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April 2014

Bad News for Good Jobs?
The Trans-Pacific Partnership

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If you liked NAFTA, you'll love the Trans-Pacific Partnership. That's the message a broad coalition of lawmakers, labor unions and health and safety activists is telling Americans about the largest trade agreement in more than a decade.

The TPP would govern trade between the United States and 12 other Pacific-rim nations: Japan, Australia, Brunei, Canada, Chile, Malaysia, Peru, Singapore, Mexico, New Zealand, Peru and Vietnam. Supporters, including the U.S. Chamber of Commerce, the Business Roundtable and President Obama, say the TPP will expand trade with some of the world's most vibrant economies, representing close to 40 percent of world GDP.

Gabe Horwitz, director of the think-tank Third Way, said that the TPP would open up doors to U.S. exports in Asia, boosting American manufacturing.

"For example, within the next 20 years, the Asia Pacific region will need 12,820 new airplanes, valued at $1.9 trillion," he said in a statement. "The question is who will build them?"

Critics of the deal question what good can come from a trade agreement where negotiations have so far been held in secret. Legislators, unions, environmental and other citizens groups have been excluded from the talks, while more than 600 corporate lobbyists have been inside the discussions from the beginning.

"The majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations — like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America — are being consulted and made privy to details of the agreement," said Sen. Ron Wyden (D-Ore.).

The agreement took one step closer to becoming a reality when Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah), along with House Ways and Means Chairman Dave Camp (R-Mich.) submitted legislation in January giving Obama "fast-track" authority to negotiate the TPP, leaving Congress only the authority to make an up or down vote on the trade deal.

"Forcing Congress to vote on an agreement this big and complex without knowing any of the details is bad for democracy and bad for the economy," said IBEW International President Edwin D. Hill. "America and its elected representatives need to know what's in it before we can move forward."

Since then, the TPP has come under serious fire from many in Congress, including from Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.), who both came out against giving Obama fast track authority.

What is known about the agreement comes from the online website Wikileaks, which publishes secret and classified information.

Leaked copies of the TPP contain clauses that prioritize foreign investor rights above all, allowing companies to take governments to court over laws they consider detrimental to their profits. These include child-labor and safety laws, along with protections for collective bargaining. For example, a multinational could sue Vietnam — one of the signatory countries to the treaty — if officials there cracked down on child labor or ended its ban on independent trade unions.

It was also leaked that the TPP would ban "Buy America" policies that prioritize the use of domestically-manufactured goods in taxpayer-financed projects. This could potentially lead to the outlawing of federal and state laws that regulate government spending, such as prevailing wage agreements and bans on sweatshop-produced goods.

"Firms that relocate avoid the risk of relying on domestic courts and instead would obtain access to sue TPP countries in foreign tribunals established by the World Bank and United Nations," wrote director of Public Citizen's Global Trade Watch Lori Wallach. "Relocated firms can skirt domestic laws and courts and bring their contract disputes and claims for regulatory compensation to such tribunals."

The TPP could also end up raising health-care costs. Special patent protections would make it harder for governmental officials to control health care costs. Pharmaceutical firms could bring a nation to court if it tried to control health care spending through subsidies or group bargaining, like Medicaid and Medicare do. And it would give them more power to keep cheaper generic drugs off the market.

"The United States Trade Representative is pushing to include policies in the agreement that would prohibit the ability of states and the federal government to get discounts for prescription drugs in the same way that private insurers do," wrote Ethan Rome, executive director of Health Care for America Now on the Huffington Post. "As a result, the TPP agreement could nullify the mechanisms to control pharmaceutical prices that the U.S. already has in place, including state Medicaid rebates and the Affordable Care Act's discounts under Medicare Part D."

With the introduction of fast-track legislation, Congress is being asked to vote on a trade bill they know little about.

"This is not surprising," said economist Gordon Lafer. "In the U.S., where almost 5 million manufacturing jobs have disappeared since the adoption of the North American Free Trade Agreement, and where real wages have stagnated, a majority of voters across the political spectrum are opposed to more such treaties."

Hatch, one of fast-track's sponsors, said what he's proposing is nothing new. "Every President since FDR has sought trade promotion authority from Congress because of the job-creating benefits of trade," he said in a statement. The legislation does provide Obama with certain negotiating guideposts, including labor and environmental standards, along with a directive for the administration to tackle currency manipulation, which some claim adds to the U.S. trade deficit.

But activists and some members of Congress say that it is not enough and are pushing back.

Sens. Sherrod Brown (D-Ohio), Jeff Merkley (D-Ore.), Ron Wyden (D-Ore.) and Rep. Robert Menendez (D-N.J.) called on Obama to give members of Congress access to draft negotiations, while more than 30 House freshmen sent a letter last summer to Rep. Sander Levin (D-Mich.), the senior Democratic member of the Ways and Means Committee, calling for greater transparency in TPP negotiations.

"Congress needs to work together to get American trade policy back on track — not give away its authority to do so," the members wrote. "Reducing our authority to ensure that our trade agreements serve the public interest will undermine our efforts to create American jobs and to reform a misguided trade policy that has devastated our manufacturing base through the offshoring of American production and American jobs."



The TPP would open markets in Asia, but so far, negotiations have taken place in secret.

Jobs gained or lost due to U.S. NAFTA trade,
1993 – 2002

Source: EPI analysis of Bureau of Labor Statistics and Census Bureau Data.

