TPPA: Trade and Geo-Politics

January 25, 2016

TPPA: Trade and Geo-Politics

by Dr. BA Hamzah


THOSE familiar with the literature on international trade will appreciate the symbiotic relationship between trade and geo-politics. Take the case of US-led economic sanctions against Iran and Cuba. They were not imposed for solely economic reasons. On the contrary, it is normal for major powers to use economic sanctions as a tool in making foreign policy. The tool can manifest in the form of trade barriers and restrictions on financial transactions to punish a state for “misbehaving”.

The Trans-Pacific Partnership Agreement (TPPA) is no exception. World renowned Professor Noam Chomsky (pic above) of Massachusetts Institute of Technology (2015) believes the TPPA is designed to carry forward the neo-liberal project to maximise profit and ensure America’s domination of the world. So does Nobel Prize-winning economist Joseph Stiglitz who views the TPPA as a managed-trade agreement of “unequal partnerships with the US dictating the terms”.

In Stiglitz’s view, partnership agreements like the TPPA “go beyond trade, governing investment, intellectual property as well, imposing fundamental changes to countries’ legal, judicial and regulatory frameworks without input or accountability through democratic institutions.”

IMF Photograph

Professor Joseph Stiglitz

Under the TPP, the status of the MNCs has been elevated to that of a nation state. MNCs have used and intend to use the controversial investor-state dispute settlement (ISDS) mechanism as an instrument in public international law to sue sovereign states for non-compliance with the agreement. In the opinion of many, the ISDS has elevated trade to a new geo-political height.

Should Malaysia not be concerned with the above observations as it hurries to ratify the TPPA before President Obama leave office in 2017? Obama minces no words on the geo-politics surrounding the TPPA as much as it is about international trade. He proclaimed to the world on October 5, 2015 that “this partnership (TPPA) levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products.

The US President adds, “[I]t includes the strongest commitments on labour and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements.It promotes a free and open Internet. It strengthens our strategic relationships with our partners and allies in a region that will be vital to the 21st century. It’s an agreement that puts American workers first and will help middle-class families get ahead.”

America needs the TPPA to compliment Obama’s foreign policy of pivoting or rebalancing its military deployment (2011) to prevent its rival (read China) from dominating the Asia-Pacific region.

In a statement on the TPPA, President Obama asserted that “we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”

In endorsing the TPPA, Secretary of State John Kerry told students at Indian State University (October 14, 2015) that the TPPA “matters for reasons beyond trade”. His remark that the Asia-Pacific region “will have a big say in shaping international rules of the road on the Internet, financial regulation, maritime security, the environment and many other areas of direct concern to the United States” clearly defines the US geopolitical agenda in the TPPA.

Secretary of State  John Kerry

I really don’t understand why some continue to deny the geo-political genesis and content of the TPPA. It is okay for Malaysia to adopt a pro-US policy to balance the rise of China but we should not plunge head on without reconsidering the consequences of becoming a party to the US strategic foreign policy of using the TPPA to contain China, our largest trading partner in South-East Asia. It may be perilous to our long-term geo-political interests to undermine China.

Like the US proposal for the Transatlantic Partnership in Investment and Trade for Europe, the TPPA is a tool of US foreign policy to retain its pre-eminence by writing the rules of the global trade and international security.

There is nothing sinister about the TPPA if Malaysia is prepared to embrace a trade deal that helps promote US foreign policy.Acknowledging the geo-political ramifications of the TPPA on Malaysia will result in greater policy transparency and reduce the trust deficit between the rakyat and the Government.

6 thoughts on “TPPA: Trade and Geo-Politics

  1. Its the Greater Asia Co- Prosperity Sphere the Japanese launched in the 1940’s minus the planes, tanks and warships.

  2. 1) Robert Reich says this:

    2) No possibility of this option? —–>

    Do not sign onto the TPP agreement.
    Wait a few years first and see what the impact has been on
    weaker countries that signed.
    If negative, then it was wise not to sign.
    If positive, then can try to join the TPP agreement.

    Any comments from experts who study international organisations and international agreements on this option? (NAFTA, UNCTAD, EU, MERCUSOR etc)

    3) For small nations like Malaysia, stay neutral and do not get tangled up in
    Big Power rivalries. Otherwise, we may come to grief.
    A Titoist foreign policy for Malaysia, in other words.
    In the past, we did not join organisations such as SEATO.

  3. /// shaipudin shah harun January 26, 2016 at 1:54 am
    Its the Greater Asia Co- Prosperity Sphere the Japanese launched in the 1940’s minus the planes, tanks and warships. ///

    Yes, it is version 2.1 of Japan’s ill-fated Greater East Asia Co-Prosperity Sphere. No, it is not minus the planes, tanks and warships. These come before, during and after the formation of TPPA. As we speak, the US is already giving old planes and warships to the Philippines. The Philippines has just belated gone into the jet age with their airforce. There’s a mini arms race in the region.

    So, the planes, tanks and warships are all there – and more to come.

  4. National sovereignty challenged and other horror stories from the USA:
    Part one:
    From: The Trans-Pacific Partnership: We Won’t Be Fooled By Rigged Corporate Trade Agreements: By Margaret Flowers and Kevin Zeese ; Global Research, October 02, 2013

    “The Obama administration has been negotiating the TPP in secret for more than three years. Unlike past trade agreements, the text of the TPP is classified and members of Congress have restricted access to it. If they do read the text, they are not allowed to copy it or discuss any specifics of it. However, more than 600 corporate advisers have direct access to the text on their computers.”

