The Trans-Pacific Partnership: Why I support President Obama

5.7k 27 57 11 4 Colorado Springs, CO
 

Wed Apr 29, 2015 16:04:44PM | Categories: Free Trade, Barack Obama & Department of Commerce

A summit with leaders of the member states of the Trans-Pacific PartnershipBy: Gobierno de Chile

"If you want to go face to face with me President Obama, I'm ready to go because I have the facts!" – Ed Schultz responding to President Obama for calling out MSNBC for its opposition to the TPP.

For anyone who is paying attention, the pending Trans Pacific Partnership (TPP) trade agreement has become another polarizing issue in America, but this time it has largely divided the progressive liberals from moderate Democrats and Republicans. Unions especially are dead set against it, and their opposition goes all the way back to 2010, shortly after the negotiations on the trade deal started. Senators Elizabeth Warren and Bernie Sanders are the outspoken critics of the proposed trade deal in Congress, and on cable TV Ed Schultz is leading a passionate tirade against the agreement and how it would be “devastating” to US workers and the union movement. Other notable Progressives like Robert Reich and several of my favorite liberal websites are seemingly 100 percent against the TPP.

I can understand the union opposition to this trade bill, and all trade bills for that matter, as over the past several decades workers have watched their good paying jobs go away, and at the same time they observe America importing more and more products that years ago had the familiar tag: “Made in the USA”. That label was common as we were growing up, but now seems to be a rarity. Rather, “Made in China” is the label we most often see now flooding our markets, along with India or Bangladesh or Indonesia and more recently, Mexico. It is an especially bitter pill to swallow if you are unemployed or have had to take a much lower paying job to just scrape by. The emotional toll of being unemployed for a long period can be severe and long lasting.

Having said that I admit to being conflicted on the Trans- Pacific Partnership pending agreement. I have been loyal to unions and the progressive agenda, but on the other hand, I have high regard and confidence in President Obama to do the right thing for American workers and to act in America’s best interest. So for those who want to engage me in some critical thinking on this issue, you can read on.

First we should understand the TPP is not the first trade agreement we have with the eleven countries that are participating with us in this proposed agreement. We already have long standing individual trade agreements in place with all eleven countries: Australia, Brunei, Canada, Chili, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. None of them are perfect agreements as many of them include unfair tariffs to the American worker, but they also lack clarity and/or consistency in the areas of intellectual property rights and patent protection, anti-dumping cases, workers’ rights (sweat shops), non-market economy, protecting the environment, and monetary exchange rate policies. The proposed TPP, if implemented according to Obama’s proposed provisions, will not only beef up the loose ends in all of these areas as needed, but it will also provide similar trade and regulatory standards with all participating countries. More significantly, it will also level the playing field on tariffs. It is a “free trade” trade agreement as opposed to just another trade agreement that we have now with low tariffs on imports to America and higher tariffs or quotas on what we export to foreign countries. As President Obama has often said, the American worker can compete if we just level the playing field.

The TPP addresses all those issues and many more. In fact from America’s perspective, this proposed agreement attempts to roll into one gigantic agreement measures to correct everything that has been called bad in prior agreements. Is there a guarantee that President Obama will get everything he wants in this agreement? No. The laundry list or wish list of what he wants in the TPP can be found within the United States Trade Representative website: Trans-Pacific Partnership: Summary of US Objectives. The list is quite comprehensive, and in my view, exactly what we need in our trade agreements. I commend President Obama for his ambitious far reaching goals. Here is just one paragraph summarizing his intent.

“The Obama Administration is pursuing TPP to unlock opportunities for American manufacturers, workers, service providers, farmers, and ranchers – to support job creation and wage growth. We are working hard to ensure that TPP will be a comprehensive deal, providing new and meaningful market access for goods and services; strong and enforceable labor standards and environmental commitments; groundbreaking new rules designed to ensure fair competition between state-owned enterprises (SOEs) and private companies; commitments that will improve the transparency and consistency of the regulatory environment to make it easier for small- and medium-sized businesses to operate across the region; a robust intellectual property (IP) rights framework to promote innovation, while supporting access to innovative and generic medicines and an open Internet; and obligations that will promote a thriving digital economy, including new rules to ensure the free flow of data.”

