US Congressman: Washington aims to impose disastrous trade policies everywhere in the world
A historic deal between the US and 11 Pacific Rim nations has just been brokered; American elites are praising it as the most beneficial deal for businesses – and yet, many predict that thousands in the US will lose their jobs because of it. The Trans-Pacific Partnership agreement is veiled in mystery, as the powers that be are doing their best to keep some of its provisions secret from the general public – and nobody knows why. Who really benefits from the TPP? Why was the president so eager about it – and does he even have a say in these matters, or is it the corporations that call the shots? We ask an American Congressman and senior member of the House Foreign Affairs Committee. Brad Sherman is on Sophie&Co.
Sophie Shevardnadze:American Congressman, senior member of the House Foreign Affairs Committee, Brad Sherman, welcome to the show, it's great to have you with us. Now, President Obama says the Trans Pacific Partnership reflects American values and will greatly benefit U.S. workers. If it is really so, and if it is so beneficial, why keep the details of the agreement secret, when it's been finalized? What does he have to hide?
Brad Sherman: Well, that's just one of the many questions we in the U.S. have had - a phenomenally bad trade policy for the last 30 years. We have gone with this "free trade model" which is really not free trade. We have tried to impose that model everywhere else in the world, and we have run up the largest trade deficit in America's history, in history of the world, in fact. If we could just reduce by half, maybe even just reduce by a third the trade deficit America faces, we would have a labor shortage, or a job surplus, if you will, and we’d have rapidly rising wages. This policy on trade is a real disconnect between the elites in America and the average american.
SS:So, like you've said, you've had this bad trade policy all along, there was NAFTA, the North-American Free Trade Agreement, and the CAFTA, the Central-American Free Trade Agreement - and both agreements cost American workers hundreds of thousands of jobs. Why is America repeating the same mistake here?
BS: There are couple of reasons: first, these trade agreements are very much in the interest of Wall St., and the powers of the society. Seconds, a lot of students want the professors to think they're smart, and a lot of professors live in a professorial world, where they can design theoretical models, and, you know, frankly, if we lived in one of these "theoretical model" universes, I'd support these trade deals, The fact is, they don't work in practice, and the reason they don't is that while the U.S. is very much a rule of law, capitalist competition society, most other societies in the world are considerably less so. Perhaps, if we had a free trade agreement with Canada, as we did and still do, or Britain - it would work out to our advantage, but the idea that we're going to get free access to Vietnamese market is absurd. They don't have freedom and they don't have markets!
SS:So, Congressman, I want to play devil's advocate here a bit. The Trans-Pacific Trade Agreement will help American exports, it will, apparently, remove thousands of tariffs on U.S. goods. Isn't that beneficial for small businesses and citizens ultimately?
BS: It will help our exports a little bit, and increase imports by a lot more - and the reason for that is, the only barrier to exporting to the U.S. is our tariffs. And so, we eliminate those, whereas other countries have tariff barriers and non-tariff barriers, so they reduce or eliminate their tariffs and they keep their non-tariff barriers. That's why the U.S., with its trade policies, has been able to go from the largest net exporter in the world to the largest net importer in the history of the world.
SS:Now, you've called the TPP not only a bad economic policy but a bad geopolitical policy as well. Why is that? I mean, surely, the U.S. needs to be on good terms with such a rapidly developing region like Asia...
BS: It's being sold as kind of a China-containment policy, because, frankly, the economics are so bad, that they can always shift and tell people "well, it may be bad for your family, but it's good for American security". The fact is, China benefits from this deal in two very important ways: first, it establishes the principle that currency manipulation is allowed - that is a device America doesn't use. It's the number one device China does use, and while China's not a party to this agreement, it entwines approach to trade. Second, there's a thing called "rules of origin”. You would think "okay, we're going to have imports from Japan or imports from Vietnam" - what about goods that are 60, 70, 80 percent made in China? Well, they can go to Vietnam, they can get a "made in Vietnam" sticker put on them and be shipped into the U.S. tariff-free. So, China gets tremendous additional access to the U.S. market, and of course, since China isn't a party, they do nothing to reduce their barriers to American exports. So, they won't show us the rules of origin provisions, which define whether the good has to be 60% or 70% or only 50% made in one of the twelve countries. But, whatever those rules are, they won't tell us. But the stated rule is going to be different from the de-facto rule. So, you may have a rule that says: "You've got to certify that this good is at least 60% made in Vietnam" - but who will enforce that? How do you tell the difference between goods that are 60% made in Vietnam and those that are 28% made in Vietnam? The companies involved are not going to tell you, and so, whatever the rules of origin are, de-jure they are going to be very different from what they are de-facto.
