by Andrew Gavin Marshall
Andrew Gavin Marshall is an
independent researcher and writer based in Montreal, Canada, writing
on a number of social, political, economic, and historical issues.
He is also Project Manager of
The People’s Book Project. He also hosts a weekly podcast show,
“Empire, Power, and People,” on BoilingFrogsPost.com.
This is What Corporate Governance Looks Like
November 19, 2012
In 2008, the United States Trade Representative Susan Schwab announced the
U.S. entry into
the Trans-Pacific Partnership (TPP)
talks as “a pathway to broader Asia-Pacific regional economic integration.”
Originating in 2005 as a “Strategic Economic
Partnership” between a few select Pacific countries, the TPP has, as of
October 2012, expanded to include 11 nations in total:
the United States
...with the possibility of several more joining
in the future.
What makes the TPP unique is not simply the fact that it may be the largest
“free trade agreement” ever negotiated, nor even the fact that only two of
its roughly 26 articles actually deal with “trade,” but that it is also the
most secretive trade negotiations in history, with no public oversight,
input, or consultations.
Since the Obama administration came to power in January of 2009, the
Trans-Pacific Partnership has become a quiet priority for the U.S., which
overtook the leadership role in the “trade agreement” talks.
In 2010, when Malaysia joined the TPP, the Wall
Street Journal suggested that the “free-trade pact” could “serve as a
counterweight to China’s economic influence,” with Japan and the Philippines
both expressing interest in joining the talks.
In the meantime, the Obama administration and other participating nations
have been consulting and negotiating not only with each other, but with
roughly 600 corporations involved.
The TPP is accelerating the most dangerous free
market policies of previous U.S. administrations, bestowing unprecedented
powers and privileges upon Trans-National Corporations (TNCs)
while dismantling regulations and laws without any democratic oversight or
This three-part investigative series examines the Trans-Pacific Partnership,
a legally binding trade agreement for advancing transnational corporate
tyranny and dismantling domestic democratic accountability.
The Global Corporate Lobby
Who negotiates trade agreements? The answer is simple: trade
The term “trade representative” is essentially
another way of saying “corporate lobbyist.”
To prove this point, it would be useful to quickly glance over the
biographies of the important U.S. Trade Representatives (USTR) since the
George H.W. Bush administration, when USTR Carla A. Hills
was lead negotiator for NAFTA and the WTO.
Embedded within the U.S. foreign policy establishment, Hills had a long
career in government and was the USTR from 1989 to 1993, after which she
established and became CEO of Hills & Company, an international consulting
firm with a focus on global trade and investment for clients such as the
Coca-Cola Company, Procter & Gamble, American International Group (AIG),
Novartis, Bechtel, Boeing, Rolls-Royce, Inter-American Development Bank,
Pfizer and Chevron.
A few accolades: Hills is a member of the board of the
Council on Foreign Relations, Gilead Sciences, and is on
international advisory boards for Rolls Royce, the Coca-Cola Company and
JPMorgan Chase. She is also a member of the Trilateral Commission, the
Peterson Institute for International Economics and the Center for Strategic
and International Studies (CSIS).
Following Hill, from 1993 to 1997, the U.S. Trade Representative was
Michael Kantor, who now advises corporate clients as a partner in the
law firm Mayer-Brown. A member of the board of CBRE (a real estate services
company), Kantor also serves on the advisory boards of ING USA and
Fleishman-Hillard, a public relations firm.
Next in line, from 1997 to 2001 the USTR was Charlene Barshefsky, who
is now on the boards of American Express, the Estée Lauder Company and
Intel; like Hill, she is a member of both the Trilateral Commission and the
Council on Foreign Relations.
The USTR from 2001 to 2005 was Robert Zoellick, who afterwards served
as Deputy Secretary of State, Vice Chairman of Goldman Sachs from 2006 to
2007, and President of the World Bank from 2007 to 2012. Following Zoellick,
from 2005 to 2006, the USTR was Rob Portman, a U.S. Senator who was a
possible running mate for Mitt Romney’s presidential campaign.
