Why ‘Fast Track’ Was Defeated Once — and Why That Was the Right Decision | Commentary
With the effective defeat of the initial vote on the trade bill package, advocates of the trade agreement are making a herculean last gasp effort to get the bill passed on a re-vote. They are castigating opponents as Luddites who favor a new isolationism, diminishing the influence of the U.S. in the world. They claim the bill is a job creator. None of this is true.
The most important objection to the bill is the very reason the administration wants it: Once fast-track authority is passed, it becomes difficult (though not impossible) to defeat any trade agreement the administration cajoles our “partners” into signing. It is like giving free rein to the president’s Office of the U.S. Trade Representative — long a revolving door between government and big business, now seeking more political insulation from Congress — to negotiate deals that would fundamentally rewrite the rules of how our economy works.
We know what kind of deal the USTR will broker, and it would not be good for the country as a whole. It takes time to craft a good agreement — and it will take an open and democratic process, one in which all parts of our society participate. Anyone committed to democratic processes should be uncomfortable with the secrecy surrounding the negotiations. The rules of trade determine who benefits from it, and the rules written in trade deals depend on whose voices are part of the bargain. The USTR argues negotiations must be done in secret to win as much for our side, and give as little to the other side as possible. But the true reason for the secrecy is quite different: It is that, on balance, the provisions enrich corporations at the expense of the rest of society. As written now, the proposed trade agreement risks increasing inequality and heightening job and family-income insecurity at a time when true unemployment remains staggering and America’s inequality has already grown out of bounds. The primary reason it has grown out of bounds is that the rules of the game have already been written to favor corporate interests at the expense of the rest and the economy overall.
As the Roosevelt Institute emphasized in our report last month, to reduce inequality we need to rewrite the rules. In these trade agreements, the USTR is rewriting the rules, but in ways that make matters worse. There is scope for a good trade agreement, but it won’t emerge if we pass fast-track authority and let the USTR loose to negotiate on “our” supposed behalf.
From leaked documents and conversations with other countries — where officials are more open and democratic about this than the U.S. — it is clear the trade agreements we are negotiating have little to do with creating jobs or raising wages. Indeed, the claim that these agreements would increase employment and wages is just wrong. There is an intellectual inconsistency in the USTR’s out-of-date economic analyses of TPP’s benefits: The argument for trade liberalization assumes the economy will always be at full employment, so trade agreements simply couldn’t increase employment. In today’s real world, unemployment is high; exports would increase jobs, but not as fast as imports would destroy them, even under reasonably balanced trade.
Here’s what the agreements are really about: Tipping the balance of power further in the direction of corporate interests. They are about increasing the profits of some firms at the expense of others—for example, Big Pharma versus the producers of generics. Those corporate profits would come at the expense of the well-being of most others. The most odious provisions restrict regulations — and not just discriminatory regulations — thereby threatening protections for workers, consumers and the environment. Other provisions would make generic drugs less accessible and raise drug prices — ironic given that President Barack Obama has made access to better health care his signature domestic achievement.
Proponents argue these agreements bolster our international standing. The USTR’s approach does the opposite. It makes enemies and induces resentment — not just now, but for years to come. What we need to do is to engage in open and transparent discussion, not only with all elements of American society but also with those of our partners. Treating them as true partners, rather than as geo-strategic pawns, would get us farther than the USTR’s approach. This is what government negotiators, elected officials and civil society leaders from our “partner” nations would like.
The president has said the issue before us is who will make the trade rules for the 21st century. He argues the choice is between China and us. Besides being globally offensive, this misses the key point that trade rules should not be made in secret to serve corporate interests.
This is not the time for passing Trade Promotion Authority. This is the time for constructive engagement at home and abroad. Democracy may sometimes seem slow, but its outcomes are more durable, and serve more people in the end.
Joseph E. Stiglitz is the chief economist at The Roosevelt Institute.