SS:Now, China is not a member of TPP, and when promoting a deal, Obama stated: "We can't let China write the rules, we should write the rules". China is competing with the U.S. as the world's leading economy. Can America really hope to go into Asia-Pacific and ignore China?
BS: Oh, I wouldn't ignore China for a second; but the idea that we're going to sacrifice American jobs on the altar of "we're writing the rules"...No! The representatives of working men and women are not writing the rules, most of the rules are written on Wall St. and then, the single rule that is most important to China, is written in Beijing. So, there's a lot in it for Wall St., there's a lot in it for China - and there's nothing in it on a net basis for workers in the U.S.
SS:Now, you go as far as to say that this agreement can undermine U.S. sovereignty - how so, and why would American leaders push for something like that and call it "historic"?
BS: Well, corporations have awful lot of power here in the U.S., and they don't like when the government of any country tries to control their behaviour. And, so, they are looking for multi-national commitments that would give them a way around national governments, and the investor state provisions are designed to allow companies to say: "We don't have to comply with this law or that law" because international tribunal says "It's bad for investment" or "bad for trade". The once exception that they did get in this is that a tobacco company trying to avoid health and safety regulations will not be able to use this, which, of course, exposes the fact that every other company trying to use this system to avoid health and safety regulations is certainly allowed to do so.
SS:But, from what I understand, corporations have the right or the ability to sue governments under the TPP - so, let's say, government bans Exxon from drilling, right? Then Exxon can then take the government to court, and if they win, then they get exactly what they want - isn't it right? Will this power start affecting public policy, basically?
BS: Well, it's not clear that they get what they wanted, which was to drill in this particular location or to engage in this particular activity that hurts the environment. Most of these deals provide that if they don't get what they want, they get a big check from a national government. But, of course, once you write one or two of those checks, the message gets down to local environmental regulators to make sure not to do anything that a multinational corporation can recover funds from the U.S. government - so, whether it's a check or whether it is an unchecked power, the multinationals get an awful lot of what they want under this deal.
SS:Now, here's another thing. This provisions for the legal protection of corporations against countries have been a common part in trade agreement for over 50 years - why are they making so much controversy now?
BS: I think it's because the provisions are getting stronger, and the ability of corporations to make use of them is getting more clever and more nuanced. So, we see more lawsuits by corporations using these provisions - and of course, this deal creates more investor state lawsuit protection then all the other trade agreements that the U.S. is part of.
SS:Now, the deal faces months of scrutiny in Congress, and you're obviously planning to vote against - but, is there a realistic chance of it passing?
BS: In all likelihood, it will pass. I think it will have very solid Republican support - not complete. We did lose quite...you know, almost 40 votes, roughly 40 votes in the vote a few months ago. So, this is an uphill battle just as the last bill was an uphill battle, and, frankly, we need some additional allies. You know, maybe...
SS:Do you feel pressure from your colleagues for the bill to pass?
BS: Not from my colleagues. Most Democrats will be voting against the bill, against TPP. Nancy Pelosi was not from the beginning against trade promotion authority, but she eventually voted against it - and, I would suspect that there will be very little pressure... the President will do everything he can, and around the edges, we’ll see. His target list are the 40 Democrats who voted for TPA, which gave him the authority to sign this agreement and gave him the authority to submit it to Congress for an up or down vote. It's very rare that you get to submit a bill under those favorable rules.
