Free Trade and Economic

Centralization:
The TPP and TTIP
 
by Alex Jackimovicz
One of the main issues confronting the world today, facing leaders and those who
shape and control economic policy, is how to increase the economic livelihood of all
citizens, how to increase “growth”, how to create jobs, and how to utilize trade to
increase jobs.  In the minds of policy leaders around the world, the question of how
trade should be structured to improve the economy has been mostly answered.
Increasing exports and imports creates jobs and spurs “growth”. But is this really true,
and at what price? Who really benefits?

P.R. Sarkar, in his lectures on decentralized economy, side-steps and counters the
usual questions of economic growth. In particular, he asserts that international and
national economies, as well, just need an adjustment to be better suited to meet the
needs of all. According to Sarkar, it’s not just a redistribution of wealth in the welfare
state that will guarantee minimum necessities for all.  Focusing only on reform to lessen
the pain of economic inequality for the masses isn’t the requirement of the day. Reform
doesn’t lead to economic liberation and self-sufficiency, or put an end to exploitation.
The problem is deeper. As he puts it, the main issue is not the health of the economy
and whether it is serving the needs of the people. Nor is it “whether economic
exploitation has been eradicated and the common people have been guaranteed ever
increasing purchasing capacity. The fact is that in a centralized economy there is no
possibility that economic exploitation can ever be eradicated or that the economic
problems of the common people can ever be permanently solved."[i]
 
Not a Level Playing Field
The problem with the centralization of the international economy is that centralized
production leads to further monopolization of control and leverage over the economy. A
handful of people make nearly all of the important economic decisions for whole nations
even as they increasingly accumulate incredible levels of wealth to the detriment of the
general population. According to Oxfam, “Just 80 people now own as much wealth as
half the world's population, while nearly a billion people can barely afford to feed their
families. And inequality is rising: the combined wealth of the richest 1 per cent will
overtake that of the other 99 per cent of people next year unless the current trend is
checked.”[ii]
 
In our current economic system, international “investors” and major corporations have
increased their monopoly power over economic decisions by controlling the democratic
processes of national governments and undermining the potential of political democracy
—the rule of the people. The policies of economic growth and productivity are mostly
seen through the lens of economic centralization and consolidation. And this is
expedited by liberalized trade policies that reduces barriers for import and export. 
 

One of the major components of this trend towards concentrating wealth and economic
power are trade agreements. These international treaties allow corporations greater
access to foreign markets for selling their goods and services by lowering trade barriers.
They also allow centers of production to be shifted quickly, allowing increased capital
mobility. Companies shift production to places with weaker labor standards, cheaper
labor, and lower environmental regulations.  The result has been a global ‘race to the
bottom’, with developing nations forced to buy into the global economy—sold on the
promise of economic development, greater jobs and profits through increased trade. 
 
Trade for Corporate Profits
One of the major trade deals currently being negotiated secretly—a massive agreement
affecting nearly 40% of the world’s economy—is the proposed Trans Pacific
Partnership (TPP).  Interestingly, in addition to falling in the vein of other trade
agreements where local jobs will certainly be outsourced as capital moves to more
profitable areas, the TPP is really a major investors’ rights agreement.
 
Twenty-six of the 28 chapters of this agreement have nothing to do with trade. TPP was
drafted with the oversight of 600 representatives of multinational corporations, who
essentially are awarding themselves whatever they want: new ground rules for
environmental and public health protection, worker safety, and further off-shoring of
what was once a domestic workforce.[iii]
 
Negotiated with almost absolute secrecy, its effects undermine the democratic decision-
making of national laws in each of the twelve signatory nations (so far) proposing to sign
on to it. David Korten talks about its impact just on the USA:

TPP provisions will likely have significant implications for nearly every aspect of
American life—including intellectual property rights, labor and environmental
protections, consumer safety and product labeling, government procurement, and
national resource management….And oncethe agreement is approved, its provisions
will trump national and local laws.”… [It] “will not be subject to review or revision by any
national legislative or judicial body—including, for instance, the US Supreme Court.[iv]

Most disturbingly, the TPP aims to set up a system of independent, extra-governmental

secret tribunals to allow corporations the right to sue for losses from ‘expected future
profits’ where the business profits could be hurt by environmental or regulatory
standards which rise above an accepted standard for all signatory nations--except as
they pertain to ‘investor rights’. “TPP would allow plunder of our natural resources by
foreign corporations allowed to bypass US law. Disputes over Western land contracts
for mining and timber, for example, would be settled by international tribunals.”[v]
 
In short, leaked documents of the TPP suggest that it will make it a lot easier to sue for
profits lost.
 