And only after him did Susan Schwab, the USTR from 2006 to 2009,
commit the U.S. to joining the Trans-Pacific Partnership. Schwab has since
joined the boards of FedEx, Caterpillar and Boeing. Based on the evidence of
her and her predecessors’ tenures, it is safe to say there has been a
significant interchange between “trade representatives” and “corporate
representatives” - to the point where it is almost impossible to distinguish
Now let’s get even more caught up to speed on appointed “government
officials” so we can know exactly what we’re talking about.
In 2008, as Obama was campaigning for president, he stated, “I have done
more to take on lobbyists than any other candidate in this race. I don’t
take a dime of their money, and when I am president, they won’t find a job
in my White House.”
Within a week of becoming president, Obama changed his mind and his
“transition team” (responsible for selecting the Obama cabinet) became
co-chaired by John Podesta, co-founder with his brother Tony Podesta
of the Podesta Group, a major Washington lobbying firm.
Podesta was Bill Clinton’s former chief of staff and, as co-chair of Obama’s
transition team, he declared his team was implementing,
“rules that are the strictest, the most
far-reaching ethics rules of any transition team in history.”
A top lobbyist whose firm has represented
clients ranging from Wal-Mart, BP and Lockheed Martin to the Egyptian
military dictatorship, Podesta appeared the ideal figure to implement
Obama’s “strict” rules against hiring corporate lobbyists, right?
A little further background:
the Podesta Group counts among its recent
lobbying successes the stalling of a Senate bill which was calling on
Egypt “to curtail human rights abuses.”
The Group’s website also boasts that it
“challenged” Wall Street reform after “one of the world’s largest banking
firms came to the Podesta Group seeking help with their opposition” to
proposed regulations for banks.
Thus, it should come as little surprise that part of the “strictest” and
most “far-reaching ethics rules” announced by John Podesta in relation to
lobbying was that no official could be appointed to the Obama administration
if s/he had been an active lobbyist within the previous two years.
Luckily for Ron Kirk, Obama’s U.S. Trade
Representative, these “strict” rules only applied to the Washington D.C.
area; and since Kirk was a corporate lobbyist in Austin, Texas, for the
investment bank Merrill Lynch (before it was taken over by Bank of America
in 2008), the “far-reaching ethics” promised by Podesta didn’t reach Kirk.
Kirk’s main priority since becoming USTR has been the Trans-Pacific
Partnership, worked on in secret for nearly four years with several other
countries and 600 corporations. President Obama has called it “a
next-generation trade agreement” and a “model” for future agreements.
But not everyone agrees.
In May of 2012, more than 30 legal scholars from nations that will be
affected by the TPP signed a letter addressed to USTR Kirk expressing their,
“profound concern and disappointment at the lack of public participation,
transparency and open government processes in the negotiation” of the TPP.
In late June of 2012, more than 130 members of Congress followed this up
with a letter that they signed and sent to Kirk urging transparency in TPP
negotiations, and an inclusion of Congressional consultations, stating:
“We are troubled that important policy
decisions are being made without full input from Congress.”
In his not-to-worry response, Kirk reassured the
“I believe… that we have very faithfully
operated within the spirit of the Obama administration to have the most
engaged and transparent process as we possibly could.”
Meanwhile, the TPP has received strong
endorsements from large transnational corporations and their official
lobbies, such as Thomas Donohue, the CEO of the U.S. Chamber of
Commerce, who told the Financial Times that,
“[t]his must be an agreement with high
standards. These standards will set the bar on regulatory coherence,
investment and intellectual property.”
Part of these “high standards,” according to a
meeting of the Asia-Pacific Economic Co-operation group (APEC), are,
“deep commitments that go beyond tariff
reduction and pass existing World Trade Organization standards.”
