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The Big Lies About Free Trade Agreements

Obama Sells Out Labor and the Environment … Again

by ROB URIE

This week the Obama administration was caught hiding behind secrecy agreements to mask its role in the latest ‘free-trade’ deal, the Trans-Pacific Partnership Agreement (TPPA). The pact is designed to further shift legal and regulatory authority from governments to multi-national corporations. To state the obvious, if doing this were in the public interest there would be no need for secrecy.

The pact was originally framed as an extension of existing agreements to Asian countries. However, with Canada and Mexico brought into the open as members, it is now apparent that it goes well beyond previous trade deals. In fact, it is looking like the end game to achieve total corporate control over our lives.

To explain their need for secrecy ‘seasoned’ trade negotiators argue that special interests impede progress. Exactly what progress is being impeded is inferred in the absence of labor and environmental groups in the negotiations.

The evidence is unambiguous that trade agreements have decimated U.S. manufacturing, have driven wages down for most working Americans and have led to soaring corporate profits as corporations earn more by paying workers less. Mainstream economists attribute these effects mainly to technological innovation (computers, robotics), which is partially true but misleading.

The sleight-of-hand with technology involves the myth that computing and communications technologies resulted from lone entrepreneurs inventing computers and the Internet in their garages. In fact, these resulted first from the government’s funding of the development of computers, second from the Pentagon’s (ARPA, now DARPA) development of the internet and finally from the government’s purchase of tech goods and services from ‘private’ corporations. To a significant degree these technologies were created at public expense before being transferred to private hands.

With respect to manufacturing technologies in particular, newer technologies have largely been put into new factories overseas. This results from a confluence of factors, but with labor costs representing a relatively small proportion of overall manufacturing costs, the prevailing explanation that lower wages are behind this transition is incomplete.

International labor market competition, to the extent that it can be said to exist, is about differing institutional conditions, not labor markets per se. Assuming for the moment that workers in the U.S. and China can produce the same output using the same equipment in the same amount of time, capital goes to the country with the lowest all-in costs. Labor is one component, but the unrestricted ability to pollute is another. Government and / or corporate control over workers that prevents work stoppages and labor organizing are another. It is this total package that international capital looks for, not just the lowest wages.

Again, labor costs are a relatively small proportion of total manufacturing costs in industries that have seen outsourcing. Were corporations forced to heed strict environmental regulations and negotiate with (real) organized labor overseas, the economic incentive to out-source would be even less than it already is. It is the ability to pollute without consequence and access to pliant labor that have driven out-sourcing more than simply lower wages.

Additionally, the ability of corporations to move production overseas is being used to eliminate environmental regulations and restrict labor organization in the U.S. The argument goes that eliminating these will revive the U.S. economy. Yet with forty years of unimpeded implementation of these very policies behind us, the benefits remain elusive. This isn’t a matter of market competition. By building new factories overseas multi-nationals can get other people to pay their bills for them. By removing environmental regulations and busting unions in the U.S. these same corporations can get us to pay their bills for them.

That organized labor and environmentalists continue to support parties and policies that are diametrically opposed to their members’ interests points to opposing tensions within these groups. Decades ago U.S. labor made a deal with the devil by ousting ideological unionists (communists) in favor of ‘pragmatists’ considered less objectionable to political moderates and the right. And by shifting to corporatist organizational models the environmental movement now by-and-large promotes corporatist ‘solutions’ to environmental problems.

Pay and benefit differences between union leadership and the rank and file put the two on opposing sides of class struggle. The cooperative strategies used by labor leaders in recent decades haven’t stemmed the loss of union members, haven’t resulted in rising wages and benefits for union members, and have not slowed one iota the neo-liberal program to destroy the U.S. labor market. The question of what union leadership is being paid so much to do seems legitimate?

Likewise, corporatist environmental strategies put well-paid environmental lobbyists in luxury office towers pushing ‘market-based’ solutions that are ineffectual both in that they promote the profit system that has corporations earning higher profits the more they pollute and they provide no necessary link between polluters and those who bear the costs of pollution. Corporate polluters and profiteering environmentalists are living lives of relative prosperity while the poor in far-away lands choke and drown on pollution from which they derive no offsetting economic benefit.

The innovation reportedly in the TPPA increases corporate control over local legal and regulatory authority. For instance, under the agreement, if a local or state government passes a law requiring that genetically modified crops be identified as such, a panel of corporate representatives outside of the U.S. can overrule the law. Likewise, labor organizing rights and environmental restrictions can be banned or otherwise overridden. Without the ability to pass binding laws all governmental ability to restrict corporate behavior is removed.

The big lie at work here is that ‘free-trade’ agreements have anything to do with free trade. They are about transferring social resources to connected capitalists who will take as much as they can get. That government officials would willingly hand over their law making powers to private corporations illustrates exactly where real political power now resides. And the strategies of cooperation being used by labor unions and environmental groups haven’t even slowed, let alone reversed, this transfer of power. The choice between fighting back and giving up entirely has rarely in history been clearer.

Rob Urie is an artist and political economist in New York.