Comprised of three private attorneys, the extrajudicial tribunals are authorized to order
unlimited sums of taxpayer compensation for health, environmental, financial and other
public interest policies seen as frustrating the corporations' expectations. The amount is
based on the "expected future profits" the tribunal surmises that the corporation would
have earned in the absence of the public policy it is attacking. There is no outside
appeal.”[vi]
There are currently about 500 cases of corporations versus national or local
governments, and the ad hoc ‘arbitration tribunals’ overwhelmingly favor the corporate
over local interests. The TPP would greatly expand the ability of corporations to sue,
likely resulting in an explosion of litigation.
 
Similarly, the Transatlantic Trade and Investment Partnership (TTIP)—which is a re-
branding of the Trans-Atlantic Free Trade Agreement (TAFTA), is a proposed bi-
lateral secret trade negotiation between the EU and US. TTIP would require all signees
to adapt their national regulations to TTIP standards. Like the TPP, the TTIP “is about
reducing the regulatory barriers to trade for big business, things like food safety law,
environmental legislation, banking regulations and the sovereign powers of individual
nations. It is, as John Hilary, Executive Director of campaign group “War on Want”,
said: “An assault on European and US societies by transnational corporations.”[vii]
 

The TTIP aims to open up Europe’s “public health, education and water services to US
companies.”[viii] It could mean the privatization of European public healthcare systems,
including the NHS in the UK. As a Free Trade Zone, standards on food and safety would
be systematized across the board with European protections for food and the
environment being downgraded to US standards. GM foods virtually not allowed by the
EU makeup as much as 70 percent of US food.  The US has many fewer restrictions on
the use of pesticides and the use of growth hormones as well—both linked to increased
rates of cancer. Restrictions on US imported food would be reduced.
 
Conversely with the TTIP, the US, which has relatively stronger banking regulations than
Europe, could see a loosening. The TTIP will likely lift those restrictions on speculation.
As with the TTP, unemployment in the EU is likely to rise as jobs shift to the US where
there are weaker trade unions and lower labor standards. Also similar to the TPP, the
TTIP would introduce Investor-State Dispute Settlements (ISDS), which expand the
right of companies to sue governments over ‘expected future profits’. Here again,
unelected corporate lawyers would circumvent national sovereignty of democratically
elected governments and change laws which impinge upon profits.
 
Article to be continued in July issue of Global Impact as: Fair Trade and Economic
Centralization part 2: De-Localization and its Malcontents

Alex Jackimovicz is an activist from Maine who works with the Maine Fair Trade
Campaign that collaborates with a national campaign to stop trade agreements like the
TPP and the TTIP which threaten domestic jobs and the environment. 

[i] Sarkar, P.R., “Decentralized Economy – 1.” 1982. Proutist Economics: Discourses on
Economic Liberation. Kolkata: Ananda Marga Publications, 1992.
[ii] "Inequality and Poverty." Oxfam. Oxfam, 2015. Web. 3 Apr. 2015.
[iii] Moench, Brian. "Death by Corporation: America's Corporate Deathstar." Truthout.
Truthout, 13 Aug. 2013. Web. 5 Apr. 2015.
[iv] Korten, David. "Do Corporations Really Need More Rights? Why Fast Track for the
TPP Is a Bad Idea." YES! Magazine. 9 Mar. 2015. Web. 5 Apr. 2015.
[v] Ibid, Brian Moench.
[vi] "Investor-State Attacks: Empowering Foreign Corporations to Bypass Our Courts,
Challenge Basic Protections." Investor-State System. Public Citizen, 2015. Web. 5 Apr.
2015.
[vii] Williams, Lee. "What Is TTIP? And Six Reasons Why the Answer Should Scare
You." The Independent. Independent Digital News and Media, 7 Oct. 2014. Web. 5 Apr.
2015.
[viii] Ibid. Lee Williams.