House Democrats derailed “fast-track” today, putting the Trans-Pacific Partnership, President’s Obama’s pet trade free-trade agreement, in jeopardy. You may have some questions about what that all means. Questions like:
What’s TPP? And “fast-track,” what is that? Why is Barack Obama yelling at Democrats and calling that nice Elizabeth Warren a liar? What should I, a cool liberal internet person who doesn’t actually pay close attention to horrifically boring political news, think about this? What is the Correct and Smart Position?
To which I am tempted to say: Fuck off, I’m not your mom and I’m not Vox dot fucking com. If you want to understand the goddamn news you have to actually read widely from a variety of sources, you can’t look at one fucking chart and pretend you know what you’re fucking talking about.
But that would be unproductive. So let’s “explainer the news.”
You hopefully know, at a bare minimum, that the Trans-Pacific Partnership is a free-trade deal between the U.S. and various Asian and Pacific Rim nations. The Obama administration wants Congress to approve it with a straight up-or-down vote. Conservatives, who hate Obama, and left-leaning Democrats, who hate the unchecked political power of multinational corporations, don’t like TPP.
Today, the president made an unexpected last-ditch effort to woo progressives to his side, bringing Labor Secretary Thomas Perez along for a closed-door meeting with House Democrats. (This after months spent publicly insulting and dismissing left-leaning critics as, at best, ill-informed, and, at worst, dishonest.) The House Progressive Caucus was... less than impressed:
Now President Obama wants to talk?June 12, 2015
Today’s House vote was about “fast-track.” Fast-track ensures that the final deal will get a straight up-or-down vote in Congress, without amendments or alterations. It also gives the president (and his successor) a six-year window in which all trade deals get the same treatment — no amending, just approval or disapproval. The argument for fast-track is that in a negotiation with multiple foreign parties, those parties need to feel confident that American negotiators have the authority and political ability to deliver what they promise.
This isn’t a ridiculous thing to ask for. Think of the Iran nuclear negotiations, where American conservatives and Iranian hardliners both take the same position: it doesn’t matter what Obama promises because the Republicans will shred the deal, whatever it is, the first chance they get. In an actually functional political system, it might make sense to support fast-track but oppose the TPP itself.
This is not that world, and since opposing fast-track could sink the TPP completely, pro-labor Democrats are opposing fast-track.
Today’s vote was a bit more complicated than that, because Congressional procedure and tradition are stupid. House Republicans tied fast-track — something most Republicans support — to “TAA,” legislation that offers a bit of public assistance to workers harmed by free trade agreements — something most Democrats support. Fast-track approval could only happen if TAA passes. The idea was that Democrats get to vote for TAA and against fast-track, and Republicans get to do the opposite, and fast-track happens without either side casting votes that will get them in trouble with their bases. This is a pretty standard way of doing business in Congress, and President Obama’s case today was that Democrats should vote for TAA even if they oppose fast-track, because they do approve of what TAA does on its own. For once, no one was convinced.
For Rep. Charlie Rangel (D-N.Y.) and others there’s nothing crooked about opposing TAA, if it accomplishes the goal of killing fast track.
“If you’re against TPA and you believe that TAA is going to allow it a better chance to pass, from a legislative point of view, that’s playing it straight. So in a sense, he was saying he didn’t mind people opposed to him, but play it straight,” Rangel said. “And some people were offended that he was challenging their integrity as it relates to TAA. But if a piece of chocolate is going to make you feel good, but it’s got a poison pill in it, I don’t see why you can say that the chocolate is good by itself.”
Just before the TAA vote, Nancy Pelosi herself — a pretty reliable promoter of the party line — announced that she’d be opposing TAA, making it officially acceptable for House Democrats to turn on the president. And they did, with a flood of “no” votes coming after it was apparent that TAA was doomed. House Republicans went on to vote for fast-track, but that was meaningless symbolism — their own rule meant that fast-track was dependent on TAA passing.
Now is the part where I have to make up another “question” to “explainer.”
OK so why do some, but not all, Democrats support TPP (an idiot asks) (j/k you’re great you’re just too busy to keep up with all this complicated political stuff!)?
