Axis of Logic
Finding Clarity in the 21st Century Mediaplex

Critical Analysis
The Real Reason Trump Tore Up the TPP
By T.J. Coles, PIPR
Submitted by Author
Thursday, Oct 26, 2017

Most working Americans never heard of the Trans-Pacific Partnership. Those that had supported the general idea of “free trade” but expressed concerns about the details. Among those who knew what it was really all about, the middle classes saw it as another nail in the coffin of their living standards. The lower classes saw it as another way of taking potential jobs away. But Trump didn’t back out of it because he cares about ordinary working Americans.
 
Big international deals like NAFTA and TPP are designed by and for the benefit of the 0.0001%s, like Trump and the147 mostly US companies that control 40% of global trade and investment. So, why would Trump want to back out of a deal that would make people like him even richer? He certainly doesn’t care about ordinary working Americans.
 
Yes, the US economy is booming under Trump, but as the Financial Times reports, 50 million Americans are not seeing the benefits. Yes, there are more jobs now, but many are very bad quality and bosses, says Bloomberg, are taking advantage of the business climate and keeping wages low.
 
The answer as to why Trump backed out of TPP is that even under Obama, who wanted to move ahead with it, many businesses—from Ford to IBM—were getting cold feet on issues like currency manipulation, value-added tax and the growing cost of offshoring. Far from being a man of the American people, Trump is merely following the wind of the business community. Let’s look at some cases:
 
Offshoring/Outsourcing: The Economist reports that American and European banks and financial institutions (which hold and/or invest the given companies’ money) have already offshored 80% of what is possible. “A second reason is that a lot of the jobs that might have been offshored by Western firms in the coming years have already been wiped out by productivity improvements. New jobs in Western economies tend to be of a more demanding, higher-level kind and are less likely to be sent abroad.” Computer Weekly says: “new technologies, such as automation software – including IBM’s very own Watson – and cloud computing, are reducing the need for high numbers of offshore staff to carry out business processes and software development.”
   
Currency manipulation: The Congressional Research Service says agribusiness cautioned against the lack of provision to protect against foreign currency manipulation, which can drive down the value of US products. The sugar and dairy industries were unenthusiastic about giving other countries access to US markets. The New York Times says that “[t]he Ford Motor Company quickly condemned the [TPP] agreement” because TPP will “not meaningfully address currency manipulation by American trading partners, like Japan.” Ford is said to have written the following statement to the US government: “To ensure the future competitiveness of American manufacturing, we recommend Congress not approve T.P.P. in its current form.” Obama’s majority-Republican Congress pressed the Democrats to include anti-currency manipulation provisions, which Obama failed to do.
   
Intellectual property: The NYT article goes on to note that US negotiators sought a 12-year gap for American pharmaceutical companies, allowing them to withhold data to protect their biology-based (“biosimilar”) products. TPP negotiators from non-US countries got the US to compromise and agree to a five-year period. This has negative implications for US big pharma, which could otherwise hold back drugs until a given competitor places a drug on the market, at which point the given US company can flood the market with its own biosimilars and kill the competition. Senate Finance Committee chair, Orrin Hatch (a Republican from Utah), said in response: “I think most people, once the [2016 election] is over … will rethink this thing [i.e., TPP].”
 
Value-added tax (VAT): Obama’s Initiative to Double Exports in Five Years 2009-2014 achieved only half its aims. VATinfo.org advocates a value-added tax on US products to put the US at a competitive advantage. MarketWatch calls VAT a hidden barrier to trade, noting that “10 of the other current TPP countries do maintain VATs (the exception is tiny Brunei) and of these, seven subject imports to the equivalent of double-digit tariffs, and hand their exporters comparable subsidies.” Before calling China (not a TPP-signatory) the “master” of VAT manipulation, the article notes that VATs can be changed with the stroke of a government pen—and frequently are.
 
In conclusion, Trump was right to back out of TPP, but for all the wrong reasons. We should be more aware of the new bilateral deals Trump is pushing for, like the ones with Japan and Australia, as they’ll be even worse than TPP.


Dr T.J. Coles is the author of President Trump, Inc. (2017, Clairview Books)