Source: EPI

Secretive Trade Deals Imperil Canadian Jobs, Democracy

Union members and citizens groups in Canada are joining their neighbors to the south in raising concern over the Trans-Pacific Partnership. As in the U.S., negotiations have been shrouded in a veil of secrecy, leaving many Canadians and members of parliament in the dark.

But an even more devastating trade deal is in the works: the Comprehensive Economic and Trade Agreement, a bilateral trade pact between Canada and the European Union.

Proposed in 2008, it has the strong support of Prime Minister Stephen Harper, who claims it will boost Canadian exports across the Atlantic, creating good jobs.

But like the TPP, these claims are hard to verify as most Canadians and elected officials don't know the details of the agreement. In fact, most of its contents remain a secret and supporters want to keep it that way. One British Columbia minister involved in negotiations said he is prohibited by the federal government from sharing information about the treaty.

"CETA subverts our democracy by taking authority away from elected lawmakers at all levels and giving it to E.U. investors," said First District Vice President Bill Daniels. "It's the people who rule Canada who should get to decide what we do with our resources and money, not foreign CEOs."

What is known comes from leaked documents. Most disconcerting is the threat CETA poses to local job creation and public services. The agreement gives foreign corporations the authority to sue federal, provincial and municipal authorities in international courts over rules and regulations they don't like.

This includes laws strengthening worker rights protections and health and safety regulations.

CETA bans any government spending that "discriminates" against E.U. imports, in effect making it impossible for lawmakers to use funds to encourage local jobs and economic growth. Federal and provincial government would no longer be allowed to prioritize the use of Canadian manufactured products on taxpayer-funded projects, for example.

Trade lawyer Steven Shrybman found that CETA rules would prevent municipalities from requiring even a portion of local government funds to support legislative goals, such as job creation or energy efficiency.

Leaked information also reveals that E.U.-based corporations have their eyes on Canadian public and municipal services, going so far as to name specific utilities and transit agencies they would like to buy out.

CETA would be the first trade agreement to apply to provincial and municipal governments, meaning everything from contracts for school lunches to local water treatment facilities would be opened up to bids from foreign multinationals — from the smallest towns to Toronto and Vancouver.

Since 2010, more than 50 Canadian municipalities, local government associations and school boards have passed resolutions expressing concern about CETA's potential impact on local public services and decision making.

Last year, the Canadian Labour Congress issued a joint statement with the European Trade Union Confederation calling on lawmakers in both Canada and the E.U. to eliminate any clause in CETA preventing municipalities from spending taxpayer money as they see fit.

"Governments must retain the authority to favor public delivery of services, such as water treatment and distribution, without fear that such a policy would be considered a barrier to trade in services."

Both union federations also called on trade negotiators to disclose details about CETA to labor and the citizens, saying "the public has the right to full disclosure, along with the right to meaningful and informed input in the negotiations."


Bad trade agreements drive down working standards and weaken labor laws across the globe.

The NAFTA Disaster

"Free trade with Mexico would be anything but free for American and Canadian working people, in fact it would cost us dearly," wrote then-International President J.J. Barry in the November 1992 issue of the IBEW Journal. "The overwhelming consensus in the labor community is that big business and multinational corporations would reap a great windfall with NAFTA and working people, small businesses and domestic companies … would be hurt very badly by the proposed agreement."

More than two decades later, President Barry's warning about the dangers of the North American Free Trade Agreement has proven all too prescient.

Twenty years ago this January, NAFTA went into effect. The agreement created a common market for goods, services and capital between Canada, the United States and Mexico.

It was sold to voters and Congress by Presidents George H.W. Bush and Bill Clinton as a free-trade agreement that would create jobs throughout the continent, but as Public Citizen's Global Trade Watch pointed out in a recent report "NAFTA at 20," NAFTA went far beyond reducing tariffs.

"NAFTA created new privileges and protections for foreign investors that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries," the report said.

Chock full of guarantees for multinational corporations and investors, giving corporate investors equal rights with signatory governments, NAFTA left workers, farmers and small businesses with minimal and largely ineffective protections.

The results were nothing less than a disaster for working families in all three nations.

The U.S. suffered a net loss of nearly 900,000 jobs and opened up an enormous trade deficit with Mexico as companies rushed to set up shop south of the border, devastating the domestic manufacturing sector. NAFTA also led to downward pressure on wages and benefits in industries most directly affected by the agreement. The Bureau of Labor Statistics found that two out of every three laid off manufacturing workers who were rehired suffered pay cuts, most of them greater than 20 percent.

NAFTA had a devastating effect on Mexico as well. By removing government support for agriculture, the agreement caused widespread dislocation in the Mexican countryside, forcing many citizens to cross the border to find work. Public Citizen found that annual immigration from Mexico more than doubled after NAFTA was passed, while the number of undocumented immigrants in the U.S. increased a whopping 144 percent.

Even free-trade supporters like the Economist magazine admit that NAFTA failed to live up to its early promises.

Skeptics say that NAFTA's record must be a warning to members of Congress considering giving President Obama authority to negotiate the Trans-Pacific Partnership.

"We now have free trade agreements with 17 countries. Show me a single one of those agreements in which we have gained jobs on net," said director of Public Citizen's Global Trade Watch Lori Wallach. "Show me any of the past promises that are being repeated now by the same interests — the same corporate think tanks, the same companies — to push TPP which have come true."

U.S.-Mexico Trade Balance 1994 – 2001
(in millions of U.S. dollars)

Presidential candidate Ross Perot's warning that NAFTA would lead to a "giant sucking sound" of jobs and money out of the U.S. proved to be a reality as the trade balance with Mexico went straight into the red after the agreement was passed.