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  • Obama Pushes NAFTA-Style Trade Policy Despite 2008 Promise

    Timothy A. Wise: US pushing Trans-Pacific Partnership trade agreement without key reforms -   September 15, 2011
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    Timothy A. Wise directs the Policy Research Program at the Global Development and Environment Institute at Tufts University. Currently on an Open Society Institute fellowship, his current research priorities include: the global food crisis; trade and agricultural development; food security and climate change; biofuels and hunger; financial speculation in agricultural commodities markets. He is the former executive director of Grassroots International, a Boston-based international aid organization. He holds a Masters in Public Policy from Tufts’ Urban and Environmental Policy and Planning Department.


    Obama Pushes NAFTA-Style Trade Policy Despite 2008 PromisePAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay, coming to you today from Toronto. President Obama has made a major part of his jobs strategy expanding American exports, and that includes new free trade agreements. One of those agreements is the Trans-Pacific Partnership. Here's what President Obama said about future trade agreements when he was running for president. He said--this is in 2008--I voted against the CAFTA--that's the Central American Free Trade Agreement--never supported NAFTA, and will not support NAFTA-style trade agreements in the future. While NAFTA gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection. So are the new trade agreements that President Obama is planning going to be better than NAFTA? Now joining us to deconstruct all of this is Timothy A. Wise. Timothy is director of the Research and Policy Program at the Global Development and Environment Institute at Tufts University and leads its Globalization and Sustainable Development Program. Thanks very much for joining us, Tim.


    JAY: So tell me, do you think this new--the Trans-Pacific Partnership agreement, as it seems to be panning out, is this really going to be an improvement over NAFTA?

    WISE: No, I really don't think is. In fact, while the text has not been fully released of the US proposals--and that's one of the criticisms of the process is that it's really lacked transparency--what we've gathered from the information we have about the US proposals is that it's very much off of the NAFTA template, making a lot of the same mistakes that that agreement did, and it actually takes some significant steps backwards from more recent reforms.

    JAY: So what are examples of what you're talking about?

    WISE: The NAFTA agreement was widely criticized, including by candidate Obama, for granting excessive rights to investors. That in effect means granting--opening the way for multinational firms, getting governments out of the way of interfering in the operations of multinational firms. And, unfortunately, the Trans-Pacific Partnership seems to go very much in that same direction. There have, since NAFTA, been some minor reforms to US trade agreements, mainly at the insistence in 2007 of the Democratic majority in Congress, which pressured the Bush administration to make some minor reforms to--important reforms to labor provisions, to grant greater labor protections, to environmental enforcement under these agreements, and to intellectual property rights, to allow greater access to life-saving medicines, generic medicines for developing countries. Those are important reforms, but they hardly go deep enough to reform the flaws of NAFTA.

    JAY: Now, one of the big issues that people have been critical about NAFTA and was supposedly, I think, to be corrected in future agreements was the ability of multinational companies to sue sovereign governments when sovereign governments are in theory trying to defend the interests of their population. How is that going to be dealt with?

    WISE: By all indications, the United States government's taking a very hard line in the Trans-Pacific Partnership negotiations on some of these provisions. This is even more surprising because the United States has bilateral trade agreements with a number of the members of the Trans-Pacific Partnership, including Australia. And the Australia free trade agreement with the United States does not include this so-called investor-state provision, which allows investors who feel wronged by government actions, feel their process has been impeded by government actions--it doesn't have that provision, so investors can't sue. The Australian government has actually said explicitly that it will not sign a TPP (a Trans-Pacific Partnership Agreement) that has those provisions in it. And yet the United States continues to insist on those provisions over and above the insistence of the recommendations of a State Department panel, members of a State Department panel that the Obama administration actually commissioned to study US investment proposals in trade agreements.

    JAY: One of the other big issues facing lot of developing countries is the issue of food sovereignty and some ability to have a strategy for food that isn't completely dependent on a global market that's increasingly owned by fewer and fewer companies, a lot of which are hoarding, and then, of course, the role of speculation as it affects food prices. Is this agreement going to allow any kind of room for that kind of sovereignty?