In other words, it goes far beyond “trade.”
This was confirmed by Iwan Azis, the head
of the Asian Development Bank’s regional integration office, who stated that
the TPP was intended to deal with “behind the border” issues, typically
decided by domestic policy, and,
“which go beyond the normal scope of trade
agreements” including issues of labor, environmental and intellectual
“As a concept, this is definitely something
big… This is so comprehensive, it is like a Grade A agreement.”
The TPP is designed,
“to be a structure on to which other
nations, including possibly South Korea, and eventually even China,
could be bolted.”
At the 2011 APEC summit, Chinese president Hu
“China supports the goal of the regional
integration of the Asia-Pacific economy, using the East Asian free trade
zone, full economic partnerships in Asia and the Trans-Pacific
Partnership as foundations.”
The aim of the TPP appears to be in establishing
a core “trade bloc” in order “to create a gravitational force that would
bring others in,” according to Karan Bhatia, the Vice-President for
international law at General Electric and a former deputy U.S. trade
Ultimately, this objective includes bringing
both Japan and China into the fold.
In May of 2012, Kirk stated that he “would love nothing more” than to have
China join the TPP, following the more immediate additions of Mexico,
Canada, and Japan.
And in November of 2011, President
to the Australian parliament, explaining:
“I have directed my national security team
to make our presence and missions in the Asia Pacific a top priority…
The United States is a Pacific power and we are here to stay.”
One observer and critic has noted that the TPP
has the potential to become a new “global trade agreement.”
Charlene Barshefsky, the USTR from 1997
to 2001, wrote an article for the Wall Street Journal in October of 2012 in
which she strongly endorsed the TPP as a “crucial opportunity” to overcome
“barriers to innovation.”
Referring to the TPP as the,
“most important trade negotiation of the
past decade,” Barshefsky wrote that it “will set the terms of trade for
many years in the world’s most economically dynamic region.”
Gary Horlick, who is rated one of the
world’s top international trade lawyers with a long career representing
major U.S. and global multinational corporations, and more than 20 countries
in international trade negotiations and disputes - and who was the first
Chairman of the World Trade Organization’s Permanent Group of Experts on
subsidies - commented on the TPP:
“This is the least transparent trade
negotiation I have ever seen.”
As part of this “transparency,”
participants in the negotiations had to sign a memorandum of
understanding which forbids them from releasing any,
documents until four years after a deal is done or abandoned.”
What Horlick referred to as the,
“least transparent trade negotiations” he
had ever seen, Kirk referred to as “the most engaged and transparent
Perhaps this can be explained by the fact that
Kirk has access to the draft document and observes and participates in the
negotiations, unlike the representative bodies of governments or their
So let’s call this what it is: a transnational corporate coup over the
democratic process and public accountability.
Kirk explained that “there’s a practical reason” for all the secrecy in the
negotiations over the TPP:
“for our ability both to preserve
negotiating strength and to encourage our partners to be willing to put
issues on the table they may not otherwise, that we have to preserve
some measure of discretion and confidentiality.”
Indeed, this is “practical.”
After all, as he explained, if the talks were
not done in secret, the public would be aware of what was being discussed,
and if the public knew what was being planned, they would oppose it.
So secrecy is necessary in order to make the agreement as undemocratic
and unaccountable as possible, to ensure that corporations get what they
want while the public remains in the dark.
Deceptive and saturated with disdain for
democracy, certainly, but “practical” nevertheless.
Why So Secretive? The Trans-Pacific
Partnership as Global Corporate Coup
November 21, 2012
The Trans-Pacific Partnership is the most secretive and “least transparent”
trade negotiations in history.
Luckily for the populations and societies that will be affected by the
agreement, there are public research organizations and alternative media
outlets campaigning against it - and they’ve even released several leaks of
draft agreement chapters.
