By Karel Van Wolferen, www.japantimes.co.jp
Above Photo: State Minister of Cabinet Office Shuichi Takatori and New Zealand Prime Minister John Key shake hands after signing the Trans-Pacific Partnership Agreement in Auckland on Thursday. | AP
NOTE: To join the fight to stop the TransPacific Partnership (TPP) and its sister agreements, take the pledge at FlushtheTPP.org/pledge/.
Twelve Pacific Rim countries representing around 40 percent of the global economy signed the Trans-Pacific Partnership free trade accord on Thursday. Dutch author Karel van Wolferen examines the corporate ramifications of the divisive deal
Misnomers that hide what the strong and rich control — and aspire to control — help promote our world’s numerous political ills. “Spreading democracy” in the Middle East and Africa has been used to excuse much slaughter, ruin and higher risks of wider war for purposes not remotely connected with democracy.
The designation “trade” used by politicians and the media when talking about the Trans-Pacific Partnership (TPP) pact and the proposed Trans-Atlantic Trade and Investment Partnership (TPIP) agreement is another perfect example of a misnomer thanks to which a new shadow will be cast over the generally more fortunate parts of the world.
If signed and ratified, the trans-Pacific and trans-Atlantic agreements, which seek to organize business activity under one gigantic umbrella of new rules, are likely to change our living environment in ways very different from what elected officials have been misled to imagine.
They have been peddled as trade treaties, and hence as being wonderful for economic growth, job creation, social well-being and general happiness.
But the TPP agreement, which aims to tie the United States together with close to a dozen countries in Asia, Oceania and a bit of Latin America, is not in the first place about trade, and may hardly be significant at all for stimulating genuine exchanges traditionally labelled that way. The same is true for its TPIP companion, which is meant to create and foster a new American-European business environment.
The TPP and TPIP accords are about power, not trade. More specifically, the agreements are about changed power relations between a collectivity of politically well-connected large corporations and the sovereign states in which these entities want to sink new roots. In particular, these treaties would allow U.S. corporations to engage in conduct unchecked by national rules of the participating countries. In eyes not fogged over through neoliberal dogma, such a thing would be recognized as predation.
Some history will clarify a lot. The first systematic attempt to establish corporate supremacy over national laws and regulations, begun in 1997 by the Organization for Economic Cooperation and Development, was more honest by calling itself the Multilateral Agreement on Investments (MAI). Under MAI rules, foreign businesses would be guaranteed all the advantages enjoyed by domestic producers and services of the participating countries.
If implemented, the larger foreign investors in these markets could have easily wiped out smaller domestic players with the superior force they can muster and would, once and for all, have made the older standard development methods, known as “import substitution industrialization,” impossible.
Potential competitors would become perennial subcontractors. In other words, the MAI was a blatant move to implement neocolonialism by treaty.
No surprise then that the MAI turned “globalization” into a controversial proposition as it triggered mass activism of a kind never seen before. This was the moment that, thanks to the then very young Internet, the world saw a bundling of international protest against transnational business power.
Anti-MAI events encouraged other antiglobalization protest movements around the world, which peaked in 1999 in Seattle, and seemed to augur a new kind of “people power” element in global affairs. It continued until Sept. 11, 2001.
With yet another calamitous misnomer of the “war against terror” — a political impossibility — the attention of virtually everyone in the world changed utterly, and the MAI plans as well as the antiglobalization activism were soon forgotten.
An attempt to reintroduce MAI-like arrangements with the Doha Round of trade negotiations under the auspices of the World Trade Organization has remained dead in the water.
Ten years ago, an innocuous enough attempt by Singapore, Brunei, New Zealand and Chile to enhance trade cooperation through laudable tariff reductions produced the initiative for a nascent TPP agreement.
Nurturing schemes for regional economic hegemony, Washington jumped in and captured that initiative. It enticed Australia, Peru, Vietnam and Malaysia to join as well. Once the U.S. Congress had endorsed related free trade agreements with South Korea, Colombia and Panama, the TPP became the most important component in a scheme for a Pacific-Asian business playground on which, if Japan could be enticed to join as well, U.S. corporations could be the bullies.
