Commentary / World

Too early for TPP cheers

by Kevin Rafferty

Special To The Japan Times

Prime Minister Shinzo Abe was way ahead of the game when he declared that the much-heralded 12-country Trans-Pacific Partnership agreement announced this month is “just a start.” The prime minister was positively gung-ho, boldly proclaiming that even Japan’s ailing, aging, heavily protected agriculture would be transformed through TPP. “We will strive to transform defensive agriculture into offensive agriculture so that young people can develop dreams,” boasted Abe.

Sadly, he is being economical with the truth. In reality, the way the TPP was negotiated is a major blow against democracy and good governance. It is studded with measures distorting capitalism and free markets. Above all, it is a triumph for giant corporations in the United States and to a lesser extent Japan.

Normally when a major deal is struck, there is a news conference with a text available. Ministers face questions about the achievements, the implications and the details, down to a mini-clause in a sub-chapter or a parenthesis in an appendix.

But this TPP as yet has no public text. It runs to 30 chapters and thousands of pages, not surprising when it covers everything from cars to cough medicines, as one newspaper put it. Actually, it goes far beyond traditional trade in agricultural and manufactured goods and into services, intellectual property rights, the settlement of international disputes, as well as labor and environmental standards.

Trade ministers, visibly weary after their marathon sessions in Atlanta that turned a day of negotiations into five, congratulated themselves for reaching “the largest free trade deal in a generation,” a pact that will link countries representing almost 40 percent — 36 percent actually — of the global economy. They proclaimed the TPP as an “ambitious” and “challenging” treaty slashing through red tape to “set the rules for the 21st century for trade.” New Zealand trade minister Tim Groser boasted that the achievements of Atlanta will lead to even greater things: “It remains inconceivable that the TPP bus will stop at Atlanta.”

We should be suspicious of a deal for which ministers are congratulating themselves but dare not release the full text. Each country released bits favoring its own interests. As the prime mover, U.S. President Barack Obama claimed, in a statement, not at a news conference: “This partnership levels the playing field for our farmers, ranchers and manufacturers by eliminating more than 18,000 taxes that various countries put on out products. … It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements.”

Ten days after the announcement, members of the U.S. Congress were still waiting to get the documents, and they will then have 30 days to study them before they are made public.

In spite of the celebrations and media headlines of a “massive trade deal,” the TPP is not a done deal. As Lambert Strether of Corrente noted in the Naked Capitalism blog, “TPP: It’s not a deal, it’s not a trade deal, and it’s not a done deal.” The “deal” still has to be signed by leaders of each country and ratified by lawmakers in each country. Strether added: “And what are the lawmakers? Chopped liver?”

In the U.S., Obama has the protection that the Congress cannot nickel and dime the TPP. It will have to give a straight up or down, yes or no, vote, without being able to delete or change anything. Judging by the pro-TPP propaganda being pumped out from the White House website, including a cutesy video about the global journey of a U.S. cherry, Obama is worried whether he will win in Congress.

Japan has given details of its concessions on agriculture, including raising its tariff-free annual import quota for American rice from 50,000 tons to 70,000 tons and for Australian rice from 6,000 to 8,400 tons, both over 13 years. Japan’s tariffs on imported beef will go from 38.5 percent to 9 percent over 16 years. The deals for pork, oranges, dairy and other products are complex and will not kick in for several years. It’s tempting to say: big deal, even a snail could move faster.

Of course, it doesn’t take a cynic to understand that there are election politics at play. The Abe government reportedly plans to craft an extra budget to the tune of ¥3 trillion toward the end of the year to look after farmers, even though they will not face the crunch for several years. But the Upper House election is next year, and Abe is pandering to his protected elderly farmers, whatever he says about helping the young to dream.

Former agriculture official Kazuhito Yamashita argues that “there will be hardly any impact” on rice. The extreme 778 percent tariff on rice imports will stay. Although the zero-tariff import quota for U.S. and Australian rice will expand by 78,400 tons, the government will purchase the same amount of domestic rice for stockpiling, thus isolating it from the domestic market and preventing any falls in the domestic price. The bottom line is that consumers will not benefit from cheaper prices, but farmers, helped by new agriculture minister Hiroshi Moriyama, a leading LDP lawmaker with links to the farm lobby, will feel that Abe still supports them in his Upper House hour of need.

The TPP negotiations went on for more than five years. Media reports typically declared the talks to be “shrouded in secrecy.” Indeed they were, as far as members of the public, media and elected lawmakers were concerned. But big business groups were key players, allowed to read the texts and influence the nitty-gritty details as they were haggled over.

Big business and trade-related bodies dominate all 28 of Obama’s trade advisory committees, from aerospace and agriculture to chemicals and pharmaceuticals, services and finance, technical and standards, and telecommuications and e-commerce.

U.S. corporations spend a reported $2.6 billion a year on lobbying. They are not alone. Toyota and other Japanese carmakers, which will be the big Japanese winners if the TPP goes through, have been spending millions of dollars in the U.S. as well as at home.

The criticism of my former World Bank colleague and Nobel laureate Joe Stiglitz rings true — the TPP is not free trade but managed trade and done “on behalf of each country’s most powerful business lobbies.” The worry about having big business so closely involved, and lawmakers and media excluded, is particularly strong because TPP strays beyond trade.

Julian Assange, co-founder of WikiLeaks, which leaked chapters on intellectual property proposals, put it graphically: “If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its cross hairs.”

TPP provisions for investor-state dispute settlement (ISDS) allow for secret arbitration panels to effectively overrule national regulations by permitting foreign investors to sue governments over lost potential future profits. Now there is a nebulous concept for lawyers to play with.

There were some small achievements from the light of public scrutiny intruding on the secrecy. Big tobacco companies have been specifically prohibited from enjoying ISDS panels. Debate over protection for biologic drugs, next-generation genetically engineered drugs, led to pushback against big pharmaceutical companies. Or so we think, but are not sure because the text has not been released and is still being tweaked, and Strether warns of secret side deals and differences in interpretation.

Obama himself gave the game away, presenting trade as part of modern warfare. “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting standards for protecting workers and preserving our environment,” the president said in a statement.

For all the ballyhoo about 40 percent (or 36 percent) of the global economy coming together for TPP, the world’s two biggest countries in population terms, China and India, are not included, as well as Indonesia, South Korea and Thailand. In reality, it is perhaps the last throw of imperial America’s dice. The problem is that if Obama cannot get it through Congress, he will reveal himself as America’s most naked emperor. For Abe, it’s more of a win-win: if the TPP goes through, he will sweeten his key farm support while opening the door to big auto through local content provisions; if the TPP fails, he can say he did his best.

Journalist and commentator Kevin Rafferty was a former World Bank official, and a professor in the Institute for Academic Initiatives at Osaka University.