From these leaks, which are not covered by
mainstream corporate-controlled news outlets, we are able to get a better
understanding of what the Trans-Pacific Partnership actually encompasses.
For example, public interest groups have been warning that the TPP could
result in millions of lost jobs.
As a letter from Congress to United States Trade
Representative Ron Kirk stated, the TPP,
“will create binding policies on future
Congresses in numerous areas,” including “those related to labor, patent
and copyright, land use, food, agriculture and product standards,
natural resources, the environment, professional licensing, state-owned
enterprises and government procurement policies, as well as financial,
healthcare, energy, telecommunications and other service sector
In other words, as promised, the TPP goes far
Dubbed by many as “NAFTA on steroids” and a “corporate coup,” only two of
the TPP’s 26 chapters actually have anything to do with trade. Most of it
grants far-reaching new rights and privileges to corporations, specifically
related to intellectual property rights (copyright and patent laws), as well
as constraints on government regulations.
The leaked documents revealed that the Obama administration,
“intends to bestow radical new political
powers upon multinational corporations,” as Obama and Kirk have emerged
as strong advocates, “for policies that environmental activists,
financial reform advocates and labor unions have long rejected for
eroding key protections currently in domestic laws.”
In other words, the already ineffective and
mostly toothless environmental, financial, and labor regulations that exist
are unacceptable to the Obama administration and the 600 corporations
aligned with the TPP who are giving him his orders.
The agreement stipulates that foreign corporations operating in the United
States would no longer be subject to domestic U.S. laws regarding
protections for the environment, finance or labor rights, and could appeal
to an “international tribunal” which would be given the power to overrule
American law and impose sanctions on the U.S. for violating the new “rights”
The “international tribunal” that would dictate the laws of the countries
would be staffed by corporate lawyers acting as “judges,” thus ensuring that
cases taken before them have a “fair and balanced” hearing - fairly balanced
in favor of corporate rights above anything else.
A public interest coalition known as Citizens Trade Campaign published a
draft of the TPP chapter on “investment” revealing information about the
“international tribunal” which would allow corporations to directly sue
governments that have barriers to “potential profits.”
Arthur Stamoulis, the executive director of Citizens Trade Campaign,
explained that the draft texts,
“clearly contain proposals designed to give
transnational corporations special rights that go far beyond those
possessed by domestic businesses and American citizens… A proposal that
could have such broad effects on environmental, consumer safety and
other public interest regulations deserves public scrutiny and debate.
It shouldn’t be crafted behind closed doors.”
Public Citizen’s Global Trade Watch, a public
interest organization, undertook an analysis of the leaked document on
investment and explained that the international corporate tribunal would
allow corporations to overturn national laws and regulations or demand
enormous sums in compensation, with the tribunal,
“empowered to order payment of unlimited
government Treasury funds to foreign investors over TPP claims.”
Even under NAFTA, over $350 million has been
paid by NAFTA-aligned governments to corporations for “barriers” to
investment “rights,” including toxic waste dumps, logging rules, as well as
bans on various toxic chemicals.
Because let’s be clear: for corporations, such regulations and concerns over
health, safety and environmental issues are perceived solely as “barriers”
to investment and profit.
Thus their “government” would sue the foreign
government on behalf of the corporation, on the premise that such
regulations led to potential lost profits, for which the corporation should
The TPP allows the corporations to directly sue the government in question.
All of the TPP member countries, except for
Australia, have agreed to adhere to the jurisdiction of this international
tribunal, an unelected, anti-democratic and corporate-staffed kangaroo-court
with legal authority over at least ten nations and their populations.
Further, TPP countries have not agreed on a set of obligations for
corporations to meet in relation to health, labor or environmental
standards, and thus a door is opened for corporations to obtain even more
rights and privileges to plunder and exploit.
Where corporate rights are extended, human and
democratic rights are dismantled.
One of the most important areas in which the TPP has a profound effect is in
relation to intellectual property rights, or copyright and patent laws.