The most striking aspect of TPP negotiations since then has been their utter secrecy. Only about 600 “cleared advisers” — most of them linked with the businesses that stand to gain from the deal — have had access to parts of subagreements, and critics among them have been sworn to remain silent about what they consider unacceptable.
Several former trade officials and clued-in politicians in the United States and elsewhere have noted that this treaty would not have the slightest chance of making it through the legislatures of participating governments if details were negotiated out in the open. Only the fast-track authority that Congress gave President Barack Obama last year (allowing the House and Senate only to vote yes or no, without debating changes or amendments) gives it an even chance that it will become law in the United States.
We do know a little of what went on behind closed doors. For example, we have seen that U.S. negotiators have concentrated on controlling labor laws, environmental legislation and intellectual property rights.
Since traditional tariffs hardly appear to be an obstacle to trade nowadays, what else could they do? But it does go to show that the TPP is primarily a political program.
It is political because it aims to change the power relations between transnational corporations and foreign governments. It is political because it will create patterns of colonial dependence through agricultural agreements. It is political because it seeks to place the governments of the participating countries under a kind of legal discipline that has nothing to do with the rights of citizens and everything to do with the ability of powerful corporations to become even stronger.
Many details of the TPP agreement have yet to be divulged, but what we may take away from the MAI experience is that participating governments can violate its intended rules only at their own great disadvantage. In effect, the legal stipulations tied to the MAI would have created a new element of corporate groups operating internationally beyond any kind of accountability. The TPP, much like the MAI before it, will not be about economic development but about wholesale power shifts.
Those who can still make a political difference in Japan ought to study the reason for and the nature of such shifts. Numerous large, politically connected U.S. transnational corporations operate in colonizing mode. In the context of recently evolved methods of profit-making in the current phase of American late capitalism, and while the domestic U.S. economy remains in the doldrums, only the rest of the world still offers enticing prospects.
The political class of the Asian participants of the TPP agreement and the Europeans, who watch from the sidelines with the companion TPIP treaty in the back of their minds, are still affected by the lines of seduction first penned some two centuries ago by English political economist David Ricardo about unfettered trade always being good for everyone.
But Ricardo and his followers were talking about free trade in goods. If genuine markets in goods were to determine profits, U.S. businesses would hardly have a chance to play a significant role internationally, since they no longer manufacture that much at home anymore.
Hence corporate hopes are specifically vested on two areas opened up by the TPP deal in participating countries: rents and “financial products.”
Rather amazingly, Ricardo’s cause still serves in our times as a sacred principle to emulate when questions of any kind of liberalization are raised — fatefully with regards to the lifting of regulations that kept order in the world of international financial transactions. This has permitted rent seekers and financial firms to become top predators. The TPP agreement will massively expand their hunting territory and give them fierce fangs in the bargain.
When it was introduced, copyright was meant to provide protection to authors for an agreed number of years. More recently, it has been applied in a broader way to works of art in general. This made sense, and was in line with the thinking behind patents for industrial inventions.
But it has long since become exploitative. Attracted by an opportunity to make money without producing things, corporations began to claim the rights of all manner of artistic merchandise after paying off needy creators.
Sometimes, they even claimed the right to something that had theretofore been free, such as the extraction of a substance with medicinal properties from plants and trees used in indigenous forms of medicine.
A new category came into general use in the last decade of the 20th century named “intellectual property” for the purpose of maximizing rent extraction and the creation of monopolies. Many things can be endowed with the near-sacred aura of property with this fashionable terminology, not only tunes and images, but also simple ideas, clever marketing tricks, Indian Ayurvedic medicine formulas and images of temple paintings in Southeast Asia — you name it, we are only at the beginning of this.
Public gullibility under neoliberal regimes can be measured by the ease with which the notion of “piracy” has become widely accepted, along with the moral construction that imitation constitutes theft. Under ever more stringent and internationally enforced controls, films that have made their intended profit many times over in general box-office release, on TV and with extended DVD editions are set up to be making money forever.
The intellectual property regime of the TPP agreement contains traps of which the countries seduced to join are unlikely to be aware.
Much of the discussion among critics has revolved around the obviously questionable closed-door tribunals to arbitrate investor-state disputes. But other legal entanglements awaiting those who sign have as yet been overlooked.