    WISE: Well, not really. And I think the--one of the great failures of NAFTA was Mexico throwing itself wide open to US corn exports. And that's had a dramatic impact not only on Mexico's food sovereignty and food independence, but also on its labor, because--and employment, because so many people are employed in that area. Interestingly, the Korea agreement, which is [incompr.] trade agreements that come from the Bush era that have been reformed in minor ways and which the Obama administration is now pushing heavily, the agreement with Korea, with Colombia, and with Panama. Those are expected to come up in the--very soon in Congress. And, interestingly, the Korea agreement does not open up the rice market, at the insistence of the Korean government. I would have loved to have seen the Obama administration reflecting a position that understood what is now widely understood (and even in the World Trade Organization), that food crops are--live in their own special category, and some need special protection if they have a particularly important role in food security or in rural livelihoods. But there's no such flexibility suggested by the Obama administration's position in these negotiations.

    JAY: The other issue that seems to be very contentious is the ability of countries to control speculative flows of capital. What is this issue, and how is this being dealt with by American policy?

    WISE: I don't know that those are so directly relevant to the Trans-Pacific Partnership negotiations, but I think what is relevant to the Trans-Pacific Partnership negotiations are negotiations on the services sections of the agreement. This is a liberalization of services and investment that essentially opens the door for US financial firms to operate more freely in these countries. These are, of course, some of the same the multinational firms that brought us the financial crisis in the first place. But there are also serious limitations placed by the US proposals on the ability of foreign governments to control the flows, in and out, of hot money during a speculative crisis like we saw in the financial crisis. It's widely recognized and accepted now in the economics profession, even at the International Monetary Fund, that such capital control regulations are appropriate in a financial crisis, and yet the US position continues to reflect a very 20th-century vision of capital control management and the rights of governments to manage their economies in a crisis.

    JAY: You mentioned earlier in the interview the issue of intellectual property rights. Why is that so important?

    WISE: One of the concessions that the Obama administration made--or that the Bush administration made under pressure from Congress and that has been incorporated into the US-Peru free trade agreement which was passed--it's in the Colombia agreement; it's also in the Panama agreement--is a recognition that extended patent protection for US multinational pharmaceutical firms on life-saving medicines actually creates serious impediments to access to affordable medicines for developing-country governments. And so there's been a lot of pressure internationally to relax such patent protections for life-saving drugs. And the United States, as part of its--part of those reforms that were made at the behest of the Democrats in Congress, actually granted greater concessions in that area. By all accounts, in the Trans-Pacific Partnership negotiations, the administration has abandoned those reforms and is actually back to proposing extended protections for pharmaceutical companies in the--it actually abandoned those provisions for the agreement with Korea. So this is one of the areas where we see a real step backwards on the part of the Obama administration from previous attempts to improve on the NAFTA model.

    JAY: So what are a few key things you'd like to see in this TPP agreement and other future trade agreements that you're not seeing?

    WISE: We were part of a--my colleague here at Tufts Kevin Gallagher and I were part of a task force on North American trade policy that really decided to take on the administration's promise to reform NAFTA. And we said, well, so what have been the real flaws of NAFTA? That effort brought together eight experts from North American countries on different provisions of NAFTA, and [we] came up with a set of very detailed proposals for how one would need to reform NAFTA to make it more friendly to development, international development, and [crosstalk]

    JAY: We'll put a link to your proposals underneath the video player, down here somewhere. But what are just a few of the highlights?

    WISE: Well, in the--you've touched on a few of them. In the area of investment, there would need to be provisions to allow governments to manage hot money flows in and out. There would need to be elimination of--.

    JAY: Let's just remind people what hot money is. If I understand it correctly, this has to do with the carry trade. [incompr.] American banks are getting practically free money from the Fed, and then they go and take it to a place like Brazil, earn, what, 3, 4, 5 percent on the money, and that starts jacking up the value of Brazilian currency, which starts in a kind of inflationary spiral in Brazil. Do I have it more or less right?

    WISE: Right. And governments in fact are very actively managing their capitals--their capital flows. They are enacting capital controls. And so it's a position on the part of the Obama administration that's very out of step with the times, I think. But beyond that, there are important provisions related to services, which I've touched on. The opening of financial services creates particular risks for developing countries. And in the area that I work the most on, in agriculture, there really are no protections for food security, and that relates in great part to the government's ability to continue playing a role in protecting key food-producing sectors and managing the trade in key food crops.

    JAY: So this would mean not, for example, Mexico having to open up its agriculture to American cheap corn. They could in theory--you're saying the country should have the right to protect their own agricultural base.

    WISE: In designated key food crops at the very least.

    JAY: Thanks very much for joining us, Tim.

    WISE: My pleasure. Thank you.

    JAY: Thank you for joining us on The Real News Network.

    End of Transcript

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