Corporations have been strong advocates of expanding intellectual property
rights, namely, their intellectual property rights.
Pharmaceutical corporations are major
proponents of these rights and are likely to be among the major
beneficiaries of the intellectual property chapter of the TPP. The
pharmaceutical industry ensured that strong patent rules were included in
the 1995 World Trade Organization agreement, but ultimately felt that those
rules did not go far enough.
Dean Baker, writing in the Guardian, explained that stronger patent
“a government-granted monopoly, often as
long as 14 years, that prohibits generic competitors from entering a
market based on another company’s test results that show a drug to be
safe and effective.”
Baker noted that such laws are actually,
“the opposite of free trade” since they
“involve increased government intervention in the market” and “restrict
competition and lead to higher prices for consumers.”
Essentially, what this means is that in poor
countries where more people need access to life-saving drugs, and at cheaper
cost, it would be impossible for companies or governments to manufacture and
sell cheaper generic brands of successful drugs held by multinational
Such an agreement would hand over a monopoly of
price-controls to these corporations, allowing them to set the prices as
they deem fit, thus making the drugs incredibly expensive and often
inaccessible to the people who need them most.
As U.S. Congressman Henry Waxman correctly noted,
“In many parts of the world, access to
generic drugs means the difference between life and death.”
The TPP is expected to increase such corporate
patent rights more than any other agreement in history.
Generic drug manufacturers in countries like
Vietnam and Malaysia would suffer. So would sales of larger generics
manufacturers in the U.S., Canada, and Australia, which supply low-cost
drugs to much of the world.
While the United States has given up the right to negotiate drug prices with
pharmaceutical corporations (hence the exorbitant price for drugs purchased
in the U.S.), countries like New Zealand and even Canada to a lesser extent
negotiate drug prices in order to keep the costs down for consumers.
The TPP will grant new negotiating privileges to
corporations, allowing them to appeal decisions by governments to challenge
the high cost of drugs or to go with cheap alternatives.
Referring to these changes, the U.S. manager of
Doctors Without Borders’ Access to Medicines Campaign stated,
“Bush was better than Obama on this.”
But that’s not all the TPP threatens:
Internet freedom is also a major target.
Council of Canadians and
OpenMedia, major campaigners for Internet
freedom, have warned that the TPP would “criminalize some everyday uses of
the Internet,” including music downloads as well as the combining of
different media works.
OpenMedia warned that the TPP would,
“force service providers to collect and hand
over your private data without privacy safeguards, and give media
conglomerates more power to send you fines in the mail, remove online
content - including entire websites - and even terminate your access to
Also advanced under the TPP chapter on
intellectual property rights, new laws would have to be put in place by
governments to regulate Internet usage. OpenMedia further warned that, from
the leaked documents on intellectual property rights,
“there can be heavy fines for average
citizens online,” adding: “you could be fined for clicking on a link,
people could be knocked off the Internet and web sites could be locked
The TPP, warned OpenMedia founder Steve
“will limit innovation and free expression.”
Under the TPP, there is no distinction between
commercial and non-commercial copyright infringement.
Thus, users who download music for personal use
would face the same penalties as those who sell pirated music for profit.
Information that is created or shared on social networking sites could have
Internet users fined, have their computers seized, their Internet usage
terminated, or even get them a jail sentence. The TPP imposes a “three
strikes” system for copyright infringement, where three violations would
result in the termination of a household’s Internet access.
So, why all the secrecy?
Corporate and political decision-makers study
public opinion very closely; they know how to manipulate the public based
upon what the majority think and believe. When it comes to “free trade”
agreements, public opinion has forced negotiators into the darkness of
back-room deals and unaccountable secrecy precisely because populations are
so overwhelmingly against such agreements.
An opinion poll from 2011 revealed that the American public has - just over
the previous few years - moved from “broad opposition” to “overwhelming
opposition” toward NAFTA-style trade deals.
