Historical Perspective: the US and FTAs

In response to my most recent blog post on the TPPA and its flawed underlying principles, my father sent me a fascinating reflection on actual FTAs to which the US is a party (the TPPA isn't an FTA), and the impact they've had... This shows the sort of damage done by FTAs, so by extrapolation, the TPPA is likely to be much much worse for the common person in the TPPA countries.

The following guest blog by Charles Lane is posted with permission (with minor edits to remove personal references):

Here in the USA we had the NAFTA agreement with Canada and Mexico. This was the first of these "free" trade agreements. It has proved a disaster for Mexico and for many sectors of the US economy and population. Just imagine the following:

The US government Dept. of Agriculture pays billions in subsidies to the big grain farmers. They then can export their corn to Mexico so cheaply that it has driven local Mexican small corn farmers out of business. Corn is a staple of the Mexican diet - tortillas, etc. Now these Mexican farmers are unable to support their families, so what can they do? They emigrate illegally to the US to earn money to send back to their families. They live in squalor and are in constant fear of being picked up by the "Migra" (the Immigration agents) and sent back. That's what NAFTA did for the Mexicans. It also assured that many US manufacturing jobs would be outsourced to Mexico for cost reasons. It's the "increase the shareholder value syndrome" at work.

And what has happened in Canada? It appears that Canada has been relative unaffected by NAFTA one way or the other. However, recently the provision under NAFTA that permits an aggrieved corporation to sue a sovereign country, if it considers that country's laws to be inhibiting the corporation's ability to do business or to make a profit in the country, has been put into play: The Trans Canada Pipeline Co., which wanted to build the Keystone XL pipeline to transport tar sands oil to the US Gulf Coast for refining and export, has entered a complaint against the US government for having blocked the building of the pipeline. This dispute will not be tried in public by a court of law, but in secret before an arbitration panel. This is just an example of what every country which is part of the TPPA can expect.

It's a bloody disaster waiting to happen. Suppose Microsoft runs in to trouble in NZ, because of laws which protect and support the local IT industry. Conceivably, Microsoft could sue and win against  the New Zealand government for such a large sum that the NZ treasury would be forced to devalue the currency by borrowing funds on the international market in order to pay such a claim. At the least it would have to raise taxes on the people to fund this sum. This is perhaps less hypothetical than people realize, and, in my considered opinion, presents a totally unacceptable danger to the country and people of New Zealand and, for that matter, to any country and people.

There is no such thing as "free trade". Protective tariffs and other restrictions  prevent the free passage of trade between countries. Currency manipulation and other measures to make a country's goods cheaper in foreign markets is not free trade, nor even "fair" trade. But all countries do these things in the expectation that somehow this will help their economies. With the advent of these toxic multinational corporations, which are treated as persons and which can shift funds and jobs to maximize profits, and, hence, shareholder value (an Ayn Rand idea of decades ago), the pressure is on to rig the system to benefit those multinational corporations at the expense of everyone else

We knows all of this, it's nothing particularly new, but most people have no clue.

We in the USA can only hope that for once the Republican principle of sabotaging anything that President Obama is for, will work in the favour of the best interests of the American people, when the Congress takes up the TPPA in the coming weeks.