If you want to learn more, the same US Trade Representatives website has a tab for “Issue Areas”. Just scroll down to one of the lower tabs, Labor for example, to learn more about the issues confronting the negotiators. There is much more in the website for those that want to browse the tabs.

Okay as some critics point out, the website and its lists and discussion topics may be nice reading for public consumption, but what is on that wish list and what his team gets into writing in the actual final agreement are two different things. That’s a fair point, but in any agreement, especially this one with 12 different countries participating, and also differing and sometimes conflicting agendas between the many special interest groups participating in the talks, I can guarantee that it will be impossible to get firm agreements on every single issue on Obama’s wish list, or for that matter the wish list of unions or environmental groups. Some of the points on his list might be deal breakers for another country that sees the United States as the bully in the room.

Another often repeated point of the critics is that this agreement is stacked with representatives from multinational corporations. Organizationally, the responsibility for negotiating this and other trade agreements lies with the Office of the United States Trade Representative. The head representative is Michael Froman, appointed by President Obama and confirmed by the Senate in a 93-4 vote. He reports directly to the President, but the deputies, heads of committees and committee members undertake much of the negotiating work. Yes the committees have heavy industry representation, but unions and the environmental groups also have a seat at the table. The members of Obama’s Advisory Committee for Trade Policy and Negotiations includes the International President of the International Steelworkers Union, the International President of the United Food and Commercial Workers Union, the President of the International Brotherhood of Teamsters, and both the President and the International President of the United Auto Workers. His Trade and Environment Policy Advisory Committee includes highly regarded professionals from the World Wild Fund, World Animal Protection, The Nature Conservancy, Endangered Species Coalition, and the Environmental Investigative Agency amongst several corporate and trade groups. These and the members of other committees all include highly qualified professionals that are striving to get the best deals possible, but compromises will absolutely be necessary, and with any compromise there will be criticism..

Richard Trumka, president of the AFL-CIO, in an interview with Vox on April 28, 2015 regarding the union role in negotiating the TPP stated:

"I started off almost two years ago very hopeful," he says. "We spent literally hours and hundreds of thousands of dollars developing ways to make TPP work for working people. We gave [US Trade Rep. Michael Froman] over 200 of those suggested changes — some little, some big, some medium-sized. Collectively they would have made a great agreement.

"So far, only four or five have only made their way onto the bargaining table. Now, they’re about to close out negotiations. I don’t expect that Froman is going to lay down 195 of those changes right now and say, 'I want these as well.' So as each day goes on and they agree to each new chapter, my level of hope wanes."

Of course this interview shows that unions did indeed have a seat at the table. However, it also suggests that many of the issues on the union wish list have not been taken up by the various committees, which may be part of the reason that the unions are so strongly opposed. We do not know the specifics of Trumka’s issues, but the areas that he has now highlighted in his interview with Vox are indeed part of the negotiations, if you believe Obama’s wish list.

Progressives have chimed in and cherry picked the various provisions that thy oppose in the Wiki Leaks leaked TPP Drafts of August 2013. Notable liberal websites like Truthout, Salon, AlterNet, ThinkProgress, the Nation and others have picked up on similar points of criticism with some going all out to harshly condemn this agreement and President Obama. Many cite the NAFTA experience and call this “NAFTA on steroids”. Some journalists to their credit have recognized that the issues are indeed contentious within the negotiating teams and were not settled as of the date of the leaked draft. In the 20 months or so of negotiations since Wiki Leaks published the first of their leaked drafts, there has been no additional information forthcoming to the public. So in effect, everyone from Ed Schultz to Robert Reich is citing opposition to points in a working draft without any knowledge of how any of the points might or might not have been since resolved to their satisfaction. With any negotiation process the easy issues are agreed first, but many of the more contentious issues drag on to the very end, and that’s what appears we are seeing in the WikiLeaks documents. President Obama, for one, seems to be quite adamant in calling Elizabeth Warren “wrong”, so I would assume that he knows more than she does. I don’t think she has taken the time to read the current draft available to members of Congress.