A major NBC News-Wall Street Journal poll from September of 2010 revealed
“the impact of trade and outsourcing is one
of the only issues on which Americans of different classes, occupations
and political persuasions agree,” with 86% saying that outsourcing jobs
by U.S. companies to poor countries was “a top cause of our economic
woes,” with 69% thinking that “free trade agreements between the United
States and other countries cost the U.S. jobs.”
Only 17% of Americans in 2010 felt that “free
trade agreements” benefit the U.S., compared to 28% in 2007.
Because public opinion is strongly - and increasingly - against “free trade
agreements,” secrecy is required in order to prevent the public from even
knowing about, let alone actively opposing, agreements like the
And this, as U.S. Trade Representative Kirk
explained, is a very “practical” reason for all the secrecy.
What “Free Trade” Actually Means
November 26, 2012
To discuss “free trade agreements” or the “free market,” we must first
identify the theoretical versus the functional definitions of these terms -
because theoretical definitions look at what those terms should mean,
whereas functional definitions look at what the terms mean actually.
The theoretical definition of a “free market” is one in which every
individual actor in the realm of exchange exists in a state of equality of
opportunity; where all compete with one another to produce the best products
at the cheapest prices for consumers, thus the most innovative and efficient
producers succeed while others fail, unregulated - and unhelped - by the
Within “free markets,” what we call “free trade
agreements” are meant to reduce barriers such as tariffs, subsidies and
regulations so that market “competitors” can freely move products and goods
across borders and compete in an ever-expanding global “free market.”
The functional, or technical, definition of a “free market” is one in which
the state regulates the market - the realm of economic exchange and activity
- for the benefit of large transnational corporations and banks.
Barriers to profits, such as environmental, labor, safety and financial
regulations, are dismantled. Meanwhile, subsidies and legal rights and
protections are granted to major corporations, undermining competition and
So while the rhetoric of “free markets” tends to
be all about reducing state interference in the economy, in actuality state
interference increases - but only for the benefit of large corporations and
At the same time, state “interference” decreases in sectors that benefit the
actual population, such as welfare, social services, pensions, healthcare,
education, labor protections and so on. In the actual “free market,” these
protections are dismantled, subjecting populations to “market discipline”
quite unlike the large corporations and banks that receive direct protection
against “market discipline.”
The most obvious example of this is the
post-2008 bank bailouts.
In a theoretical “free market,” all the banks that gambled badly would have
failed and collapsed. But with the functional “free market” we have today,
the banks went to the state and got bailed out with trillions of dollars of
The same dichotomy exists for the term “free trade agreement,” which in
theory is the opposite of “protectionism,” where states intervene in the
market by establishing tariffs, regulations, subsidies and protections for
various imports and exports, thus undermining the “free market.”
The technical definition, however, is one in which protectionism is rampant,
with enormous subsidies and protective barriers, and very often includes
thousands of pages of regulations and provisions. But because all of this is
done to protect corporate and financial interests, it is called “free
It is “protectionism” if the barriers,
regulations and protections benefit the nation or population and prevent
transnational corporations and banks from having unhindered access to the
Likewise, is it “free trade” if the barriers, regulations, and protections
benefit corporations and banks at the expense of the nation and population?
In actuality, so-called “free trade” is a drain on the economy, creates
enormous national debts, undermines labor, creates poverty and exploitation,
wastes natural resources and devastates the environment.
However, it is very profitable for banks and
corporations, so is endlessly repeated as something “good” and “necessary.”
In theory, “free trade” would enhance competition because it would allow all
parties to compete on an even playing field internationally, thus companies
would have to find ways to lower their costs of production while increasing
their product standards, ultimately decreasing the final price to consumers.
In this theoretical form of “free trade,” the best and cheapest product, the
company that made it, and the consumer and society as a whole would all
The reality is the exact opposite: the production cycle is broken up (this
is commonly called “offshoring”), which increases the use of transportation,
resources and the overall cost of production, making the final product more
expensive to consumers.
