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Jan. 12, 2016

TPP Is Obama’s #1 2016 Priority: Why Only 28 Seconds in the SOTU?

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Obama only dedicated 28 seconds of his final State of the Union address to the TPP, his self-proclaimed top 2016 priority, but that beat the number of Congress people who stood to cheer for the controversial agreement.

As the cabinet fans out this week to amplify President Obama’s 2016 goals, we will see if they are ginning up support for the pact.

TPP’s prospects for passage are uncertain at best with GOP that supported Obama’s trade authority bid opposing the TPP, Democratic opposition solidifying over ire with the final TPP text on access to medicines, the environment and more, and every presidential candidate of either party with more than 10 percent support in any state also opposed.

Obama’s unexpectedly brief mention of the TPP may simply reflects that the pact is very unpopular across the political spectrum and talking about it more only makes opposition grow.

SOTU Fact Check on TPP Claims

Below are fact checks of TPP claims made by Obama in tonight’s SOTU address.

The TPP=18,000 Tax Cuts Red Herring:

The administration has tried to shift focus to a “tax cut” narrative to sell the TPP with a mantra about 18,000 tax cuts for U.S. exported goods. But last year, the United States exported goods in less than half of the 18,000 tariff categories. By using the raw number of tariff lines cut with respect to the five nations with which we do not already have FTAs (Japan, Malaysia, Vietnam, New Zealand and Brunei), the administration distracts from the real question: Do 18,000 tariff cuts equate to more U.S. exports or jobs? For the nearly 7,500 categories of goods out of the claimed 18,000 for which we did sell anything, almost 50 percent had sales under $500,000.  Many items we simply do not sell, including those that the administration claims the TPP’s weak environmental chapter will help conserve. Among the 18,000 tax cuts are Malaysia’s shark fin tariffs, Vietnam’s whale meat tariffs and Japan’s ivory tariffs. The administration’s “TPP Guide to 18,000 Tax Cuts” also bizarrely highlights goods TPP nations simply do not buy in volume from anyone. Consider the 34 percent “tax” cut by Vietnam on Alaskan caviar. In 2014, Vietnam’s per capita GDP was about $2,000, and about $150,000 worth of caviar was imported by Vietnam from anywhere. Or Vietnam’s 5 percent tariff on skis from Colorado. Vietnam imported only about $50,000 in skis in total. Other highlights: Vietnam and Japan will eliminate their tariffs on silkworm cocoons, Brunei will cut its tariff on ski boots and Vietnam will eliminate its tariff on camels. Almost 2,000 of the tariff reductions in the products we do sell won’t be realized for over a decade or more, including beef and pork to Japan.

TPP Is Not About the U.S. Writing the Rules Versus China Doing So - TPP’s Rules Are Those Demanded by its 500 Official Corporate Trade Advisers:

Trying to paint the TPP as a way for America to write the rules in Asia so that China does not is a misdirect. The TPP is not about establishing “American” rules in Asia. It’s about imposing rules that are favored by the 500 official U.S. corporate trade advisers who had a privileged role in developing the TPP. The TPP rules promote more U.S. job offshoring and would further gut the U.S. manufacturing base, even as a recent Department of Defense report warned that U.S. deindustrialization poses a threat to national security. The TPP would ban the application of Buy America procurement preferences with respect to all firms operating in TPP countries. Instead of reinvesting our tax dollars at home to build a strong national infrastructure and create economic growth and jobs at home, the TPP would require us  to give firms from the TPP nations, including Chinese state-owned-enterprise firms operating in Vietnam, equal access to U.S. government contracts. The TPP also would raise our energy prices and undermine our energy independence given we could no longer halt liquid natural gas (LNG) exports to TPP nations, including major LNG purchaser Japan. The TPP’s expanded patent and copyright monopolies would raise American health care costs and thwart innovation. And, even if you believe that TPP actually is about writing rules aimed at affecting China, who in their right mind believes that China would actually abide by those rules or that the U.S. would enforce them effectively?  Fifteen years after China joined the WTO, we’re still waiting for China to comply with the commitments they made. And we are still waiting for any U.S. administration to broadly and effectively enforce U.S. rights.

