The TPP is dead, long live liberalization!
Is the TPP really dead? Or are there other elements that we must take into account before considering the end of the great project of commercial liberalization in the Pacific?
Trump has just announced his agenda for the first 100 days of government. One of the outstanding points in the matter of commercial strategy is the abandonment of the Trans Pacific Treaty, or TPP. Thus he will leave aside the legacy of Obama for the USA in its commercial dispute with China. With this new situation, we ask ourselves, is the TPP really dead? Or are there other elements that we must take into account before considering the end of the great project of commercial liberalization in the Pacific?
One of the fundamental points of the campaign of Donald Trump was the sharp criticism of the Free Trade Agreements that the US signed in the past twenty years, including the one that was signed with Mexico and Canada in 1994 (NAFTA). Trump and his team identified the FTAs as the devil itself, for having been the causes of the loss of jobs in the country. In accord with official data from Washington, between 1997 and 2013 the US lost 5.4 million manufacturing jobs, as some 82,000 factories were closed. In effect, the FTAs legally guaranteed the rights of US businesses outside the country. In their form of Direct Foreign Investment, these companies were protagonists of the relocation of production to Southeast Asia and China, fleeing from the high cost of US labour. Why stay at home, if the exterior is so attractive for profits.
The emphasis of Trump’s campaign against the Free Trade Agreements directly attacks one of the violent consequences of the capitalist mode of production based on the free circulation of capital: that large portion of surplus population that does not adapt or enter into this logic. The growing unemployment in the US, not resolved by the free trade policies of the Democrats, was one of the factors that explain the Trump victory.
In this sense, one of the principal points of discord with the Obama government is the Trans Pacific Treaty (TPP). Obama took on this treaty as one of the warhorses of his government, a legacy that he wanted to leave to the US in their global commercial struggle with China. Nevertheless, both in the Democratic Party with the candidature of Bernie Sanders, as well as from the Republican side, there was fierce opposition to this treaty. Now, a few days after the elections, everything indicates that Obama will not be able to force the ratification of the TPP in the period of transition until January, and the project will be abandoned by the Trump administration.
Now, Trump won, but is the TPP dead? As social organizations of the continent we cannot allow ourselves the luxury of repeating the journalistic slogans that predict the end of this project, due to the simple fact of Trump having won the elections. Indeed, we may dare to say that the TPP has not died, even if Trump himself proclaims this. It would seem we are defying reality, but nevertheless, the reality supports our hypothesis. Let’s see why.
A first argument is based on the accumulated experience of the past ten years. When the FTAA failed, it decelerated a project of commercial liberalization that included 34 countries of the continent. Nothing more, nothing less. The end of this project did not involve the end of free trade. On the contrary, there was a rapid proliferation of diverse bilateral deals between the US and countries of the Americas such as Chile, Peru, Colombia and various Central American and Caribbean countries (agreement known as DR-CAFTA). This recent experience teaches us that the failure of an agreement does not imply its disappearance as a project to guarantee capitalist accumulation. Meanwhile, projects of liberalization similar to the FTAA have proliferated with other global players such as the European Union, China, South Korea, Japan and Singapore, among others. The fact that the FTAA failed did not imply the end of the global free trade project.
In second place, it is important to clarify what the TPP implies. With respect to the FTAA, the TPP involved a substantial advance in the rights of corporations, expressed in various chapters, especially in those of Intellectual Property, Services, Financial Services, Investments, Telecommunications and Governmental Procurement. The text of the TPP shows that it is directly influenced by the lobby of the big US enterprises that had a privileged role in the negotiation of the agreement. In fact, the TPP gives greater property rights to the big pharmaceuticals, the movie studios of Hollywood, to the firms of computing services of Silicon Valley, to those of postal services, aeronautics, finance, etc. The big companies in these sectors make up a fundamental axis of the US "bourgeoisie", even if many of them manufacture their products outside the country. Nevertheless they pay taxes in the US. It is hardly probable that these big companies will forget the rights they would have acquired under the TPP, those that Obama signed together with 11 other presidents. If they do not achieve this with the TPP, they will do so through other channels.
In effect, the TPP has become the "new model" for a trade agreement, establishing the basis for further negotiation. Just as, twenty years ago, the WTO established the basic minimums for negotiation, and established the principle of no steps backwards (once liberalized, no return to the statu quo ante), the TPP is consolidated as the new baseline. This kind of treaty establishes the starting point from which conversation begins, but never sets a ceiling. And in this sense, the basis for negotiation proposed by the TPP is very high.
A third element in support of our hypothesis is that, in the face of the Trump announcement that the TPP will be abandoned, China has just announced that it will redouble its efforts to establish its own mega-regional agreement, also in the Pacific: the Regional Comprehensive Economic Partnership (RCEP).This agreement, that competes directly with the TPP, will become the biggest agreement negotiated in terms of the number of countries and the size of markets involved. It includes the China-India axis (the most powerful countries of the BRICS block), in addition to the members of the Asia Pacific Economic Cooperation (APEC), South Korea, Japan and Oceania. Essentially, these are the countries that have been the big receivers of Direct Foreign Investment over the past thirty years, that is to say, where the North American and European companies have relocated a large part of their production. The RCEP includes contract clauses similar to the TPP, including a chapter on investments with a mechanism for solution of investor-state controversies, TRIPS-Plus intellectual property rights (driven strongly by Japan), strong liberalization in the service sector, etc. This means that, even if TPP were abandoned, commercial liberalization will continue to advance in the Pacific region with gigantic steps.
Finally, the abandonment of the TPP does not imply that the US will not advance with other treaties that are currently under negotiation, such as the TISA (Trade in Services Agreement). This agreement is GATS-Plus (in reference to the agreement on services of the WTO, since it advances the liberalization of new sectors that had not obtained consensus in the multilateral area, and is being negotiated behind closed doors by more than 50 countries. The conglomerate of North American enterprises has a special interest in this treaty, since it guarantees their access to new countries. Also, similar to the TPP, it would establish a new baseline for negotiations in services. What is the difference between TISA and TPP after the election of Trump? As we noted, Trump put his finger on the loss of manufacturing jobs in the US territory, but if the service enterprises under the same flag take over foreign markets, in competition with the Europeans, this will benefit the US in terms of access to markets and even tax income. From Trump’s point of view, the problem is the TPP, not TISA. Hence, even if the TPP is bogged down, TISA will surely continue to be negotiated.
In short, the essence of the treaty will remain intact and active, even though the text of the TPP itself remains buried. The corporate pressure to convert the world into an enormous Global factory and guarantee superlative profits under any circumstances is the essence that sustains and moves the text of the TPP. This project is far from dead and Trump is far from being one of its principal opponents. The struggle against the TPP has not ended. Only the form has changed.
(Translated for ALAI by Jordan Bishop)
- Luciana Ghiotto y Evelin Heidel are members of the Argentine ATTAC and of the Asamblea Argentina mejor sin TLC.
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