Case in point is the North American Free
Trade Agreement (NAFTA), where competition between corporations is
undermined while access to resources and markets is enhanced, subsidized and
Corporate cooperation with each other and the state is enhanced while the
poor, working and middle classes of Canada, the United States and Mexico are
put in direct competition with each other.
Corporations in Canada and the U.S. close their
factories and move them to Mexico where labor is cheaper, increasing
unemployment and poverty, destroying unions and labor protections, and
forcing down wages while costs and corporate profits increase.
The role of the state is to regulate these markets and agreements for the
benefit of the corporations and banks, and to force the populations to
compete with each other in a race to the bottom:
market monopolization for the elite, and
market discipline for the population.
The break-up of the production cycle, especially
from the late 1980s onward, has redefined what “trade” actually is.
Typically, we think of trade as a system where
countries export and import products or goods. With the era of “free trade,”
the production cycle was no longer confined within national borders, and was
broken up between several countries.
The result was that a large percentage of what we call “trade” is actually
one corporation moving parts or goods to a subsidiary or another corporation
in a different country, to continue the production cycle until it returns to
the home country as a finished product for consumption.
This is referred to as “intra-industry trade” (transporting parts or goods
between corporations) or “intra-firm trade” (transporting parts or goods
between a corporation and its subsidiaries). When the parts move across
borders, often several times before the final product is created, customs
agents at borders register the cumulative value of those products as a
“traded” good, and these numbers are then used to determine the “actual
contribution” of that good to the economy.
For example, a product which has parts manufactured in Canada, assembled in
Mexico, and sold in the United States, would have to cross borders several
times before it becomes a final product.
Each time the parts cross a border, the total
value of those parts at that time of transport gets registered as an
import/export, instead of differentiating between the value added at each
part of the production cycle. Thus, the statistics of exports and imports
become heavily skewed and inflated since they do not account for
While the production cycle is broken up over
several countries, the determination of “value” is not broken up to fit the
actual trading system as it exists.
For a hypothetical comparison to reveal how absurd this process is, imagine
a country that attempts to measure the total education of its population by
including in its statistics the degrees and credentials of all the tourists
who entered the country for short periods of time.
The recorded education level of the country’s
population would be enormously inflated, since the educated tourists
entering the nation would not be staying and contributing their education to
the benefit of the society.
Something similar happens when parts move across
borders several times before they become a finished product, yet have their
total value registered each time they cross a border.
According to a report from a Canadian think tank, the Conference Board of
Canada, if countries were to apply a “value-added” measurement of trade
instead of using inflated numbers applied to the cumulative value of a good,
the actual contribution of trade to a country would rapidly diminish.
In conventional measurements, trade accounts for
35% of Canada’s economy, but with the value-added measurement, it drops to
These manipulations are important because they serve as a basis for
claiming that countries like Canada are “trade dependent” nations, which
justify implementing more “free trade” agreements.
When a country imports more than it exports, it builds up a large amount of
debt called a trade deficit. When a country exports more than it imports, it
establishes a trade surplus. However, because the process of determining the
value of imports and exports is enormously inflated and misleading,
countries are saddled with inflated and inaccurate debts.
They are then pressured into reducing those
debts through austerity measures, which punish those countries’ populations
Apple is a great example of this process, often hailed as one of the great
corporate success stories, being enormously profitable and therefore “good
for the economy.”
As the Asian Development Bank Institute in Tokyo
reported in 2010, while Apple is a U.S.-based company, the iPhone is itself
considered to be a Chinese export to the U.S. The iPhone is produced in many
different pieces and parts through several Asian and European countries,
which are then transported to China where they are assembled and shipped to
the United States and elsewhere.
