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Economy

Unions claims Trans-Pacific Partnership undermines democracy

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Protestors wave placards at a rally against the Trans Pacific Partnership (TPP) just days before parliament is due to open a debate on the free trade pact in Kuala Lumpur © Reuters

The biggest trade deal in history, the Trans-Pacific Partnership (TPP), was signed in Auckland, New Zealand, on Thursday. The deal aims at cutting tariffs and trade barriers in 12 Pacific rim countries with a total population of 792 million people - 40 per cent of the world economy. But unions and other campaigners have criticised it and the region’s largest economy, China, was not invited to join.

The TPP was initiated and pushed by Washington and, after seven years of secretive negotiations, trade ministers of 12 participating countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico New Zealand, Peru, Singapore, the US and Vietnam - signed the deal. 

“Outdated trade rules put our workers at a disadvantage,” said US President Barack Obama when he tried to sell the deal to the American people in one of his televised addresses to the nation. “The TPP will change that.”

Obama pointed out that other countries put taxes on goods that are made in America, that these taxes and other trade barriers put American workers “at a disadvantage. It makes it more expensive to make good here and sell them over there.” According to Obama, TPP will eliminate more than 18,000 of these taxes on American goods. 

But there are sceptics.

“Our past trade agreements have failed American workers,” says Bernie Sanders, a contender to be  Democratic party candidate in the next US presidential elections. “And they have led to the loss of millions of decent paying jobs. Why would we go forward with another trade agreement which is in fact larger than previous trade agreements?” 

But there is deeper, more systemic criticism. The TPP, whose regulations fill 6,000 pages, lay down the groundwork for the creation of a tribunal that answers to no national legislation. 

Corporations can go to it and challenge national labour and environmental laws and regulations if these cause them to lose money.

“It gives corporations access to mechanisms that overturn national legislation and to tell governments what to do,” says Tim Noonan, a spokesperson for the Brussels-based International Trade Union Confederation. “It is a blow for democracy. It will mean more expensive medicines and really alter the balance of power further in favor of large multinational corporations at the expense of local people, local businesses and indeed democracy itself.” 

One of the main reasons for the creation of the TPP is to form a counterweight to China’s growing economic might.

“TPP allows America, and not countries like China, to write the rules of the road in the 21st century," said Obama after the pact was signed in Auckland. 

Beijing is studying the deal and has refrained from criticising it. The Chinese ministry of commerce said in a statement that it had “taken note of the signing of the Trans-Pacific Partnership and is weighing up this regional trade deal, which China is not part of. Beijing also expressed the hope that the various free trade arrangements in the Asia Pacific Region will complement each other and jointly contribute to trade, investment and economic growth of the region.” 

Meanwhile, China is preparing its own equivalent of the TPP, called the Free Trade Area of the Asia Pacific (FTAAP). This treaty may be signed by countries that have signed the TPP but China will be a member. 

According to a recent study by the Peterson Institute, China could benefit from that deal to the tune of 1.3 trillion euros in exports. 

But Washington is not enthousiastic about the FTAAP. Its priority is to have the TPP ratified by the parliaments of the respective signatory countries. 

Activists say they will continue fighting the deal.

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