SS:Is there a lobby for the TPP? When I said "colleagues" I really meant - are you pressured by the lobbyists?
BS: This will be lobbied on both sides, and my hope is that there will be one or two business interests who feel that they weren't treated fairly in the agreement - that may give us a few allies that we haven't had before. But the lobbying will be from labor organisations on one side, and almost all of Wall St., almost the entire business community on the other side; not to mention a President, who regards this as a legacy. Keep in mind that all of the...the weight of authority in the elites of the society colored in part because elites benefit, colored in part because elites like to take their cue from professors with academic models - all of that is pushing the President to thinking that this is a good deal for American workers.
SS:Which side do you think is stronger? The one that's pro- or the one that's con?
BS: Well, in the White House, the pro- forces will prevail. In the Senate, the pro- forces will prevail. The House of Representatives, the last part of the decision-making process - I would say, they're ahead of us, but we might catch up. So, and, as I'm sure you're aware, the House of Representatives is in some turmoil today, making it even more difficult to predict. But it's going to be difficult to stop this deal.
SS:Congressman, you've introduced a bill that would break up too-big-to-fail banks as they pose a threat to U.S. economic security. Do you really believe you can push something like that through Congress?
BS: No. Bernie Sanders introduced it to Senate, I introduced it in the House, I’ve got two or three co-sponsors in the House, Bernie does not have any at the Senate. It is a statement of where we stand, not an attempt to immediately adopt a statute. Perhaps, longer term, we would have some success, but the chances of that bill passing in the foreseeable future is very small, beyond small.
SS:Talking about Bernie, why is becoming President so expensive in the U.S.? I mean, why does Hillary Clinton need a billion dollars for a campaign?
BS: Every campaign can figure out a way to spend every dollars they can get their hands on. I've been involved in a lot of campaigns, where people say: "Well, if you raise...you only need this amount", and we raise more and we found effective ways to spend it. What we need is a system in which small donors play an important role and we ought to have a system where every American is given $25 or $50 a cycle that they can donate to the elected officials of their choice. We also need to prevent this "secret" money, this unlimited money that has been allowed into our politics as a result of Supreme Court decision in Citizens United. That's why I've joined with others in introducing a Constitutional amendment. We believe in free speech, but the Supreme Court has gone kind of nuts and said that that means billionaires can control our elections.
SS:Well, that's the idea everyone gets overseas...about big corporations as well - I mean, Presidential campaign sponsors include Goldman Sachs, JPMorgan, Citigroup. If they are bank-rolling this show, does it mean they are running it as well?
BS: As a technical matter the main campaign for anybody running for federal office can take funds only from individuals or organisation where they get voluntary contributions, under strict limits from individuals. Problem is, the Supreme Court has opened things up for these "second campaigns" - it's absolutely absurd, but in many of the Presidential races, the candidate controls way less that half of his or her campaign, and a group of people that the candidate isn't allowed to talk to are running their TV commercials, running the main part of their campaign on collecting money from often undisclosed sources to run those campaigns. I can't think of a system that is worse than what we have now, where not only they have huge quantities of money - and often it's kept secret - but the candidate can play this game of not taking responsibility for what their main campaign is actually saying.
SS:So, are you saying, for instance, Hillary Clinton is not controlling half of her campaign?
BS: More than half of the money that will be spent - and I haven't charted exactly when the expenditures are made - but when those big expensive TV campaigns start, most of the commercials favoring Hillary Clinton or favoring Jeb Bush, or opposing their opponents, will be paid for by these “independent expenditure committees”, which are allowed to raise unlimited amounts of money. Often, they are structured so that they don't have to disclose where that money comes from. They are allowed to take money directly from corporations. The one rule is: they are not supposed to talk to the candidate about how they're going to spend it...which sometimes stretches credulity but creates these bizarre circumstances where you could have the most watched Hillary Clinton commercial be one that contains material that she doesn't like.