The TPP will be, broadly, good for business, and most elite Washington Democrats do genuinely believe that what’s good for business is good for America (and the world). What has made the TPP debate a bit frustrating is how those Democrats (including the president) have simply refused to seriously engage with arguments to the contrary. As usual, these Democratic elites are shocked and personally offended that they actually have to justify and explain their policy priorities to their left-leaning cohorts.
When they recover from that shock, the liberal pro-TPP argument goes something like this: There are stronger labor and environmental protections in this deal than in any previous deal. If we don’t dominate these markets, China will, and they care even less about labor standards and environmental protection than we do. And finally, TPP’s effect on American jobs will be minimal. It’s not NAFTA, because NAFTA already happened.
That last point is actually true! Any domestic job losses and wage-suppression that TPP causes (and, remember, one major point of free trade deals is to make labor cheaper, so it will cause those things) will be minimal, because the worst has already happened. The American manufacturing base is already totally eroded — we can’t lose millions of jobs we don’t have — and wages have been stagnant for decades. Ain’t no turning back now!
That point also serves to undermine one of the foundational arguments in favor of the deal, which is that free trade deals grow the American economy. The thing is, trade is already extremely free. That battle was already won. Here’s Simon Johnson on the best-case scenario for the TPP:
The best pro-TPP research is by Peter A. Petri, Michael G. Plummer, and Fan Zhai (see this helpful webpage). Until recently, the TPP discussions did not include Japan, and in that scenario US income gains would have been at most only $23 billion per annum in 2025 – a tiny increase (0.1 percent) relative to what will be a $20 trillion economy, precisely because we have extensive free trade agreements with those 10 countries already.
Now that Japan is likely to participate, this creates a further potential $17.6 billion of income gains for the US through trade in 2025. But it remains very unclear to what extent Japan will really liberalize, for example by reducing the non-tariff barriers that make it hard to sell US-made autos there, so such gains may prove elusive.
It is also safe to predict that the vast majority of those projected gains, if they actually do materialize, will flow straight to the top, as income gains from previous trade deals have tended to do.
The argument TPP advocates think ought to be most compelling is one that should be familiar to critics of the president’s immigration and healthcare policies: That a trade deal negotiated under this president, even if it’s not perfect, is going to be far better than one negotiated under a future Republican president (or perhaps even one negotiated under a future Clinton president). According to this line of thought, something like the TPP is inevitable, free trade always wins out, the neoliberal consensus is unshakable, and you’d rather have Obama negotiating this deal than Jeb Bush or (god help us) Scott Walker.
As with all political arguments, there are smarter and dumber versions of it. For an example of the latter, see Jonathan Capehart’s Washington Post column today. The thesis is that the left should trust Obama on this because he is good and would never do bad things, because he’s good so why would he???
And, sure. An Obama-negotiated TPP is going to be less bad than a deal negotiated under a GOP president. That’s a good argument for opposing that deal, too, if it ever comes up.
One more pretend-question, posed in a condescending faux-casual “friendly” style, from my imaginary and deeply lazy interlocutor:
Tell me why to hate TPP?
There are two elements of the deal that are — or should be — poison pills to any left-leaning Democrat: Intellectual property protectionism and investor-to-state dispute settlement.
For a “free trade” bill, the TPP is going to include a lot of protectionism. All available evidence shows that American negotiators seek to make our (incredibly stringent) copyright and trademark standards the norm for all of our trading partners. For fans of free culture, this is an annoyance; instead of reforming our terrible copyright laws, we’re exporting them. For fans of not dying from treatable diseases because pharmaceutical companies use government-granted monopolies on treatments to keep prices ridiculously high, the deal is likely to be a disaster. This is why Doctors Without Borders is among the groups opposing TPP.
The biggest pharmaceutical issue at play is data exclusivity for a class of drugs called “biologics.” Brookings has a useful factual summary of what that means. Basically, for these drugs, current U.S. law gives a pharmaceutical company a 12-year window during which the FDA cannot approve any generic alternative developed using the protected drug’s clinical trial data. This generally means that during those 12 years, generics aren’t just not approved, they’re not even developed. The industry seeks to make that 12-year window the norm among all our trading partners. As Brookings says: “For the 11 countries besides the U.S. that are involved in the TPP, current data exclusivity protections range from zero (Brunei) to eight years (Japan).” The idea is that if they get 12 years in this deal, they’ll be able to push for 12 years with all our other trading partners, too.
