Labor Advisory Committee Report on TPP Synthesizes Everything Wrong About the Trade Deal

December 19, 2015
By David Dayen
naked capitalism (December 14, 2015)

On behalf of the millions of working people we represent, we believe that the TPP is unbalanced in its provisions, skewing benefits to economic elites while leaving workers to bear the brunt of the TPP’s downside. The TPP is likely to harm the U.S. economy, cost jobs, and lower wages.

The U.S. Trade Representative’s Office has been maligned for its network of Trade Advisory Committees, allegedly “independent” counsel for trade agreements. The Washington Post did the best work on the Advisory Committees back in February of last year, showing that 85 percent of the cleared advisors (meaning cleared to read the text of trade agreements as they are being negotiated) either worked directly for private industries or their trade groups.
But there’s another, more obscure group called the Labor Advisory Committee. Its 19 members are all the heads of major labor unions (Clayola Brown, president of the A. Phillip Randolph Institute, I guess technically isn’t, but that organization is a constituency group of the AFL-CIO). And like all Advisory Committees, they are required by law to write a report to Congress expressing their opinions about any finalized trade agreement. That means we now have this 121-page document, giving labor’s full argument against the TPP, from the people who have been following it from the inside for several years.
This was an argument that labor’s cleared advisors have been prevented from making. Because of the secretive nature of trade talks, those opposed to the deal fight with one hand tied behind their backs, unable to speak about what they knew about the agreement. And they are at the mercy of USTR’s deliberate, dissent-crushing rules.
According to the report, USTR and the Department of Labor “refused to share the specific text of proposed changes to the labor chapter” for over three years, until the text was substantially complete in August 2015. The Committee was never consulted on side agreements with Vietnam, Malaysia, and Brunei, which deal entirely with those countries’ labor laws. The Committee believes this actually violated the law, but who would enforce it?
Despite being kept somewhat in the dark, the Committee released an “interim report” to USTR, based on what they knew, in April, and asked Congress to request a copy. The Administration blocked the report because they claimed the Committee didn’t follow the Federal Advisory Commission Act, because under the law, committee chairmen cannot call their own meeting, and the report was written under those auspices. Twenty-one Democratic Senators appealed to U.S. Trade Rep Michael Froman to release the report, but he refused.
That depressing but predictable bit of obstruction is over now, and we have labor’s side of the story. It gets off to quite a start in the first words of the executive summary:

	On behalf of the millions of working people we represent, we believe that the TPP is unbalanced in its provisions, skewing benefits to economic elites while leaving workers to bear the brunt of the TPP’s downside. The TPP is likely to harm the U.S. economy, cost jobs, and lower wages.

Not really anywhere to go from there!
This document puts all of the arguments against TPP in one accessible, readable place, and if you’re interested in really understanding what this agreement would do, this is a great place to start. I hasten to summarize such a dense document, but I wanted to highlight some things that I specifically learned:
• The report is supposed to answer whether the TPP advanced the negotiating objectives provided for in this year’s fast track law passed by Congress. The Committee rejects the premise. “Many of the negotiating objectives are so vague that meaningful analysis is nearly impossible. Other objectives are quite literally antithetical to U.S. worker interests.”
• There’s a special process in the rules of origin chapter called “hybrid deemed originating” that would allow a far lower standard of percentages of goods to be made in TPP countries than they already low standard embedded in the agreement, especially for autos and auto parts. Effectively that standard includes NO threshold percentage, making this even more of a boon for China, which is already integrated into every TPP member’s supply chain, than I initially thought.
• USTR has made much out of the fact that TPP has a first-ever chapter on state-owned enterprises. But every subsidy and support already provided to SOEs before TPP is implemented gets grandfathered in. Furthermore it allows nations to exempt some of their SOEs from coverage. The combination of these factors makes the SOE chapter almost meaningless.
• “Acceptable conditions” on labor issues like the minimum wage, hours per week and workplace safety are “as determined” by member countries, which means that Vietnam could make a minimum wage of 1 cent a day and have that be OK by the language of the agreement. The deal also only requires parties to “discourage” trade in goods made with forced labor.
• The side letter with Vietnam allows them five years to comply with TPP rules, while getting the benefits of the agreement immediately. This is a direct violation of the benchmark “May 10” agreement between Congress and the Bush White House, which stipulated that member nations had to reach compliance first, before even a Congressional vote on the trade deal.
• Not only do procurement rules knock out federal “Buy American” laws by forcing TPP member countries at chance at the bid, but it requires that parties expand that to the sub-national level within three years, putting state “Buy American” laws at risk.
• The IP chapter allows for “evergreening” of prescription drugs, a scam whereby corporations can extend their patents for 20 years simply by tweaking the formulary slightly or finding a new use for an old drug.
• They caught the doublespeak of how the agreement puts up all sorts of safeguards on ISDS, as long as they are “consistent with the Investment Chapter.” The Committee rightly calls this a “legal nullity” – it’s saying that things like public health or prudential regulation will be protected from the Investment Chapter, as long as it’s in line with the Investment Chapter.
• The Committee asked for a rewrite of the boilerplate “prudential exception” to allow member nations to take action on financial regulations without the deterrent effect of legal challenges by the private sector. In the end, the prudential exception is exactly the same as the ineffective language in the Peru Free Trade Agreement. Financial services firms actually get new powers to make ISDS challenges under TPP.
• There’s a specific highlight on call centers, which comprises 4 percent of the entire U.S. workforce. The Committee notes three incentives to outsource what’s left of call center jobs, including data localization measures which allow cross-border transfer of personal information and forbid nations from requiring local computing sources.
• TPP provides three separate rounds of consultations before a violation of the Environment Chapter can even be brought to a dispute resolution. Every other obligation requires only one consultation round. TPP also does not require all parties to adopt and implement obligations under six multilateral environmental agreements.
• The report hits the wishy-washy language, especially in the Environment Chapter, which obligates countries to “strive to act consistently” on conservation, or “endeavor not to undermine” fisheries. You could not set up a dispute resolution on whether or not a country “strives” or “endeavors.”
• Even though the report focuses on countries with particularly bad labor records (Brunei, Malaysia, Mexico, Vietnam, etc.), it posts an interesting 2010 letter from AFL-CIO president Rich Trumka to New Zealand Trade Minister Tim Groser, showing that the country amended their own labor laws to attract the production of the Lord of the Rings movies, by classifying every employee on that production as an independent contractor. This violates International Labor Organization rules and even every free trade agreement since NAFTA. So it’s not just the “bad seed” countries that take advantage.
• Under current “dock-on” rules, if another country wants to join TPP, Congress would not get a vote on allowing that.
There’s more here, on investment, public services, air transport, agriculture and more. The upshot is that TPP recapitulates the shortfalls of past trade agreements, failing to “break the elite stranglehold on trade policy and put working families front and center.” The report predicts hundreds of thousands of lost jobs and an advance for “the interests of global corporations rather than the national interest.”
TPP may actually be on life support right now, after Mitch McConnell said it had no shot of passing Congress before the 2016 elections. That’s mainly because it doesn’t roll out the red carpet for corporations enough for his liking. But if you want to know what a left-wing critique of TPP looks like, this report is a great place to start.
David Dayen, a lapsed blogger and author of Chain of Title, to be released May 2016. Follow him on Twitter @ddayen.




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