Since NAFTA is so often mentioned as being an example of why the TPP is also bad, I delved into the various reports pertaining to jobs supposedly lost versus jobs gained. One thing I immediately noticed is that most all reputable economists say it is next to impossible to quantify the number of jobs lost or gained from NAFTA or any other trade agreement because of all the other factors affecting jobs over the past 20 years that NAFTA has been in existence. The effects of automation, productivity improvements, recessions, bubbles, strikes, regulatory policies, changes in taxation and government spending, changing demographics of the workforce, and of course military spending and wars all have had an effect on employment and jobs, and it is impossible to separate out these effects from those of various trade agreements not only those where the US is a party, but also those where countries other than the USA are forging agreements between themselves. I will expand on those issues in a separate blog article.

Nevertheless, the Economic Policy Institute (EPI) on the left and the Chamber of Commerce and the Heritage Foundation on the right have attempted to quantify jobs gained and lost. The EPI is a liberal think tank initially funded by unions and currently gets a major portion of their funding from unions and left leaning foundations. So one needs to be wary about bias in their findings much the same as maintaining healthy skepticism of anything put out by the Heritage Foundation. EPI’s numbers, however suspect, are widely quoted by unions and various liberal/progressive websites. Their most notable claim is that NAFTA was directly responsible for the loss of American 600,000 jobs, but this number has been highly disputed by many economists. The US Commerce Department, on the other, hand shows American job gains as a result of NAFTA. Both organizations use raw numbers by the Bureau of Labor Statistics, the Census Bureau Foreign Trade Division, and the Department of Commerce Bureau of Economic Analysis. The EPI’s methodology for jobs lost is rather simplistic. They take the difference between the export and imports and where we have deficits in the balance of trade, they attribute all of that difference to American jobs lost to the trade agreement (except for a small adjustment of recession losses). They apply some kind of formula to convert the monetary amount into American jobs lost. In other words, in their analysis, any trade imbalance and net jobs gained in Mexico equate to jobs lost in America and is thus “bad for American workers”. However as the Chamber of Commerce notes in their contrary analyses, both country’s economies have benefited, and American jobs have increased as a result of NAFTA. Jobs in Mexico, however, increased at a faster rate.

I spent time poring over EPI’s May 2011 Briefing Paper, and reports by the Peterson Institute for International Economics, the Chamber of Commerce Report, as well as the Council on Foreign Relations and others. The bottom line is that NAFTA appears to have indeed been good for both Mexico and the United States in many ways, but not as much as predicted. The phased in removal of tariffs and the proximity of Mexico to the USA has prompted US multinational manufacturers to move operations, not only from the USA into Mexico, but also from China to Mexico. The growth of factories in Mexico along the US border has resulted in a vigorous trade between the two countries…a win-win for both countries, but certainly Mexico has benefited somewhat more. Having said that, critics point to the fact that NAFTA has fallen short of expectations. In particular, in Mexico’s case, their environmental goals have fallen short in large part because of the amount of money and resources Mexico has had to devote to fighting the drug cartels. In 2013 alone, they spent $173 billion (more than twice their foreign debt) fighting the powerful drug cartels, money that could have otherwise been spent on social and environmental programs.

With or without NAFTA it is hard to say how much the economies of both countries would have grown given the circumstances of so many other mitigating factors. In any case, given the terms of existing trade agreements around the world, many of those jobs, if not ,moved to Mexico, would have moved to or remained in the Asian countries, not only China, but also other emerging Asian economies. So depending on the specific skills sets required, many of the jobs are competitive between Mexico and Asian countries, but not necessarily competitive with the United States because of the large wage differences.