    “Fast Track would allow the President to sign the TPP before it goes to Congress. Members of Congress would then have a short time period to hold an up or down vote and would be prohibited from making amendments. Without Fast Track, which was used to pass NAFTA and the World Trade Organization (WTO), it is unlikely that the TPP could be signed into law”

    “This is because the TPP goes far beyond a trade deal. Only five of the twenty nine chapters contain provisions related to trade. The other chapters consist of provisions related to patent protections, investor state rights and finance deregulation, among others. The TPP is a backdoor corporate power grab to advance the stalled WTO agenda. Or as Sachie Mizohata writes in Asia Times, “The TPP is a Trojan horse, branded as a ‘free trade’ agreement, but having nothing to do with fair and equitable treatment. In reality, it is precisely ‘a wish list of the 1% – a worldwide corporate power’.”

    Part Two:
    From: Everyone but China TPP Trade Deal Threatens Sovereignty and Public Ownership: by Margaret Flowers and Kevin Zeese: [Obama led trade initiative Trans Pacific Partnership aims to isolate China while strengthening corporate legal rights] – March 29, 2013:

    “The Trans-Pacific Partnership has been in 16 rounds of negotiations over three years, pretty much in secret except for the 600 corporate advisers that have been working with the Obama administration to develop the terms. And it’s called a trade agreement, but it’s really much more than that. If you care about internet privacy, if you care about health care, financial regulation, labor rights, the environment, all these issues will be affected by the Trans-Pacific Partnership, and they’ll give corporations more power than governments to control these issues, because profits will be the ultimate goal, much more important than people’s necessities or protection of the planet.”

    “Out of those 26 chapters, only about five.” of them have to do with traditional trade. So what we see in this agreement is that it’s not really about trade; it’s about creating a backdoor for corporations to get some of the changes that they want. . . these are the things that these corporations have wanted to get but they haven’t been able to so far, and this is a vehicle for doing that.”

    “Under the TPP, money can go into and out of countries without much control by the government. So the corporations, the big banks, will have much more control over the capital controls of a country than the country will.”

    “By individual corporations in a trade tribunal, which is a three-person tribunal. Most of the judges will be corporate lawyers on leave from their corporate job, putting on their robe and being a judge, deciding in favor of the corporation, no doubt, and then going back to their corporate job. And what they’re suing for is the potential loss damages, not actual damages.”

    “Right now there’s a company in the U.S. called Lone Pine Industries that wants to frack in an area of Canada that’s banned fracking . . . Under the Saint Lawrence River. . . So they’re suing the Canadian government for $250 million for loss of expected profit.”

    “It really puts China in a lose-lose situation. It’s not a coincidence this is happening at the same time that Obama’s moving 60 percent of the Navy into the Asian waters, the Asian pivot, which is a military pivot. This is an economic pivot. And it’s a lose-lose for China either way. If they’re excluded from the agreement, which is the current status, then they are out of a lot of trade going on in their own backyard. If they’re included, then they’re stuck with these trade tribunals in their neoliberal, privatization, anti-government, opposed to state-owned enterprises model, and the Chinese economy is based on the state-enterprise model approach. And so they would be able to be taken to court by these–in these tribunals and have their economy totally changed by corporations. So either way, China loses.”

    “China’s the up-and-coming economy. We’re going to be struggling for a long time. It makes much more sense for that to happen. So I don’t really understand why a lot of these countries even are considering the TPP. It’s going to undermine their economies.”

    “. . . that’s going to cause them to lose expected profits, and they would sue Vietnam, Vietnam doesn’t have the resources to handle that kind of a case.”

    “One of the big issues seems to be intellectual copyright, and particularly pharmaceuticals. So I suppose a lot of it has to do with the sort of generic drug making that was going on in India. They want to stop it in India, but they also don’t want it to spread to other countries.”

    “And it’s going to, again, slow down the creation of generic drugs, because the patents go on and on.”

    “People did not like NAFTA, and this is NAFTA on steroids. People do not like the WTO, and this is WTO on steroids.”

    Part Three:
    From: WASHINGTON POST: The Trans-Pacific Partnership clause everyone should oppose by Elizabeth Warren – Democrat represents Massachusetts in Senate :

    “One strong hint is buried in the fine print of the closely guarded draft. The provision, an increasingly common feature of trade agreements, is called “Investor-State Dispute Settlement,” or ISDS.”

    “If a foreign company that makes the toxic chemical opposes the law, it would normally have to challenge it in a U.S. court. But with ISDS, the company could skip the U.S. courts and go before an international panel of arbitrators. If the company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require American taxpayers to cough up millions — and even billions — of dollars in damages.”

    “The use of ISDS is on the rise around the globe. From 1959 to 2002, there were fewer than 100 ISDS claims worldwide. But in 2012 alone, there were 58 cases. Recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned. U.S. corporations have also gotten in on the action: Philip Morris is trying to use ISDS to stop Uruguay from implementing new tobacco regulations intended to cut smoking rates.”

    Note: all emphases in bold are mine.

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