SS: In the last Romney-Obama Presidential contest, Wall St. was giving money to both candidates. Is this tactic for insurance, to make sure they'll influence the winner, whomever that may be? So does it matter which candidate even wins?
BS: Not every contribution from somebody who works for Goldman Sachs is part of the will to find efficient campaign for Goldman Sachs to have political power. In fact, you have a lot of rich individuals there, they have strong views on foreign policy, they have strong views on women's right to choose or gun control or this or that; they happen to be wealthy and with Goldman Sachs and usually support Goldman Sachs's position on banking and taxation issues, but they are involved in the campaign for other reasons. Obviously it gives those with money, whether their first goal of spending enough money is to protect Goldman Sachs’s financial interests or their first goal is to promote gun control - people who write really large checks have some influence not only on their first goal, but also on their second goal.
SS:So, basically, does that mean that both candidates will end up doing what their sponsors want, no matter who wins - Democrat or Republican?
BS: It's not just money. The purpose of money is to get votes, and the more sophisticated are the voters, the more effort they put in the making of their decisions, the more the voters control what the politicians do and the money controls less. But it's clear that if you have two American citizens and one spends $5 billion dollars giving money to politicians and one doesn't - the first one has way more influence on their policy, and that's not the way Democracy is supposed to work.
SS:So, if a man like Bernie Sanders, for instance, proposes reigning in the rich corporations, obviously they won't give him the money. I like the man, I worry about the man; does that mean that he doesn't stand a chance of being elected?
BS: I think he stands some chance. Bernie and I have known each other for a long time, since our days together in the House of Representatives, but I think he faces a number of issues. He describes himself as a Democratic-Socialist. This country doesn't naturally... the average voters doesn't identify themselves as Democratic socialists; in fact, "socialism" is a dirty word among big chunk of electorate. So, I think Bernie faces a number of issues. You wouldn't expect him getting a lot of Goldman Sachs' money. That being said, the fact that he's taken a strong position that he has, and that I have, too, to break up banks that are too-big-to-fail, have motivated an awful lot of small contributions. And, the technology is in the direction of democracy. Technology has meant small contributions can be raised back... You know, I’m pretty old, I’ve been doing this for a while. Decade and half ago, small contributions were raised with postal mail, and it would cost $20 of postal costs and printing in order to raise $22 in small contributions. Now, so much of that is online, you're raising the same $22, but it's costing you 22 cents. So, small contributions are playing the big role, and then, secondly, it used to be that if you didn't own a newspaper, if you didn't control a TV station or buy an awful lot of time, then you couldn't influence voters. Now, anybody with a blog can get their message through to some folks, so technology is pulling in one way, the Supreme Court decision, unfortunately, pulls very hard in the other direction.
SS:I wonder, if technology is making American Presidential campaign this time around, showing that people are backing some very unusual candidates - like, Donald Trump is an obvious example - but then, against, there’s Bernie Sanders, who as you say doesn't shy away from being called a "socialist", and he still attracts voters. What's changing in the U.S. political scene? Is the traditional two-party contest showing signs of decline?
BS: Well, the parties as structures have remained. We probably won't face a major third-party candidate the way we did in 1992 with Ross Perot, but instead of those structures being owned by the insiders, we see people way outside the mainstream of those parties, way outside of social mainstream of those parties, vying effectively, and they are because Americans are angry. When I was growing up, we were told: "every generation is going to live better than the generation before them". That's stopped in the 1980s, and we've noticed. We see economic growth higher in many places in the U.S., and we'd like to see economic growth here not in terms of a top-line GDP number, but in terms of median family incomes. Americans haven't had a raise for 20 or 30 years, that's about time we got one. By "we" I mean the average working people, Congressmen are doing fine.
SS:It was a pleasure talking to you, Congressman, thanks a lot for this interview. We were talking to American Congressman, senior member of House Foreign Affairs Committee, Brad Sherman, discussing what the Trans-Pacific Partnership agreement is, how big business benefits from the deal and who rules the show in U.S. politics. That's it for this edition of Sophie&Co, I will see you next time.