The White House and its supporters have not come close to justifying this to anyone who doesn’t already believe that ensuring pharmaceutical company profits is inherently good. This is the best the Washington Post editorial board can do on exclusivity:
The United States already has free-trade agreements, including chapters on pharmaceuticals, with several of the TPP countries (Australia, Canada, New Zealand, Peru, Chile, Mexico and Singapore), so the additional integration under the new deal would not change the status quo dramatically. It’s true that, as critics say, President Obama’s trade negotiators are shooting for the 12 years of data protection, and higher prices that come with it, that developers of cutting-edge biologic medicines enjoy under U.S. law. They’re unlikely to get it, because the maximum term in the other TPP countries is eight years. A compromise is already under discussion that would finesse the issue while allowing the only truly poor TPP country, Vietnam, quicker access to cheaper “bio-similar” versions of the drugs.
In other words: (1) It won’t be worse than the status quo, even though (2) Obama is trying to make it worse than the status quo, but (3) he probably will fail, and even if he doesn’t (4) there will be one carve-out for one poor country. (Maybe! We actually don’t and can’t know any of the final details.) You can see why the left has not been terribly receptive to the entreaties of trade advocates.
Nearly every leaked document has shown the Obama administration pushing a pro-pharmaceutical company agenda, trying its hardest to undermine foreign regulation of drug prices and marketing. The best argument supporters have made thus far is not that the Obama administration is pushing to make the deal more progressive, but that the administration’s attempts to make it worse are likely to be opposed by other nations.
The protectionism is maddening. The Investor-State Dispute Settlement provision is genuinely alarming. Here’s one definition of ISDS, from Rachel Wellhausen, an academic at the University of Texas-Austin:
ISDS, or Investor-State Dispute Settlement, is the international system whereby multinational corporations (MNCs) can sue the governments of countries in which they invest for violating their property rights. International treaties give MNCs access to ISDS, under which ad hoc international tribunals decide whether or not an MNC deserves compensation. There is no appeals system in place.
In other words, ISDS is how multinational corporations can fight regulations they don’t like in foreign countries by appealing to private tribunals accountable to no voters or citizens. Under ISDS, corporations already regularly bring cases against governments for interfering with trade by banning toxic additives, regulating tobacco marketing, invalidating drug patents, and nationalizing exploitative factories and plants. If the tribunals rule in favor of the corporations — which they frequently do — they impose financial penalties, often quite large, against the governments. No one other than multinational corporations has access to this process; there’s nothing similar for labor law violations, for example. It is effectively an attack on sovereignty by the forces of international investment.
When critics like Joe Stiglitz and Elizabeth Warren have mentioned this, Obama has responded by saying that they can’t know what the details of the secretly negotiated agreement, and that this deal has finally solved all the problems with ISDS, but you can’t know how exactly you just have to trust him, they fixed it. Again, this hasn’t won him many new admirers.
Still, most observers have tended to believe that liberals would cave, or lose, and free trade would win out, mainly because it always does. During the Obama era, labor, still one of the most important parts of the Democratic coalition, has been consistently unable to push Democratic leadership to address its demands, because they have no leverage. Democrats have had no reason to fear that union money would begin going to Republicans instead, whereas the finance and industry money Democrats also depend on is much less likely to remain loyal.
This time, though, the AFL-CIO said fuck it and began issuing credible threats, from freezing donations to promising to fund primary challenges and run attack ads against Democratic candidates in the next general election. (Labor’s courage is strengthened by the comforting fact that we’re still more than a year away from the next presidential and Congressional elections.)
What is still unexplained, and perhaps unexplainable, is precisely why President Obama is expending so much time, effort, and political capital on this particular deal. His second term has been about doing what he can to establish a legacy without necessitating any assistance from Congress, but a trade deal is not exactly legacy-securing stuff.
There will probably be a TAA re-vote next week. So, still plenty of time for Democrats to cave.
Let’s wrap things up:
Are there any bad memes about the TPP?
Consider yourself explainered-to.
Top photo: A banner flown over Manhattan this January by Doctors Without Borders/via Getty Images