The estimated value of the Chinese laborers in assembling the iPhone was
3.6% (or $6.50) of the total value of the finished product, estimated at
$178.96 in 2009. Yet, the wholesale cost of the shipped iPhone is credited
to China as an export.
China was merely the last stop in the production
cycle, but China records the total value of the finished product as an
export, while the United States records it as an import.
Thus, the researchers at the Asian Development
Bank Institute concluded that,
“even high-tech products invented by U.S.
companies will not increase U.S. exports.”
Pascal Lamy, director-general of the
World Trade Organization (WTO), commented,
“What we call ‘Made in China’ is indeed
assembled in China, but what makes up the commercial value of the
product comes from the numerous countries… The concept of country of
origin for manufactured goods has gradually become obsolete.”
If trade statistics were adjusted to reflect the
actual value contributed to a given product by a country, the U.S. trade
deficit with China (which in 2010 stood at $226.88 billion) would likely be
cut in half.
In 2009, the iPhone left the United States with a $1.9 billion
trade deficit with China, but if the value-added approach to determining
trade statistics were applied, the United States would have a $48 million
trade surplus with China (in relation to the iPhone alone).
With the production cycle broken up and scattered around the globe, this
adds enormous costs to transportation of equipment, machinery, goods and
products between these nations, which in turn requires enormous quantities
of oil and fuel to facilitate this transport system, and thus produces
unnecessary amounts of pollution.
Because of the high costs of transportation,
fuel, and assembly, the value of the end product goes up, making it far more
costly than if it were simply produced in one or two countries.
With countries determining their exports and imports based on inflated and
inaccurate statistics, populations are saddled with enormous debts and thus
the financial cost of breaking up the production cycle lands on the
shoulders of the population, who were already subjected to increased
competition between labor forces, reduced environmental and social
protections, dismantled subsidies and regulations, increased personal debt
So if “free trade agreements” are bad for people, bad for labor - at home
and abroad - and bad for the environment and the nation as a whole, why are
The answer is simple: they create enormous profits for banks and
corporations, whose losses are subsidized by the state.
In an actual “free market,” breaking up the
production cycle would be far too costly to be a rational choice for a
corporation, but because the state takes on the cost of doing so (largely
through its trade deficit), the process continues.
When it comes to agreements like the Trans-Pacific Partnership, it is not
difficult to see what the results will be:
increased subsidies, protections and
regulations for the benefit of large corporations and banks (notably
the 600 corporations involved in secretly drafting the agreement
over recent years)
decreased protections, subsidies and
regulations that benefit the population, environment and society as
advances corporate monopolistic
protections through intellectual property rights
undermines labor protections, putting
the working class of 11 different nations in direct competition with
dismantles environmental protections and
expands corporate rights and privileges
to allow undemocratic corporate institutions to challenge national
laws through an unaccountable international tribunal of corporate
lawyers who are given powers to overturn national laws or demand
immense compensation from any nations that hinder those
corporations’ “potential profits,” thus further increasing the heavy
cost of “free trade”
The Occupy movement and other activists have a
strong mandate to oppose the TPP and all related “free trade agreements.”
Popular opinion is swinging against “free trade”
as people seem instinctively to recognize - even without all the details -
that such agreements undermine labor, increase debt and benefit only the
But while public opinion may oppose the TPP in principle, the bigger problem
is that "the public" does not know the TPP even exists.
This is a challenge that the Occupy movement can
step up to: promoting an educational campaign that crosses borders,
organizing international protests and actions against the TPP, and
establishing a “free market” of resistance based upon the “free trade” of
As corporate rights expand and democratic rights decrease, so must people
demand an end to the TPP.
Organized resistance, information and action
have stopped “free trade agreements” in the past, and they can - and must -
do so in the future. The coming corporate tyranny of the Trans-Pacific
Partnership can only be defeated through a democratic movement of
Transnational People Power.
Our already frail and dying democratic institutions lack the capacity to
take up the challenge, so the challenge now rests with the people alone.