American Jobs at Risk, Not Created

The TPP includes rules that make it cheaper and less risky to offshore U.S.  jobs to low-wage nations. The pro-free trade Cato Institute calls these investor protections a subsidy on offshoring.The administration stopped claiming the TPP would create jobs after a four-Pinocchio rating by the The Washington Postfact checker. Since the North American Free Trade Agreement, more than 57,000 U.S. manufacturing facilities have closed and fivemillion U.S. manufacturing jobs – one in four – were lost, with more than 875,000 U.S. workers certified under just one narrow U.S. Department of  Labor program.

The TPP Threatens  Environment and Climate:

The environmental groups that have celebrated Obama’s achievements with the global climate treaty and his decision to the stop the Keystone XL pipeline call the TPP an act of “climate denial.” The pact would roll back the environmental standards that President George W. Bush was pressured into including in his trade deals. Indeed, in a recent Newsweek op-ed, the  Cato Institute celebrated the TPP’s watered-down  environmental terms. Environmental groups listed on the White House website as supporting the deal, including NRDC and Defenders of Wildlife, in fact came out in opposition after seeing the final text.

Increased Income Inequality:

A recent study found that the TPP would spell a pay cut for all but the richest 10 percent of U.S. workers by exacerbating income inequality, as past trade deals have done. That would contradict Obama’s 2015 SOTU income inequality reduction goal. Macroeconomic theory predicts that if Americans face more competition from Vietnamese workers who make less than 65 cents an hour, wages will be pushed downward. Historically, 60 percent of U.S. manufacturing workers who lose jobs to trade and find reemployment face pay cuts, with one in three losing more than 20 percent, according to U.S. Department of Labor data. Indeed, there is academic consensus that trade has contributed to the unprecedented rise in inequality.

New Markets for U.S. Goods?:

After being sold with the same “more markets, more exports, more jobs” mantra, Obama’s most recent free trade agreement (FTA) that served as the TPP’s template has been a disaster.  Three years into the U.S.-Korea Free FTA, the U.S. goods trade deficit with Korea had ballooned more than 90 percent as our exports fell 7 percent and imports surged. Sadly, that deal was not a fluke. The United States ran a $177.5 billion goods trade deficit, collectively, with its 20 FTA partners in 2014, the last year for which data is available.Exports to FTA partners have grown 20 percent slower than U.S. exports to the rest of the worldover the past decade. In his 2010 SOTU, Obama said he would double U.S. exports in five years. But given our paltry annual export growth rate, the export-doubling goal would not be reached until 2057 – 43 years behind schedule.

The TPP Versus President Obama’s Legacy – Health Care Costs:

The TPP would directly contradict Obama efforts to reduce U.S. health care costs by expanding monopoly patent protections for big drug firms, as Doctors Without Borders notes. This allows drug firms to stop competition and raise medicine prices. As seniors groups note, the TPP would also empower large pharmaceutical firms to meddle in U.S. government reimbursement decisions for taxpayer-funded programs like Medicare and Medicaid.

The TPP Versus President Obama’s Legacy – Gay Rights:

While the Obama administration is celebrated for its defense of gay equality after it dust-binned the “Don’t Ask, Don’t Tell” policy and joined those announcing that the Defense of Marriage Act was unconstitutional, it decided to allow Brunei to remain in the TPP even after the country announced that it would begin stoning to death gays and single mothers under new sharia-based laws. This has led to LGBTQ groups joining the TPP opposition.

The TPP Versus President Obama’s Legacy – Financial Reform:

The TPP could help banks unravel the new rules Obama achieved to regulate Wall Street by prohibiting bans on risky financial products and “too big to fail” safeguards while empowering foreign banks to “sue” the U.S. government over new financial regulations. For the first time, the TPP would expand the controversial investor-state dispute system (ISDS) to allow challenges of U.S. financial policies using the claim underlying most successful ISDS attacks.


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