As this agreement has moved into the final stages, many on the left and right have pushed for more transparency. President Obama has pushed back on the transparency issue stating that any member of Congress (but not the public) can review the latest draft at a secure Congressional website. That would suggest that if any member of Congress has some concerns on an issue, they can take it up with the negotiating team or President Obama. Senators Warren and Sanders didn’t say if they had read the latest draft, but Warren said, because of confidentiality, they would not be able to share the contents with the public. She has asked that the Obama administration make the latest draft available to the public for comment and the sake of transparency, but that in itself would be violating the spirit of agreement reached between the respective negotiating teams from the 12 countries represented, that interim drafts will not be disclosed for public consumption. Many Americans are asking “why the secrecy” and the reason is simple. Multination agreements of this sort require that the professionals negotiating the terms to, first, have the authority to negotiate, and second, that they won’t continually be second guessed by members of the public who would inevitably comb through the draft agreements looking for “what’s in it for me”, something that is happening now with the WikiLeaks drafts, which can serve as distractions and slow progress.

As President Obama explained in an April 27th interview with the Wall Street Journal, if Congress gives him Trade Negotiating Authority (Fast Track) after the text of the agreement is agreed in the committees and finalized between the 12 countries, the entire text of the agreement will be made available to the public on a website to view for 60 days. After the 60 days, Obama would sign it (or not sign it), but then it would still need to be approved by Congress. Congress could take several months or whatever time they wanted to consider it before voting on it. The same or similar process will play out in the eleven other participating countries, so it is far from a done deal. When voting it will be either yes or no. No amendments will be allowed. This is nothing new. It’s the way most all large trade agreements under both Democratic and Republican administrations have been negotiated and brought to completion. Upon implementation, many of the trade provisions will be phased in over many years. For example, some of the previously high tariffs in place before NAFTA, were phased out over a 15 year period after NAFTA was approved.

Thus far the agreement (or what people think they know about it) has been subjected to considerable political grandstanding. I would hope that members of Congress will take time to study the current draft agreement and voice their concerns to the negotiating team rather than going public. I believe Democrats would be better served by supporting the TPP in principle, but with the condition that Congress approve Obama’s proposed legislation on job retraining of workers who have lost their jobs to trade agreements and automation. Democrats could also withhold agreement (like the Republicans always do) to entice Republicans to support Obama’s Jobs Act (or a similar initiative), free Community College, and other education initiatives that have been held up in Congress by Republicans. Certainly Obama wants the TPP approved, but Republicans want it more, and therefore Democrats in Congress have leverage as well. All economists agree that rebuilding our infrastructure would have an immensely larger and immediate effect on jobs and our economy than trade agreements, whether it is NAFTA or the TPP. It should be made a condition of TPP approval.

Finally, as I said at the beginning, this is another polarizing issue. Ed Schultz and others have so poisoned the atmosphere with rage against the TPP that it may be difficult for anyone to think critically about the true benefits. Furthermore, if Hillary Clinton eventually comes out and supports the TPP, as she should, then many progressives, especially union members, may be inclined to stay home on Election Day. If that is the case, and if the 2016 election tips in favor of Republicans because liberal progressives (e.g. unions) chose yet again to NOT vote because of the passion of this issue, then on the evening of November 8, 2016 you might find at least two people smiling broadly. David and Charles Koch might be found sipping champagne on their balcony and congratulating themselves on their good fortune with a toast: “Thank you Elizabeth Warren.”

I stand with President Obama.

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RosalieAll people are my people
0 0 1 0 0 Pine Mountain, CA
 

1202 days ago
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Thank you, Schmidt, for doing the kind of reading and thinking we all should be doing, but simply won't get to. Your conclusions are sound and fact-based and I'm going to join you, even though, like "that guy in Arizona," I like Elizabeth Warren lots. I'm also going to forward this to her.
Schmidt: I've been very conflicted about this topic for a long time, due to the fact that I like both Elizabeth Warren AND President Obama. After reading your note, I now feel that the trade agreement should move forward. Incidentally, I e-mailed your summary to Elizabeth Warren tonight. If you would like to send your own comments, the address is shown below: www.warren.senate.gov/?p=email_senator