The rules demanded by the United States will create conditions for an even greater American popular culture hegemony. Local producers of popular culture products are likely to find themselves pressed to the margins in their own countries, and bankrupted by costly litigation in which U.S. corporations are masters.
An army of lawyers may be expected to become a parasitical growth on the culture of the participating countries, with a new category of “ambulance chasers” inspired by the existing U.S. industry of lawyers who, on their own, ferret out possible cases of copyright infringement by unsuspecting parties and then threaten those people with litigation unless they pay a settlement fee.
The expected intellectual property stipulations of the TPP accord related to medicine have drawn much attention, as these will enlarge the oligopoly power of pharmaceutical companies.
Global public health is likely to suffer from this because, from what is already known, the new rules will lengthen the period before the use of generic drugs is permitted, and these are the only affordable medicine for patients in poorer countries.
Nongovernmental organization Doctors Without Borders has concluded in a July 2015 press release that “the TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.”
Then there is an even bigger beneficiary in the shape of the 21st-century global casino of speculating banks, which make untold multiples of capital with their money while bypassing the complication of investing in production. For them, the TPP deal is a dream come true, which is why they rewarded two executives from Bank of America and Citigroup with millions in bonuses before these moved to work on the TPP.
The executive from Citigroup was appointed to lead the Office of the United States Trade Representative, the agency in charge of TPP negotiations.
From what we know, the TPP agreement would ban capital controls, prohibit any kind of future taxes on Wall Street speculation and block any move to separate investment from retail banking. It would also block efforts to ban toxic derivatives that created the credit crisis of 2008.
As with the manufacturers of controversial products, the financial industry will be given the means to demand compensation for regulations and policies that in their assessment may undermine their expected future profits.
It is not difficult to understand that TPP participants who have not guessed the consequences of what they will be signing will bring social misery upon themselves. It is also not difficult to understand how the TPP agreement fits in with Washington’s “Asian pivot” moves as part of its full-spectrum dominance campaign.
Japan’s participation in the TPP, which Prime Minister Shinzo Abe is eager to bring about, would be a big clincher for America’s containment of China’s tactics. It would push Japan deeper into an embrace with the United States over which it has little control.
After intense concentration on export-led developments, the Chinese economy is evolving into a consumer-oriented system and its huge middle class has lots of money to spend. Of all the world’s countries, Japan is in the best position to benefit from this switch, which is one of several reasons why it ought to treasure every opportunity for improving relations with its neighbor. The TPP would hinder that process, as has precisely been Washington’s intention.
All this is easily understood. But it still leaves us with the puzzle of why Asians as well as Europeans, whose EU trade commissioners have been mouthing the same job creating nonsense around the TPIP that accompanies the TPP rhetoric, appear unable to tackle intellectually the dominant power aspects of these treaties.
Perhaps this is because the world in which they exist is politically sterilized by current economic suppositions. More generally, the concept of power (not influence with which it is often confused) receives a “stepmotherly” treatment in popular as well as serious writing, and the social science denizens of academia are entirely at sea over it.
Mainstream economics is ahistorical by design and hence has no room for power, which has helped continue the fateful division of political and economic affairs into separate realms for discussion that has long served the interests of power elites.
Since the political dimension to economic arrangements in the United States remains hidden in most discourse because political and economic reality are routinely treated as separate realms of life, few notice that what is justified in the United States by reference to “market forces” is frequently the result of heavy political negotiation, interference and favors.
Politically well-connected U.S. corporations, paying for the election expenses of Congress members who help create their business environment, need not fear market forces.
If the banks responsible for the credit crisis of 2008 and the subsequent global recession that is still with us had not been lifted out of “the market” by the state, they would no longer exist.
Powerful corporations have been allowed to swallow the state; they have, as economist James Galbraith explains, created a “predator state,” which they naturally exploit for their own expansion. There is no frame of reference with which we can more convincingly define the TPP.
Karel van Wolferen is a former NRC Handelsblad correspondent for East Asia, professor emeritus of comparative political and economic institutions at the University of Amsterdam, and author of “The Enigma of Japanese Power.”