The Hill
April 15, 2015
By David Levine
On face value, a trade agreement sounds like a great opportunity for American business. Opening up new markets is something every business should be able to get behind, right?
Well, when it comes to the Trans-Pacific Partnership (TPP), the devil is in the details. As we understand it, the TPP will be terrible for the majority of U.S. businesses, and could prove devastating for American innovation.
The president is asking for “fast track” authority that would enable him to make a deal on his own, giving Congress only an up or down vote on the entire package. Making matters worse, negotiations on TPP have been secret and limited to a small group of predominately large multi-national corporations, excluding the rest of the business community as well as legislators and the American public.
We expect this deal, like past trade agreements, to drive less economically advanced nations to race to the bottom, providing lower-cost and less-regulated market environments. Just three trade deals – the North American Free Trade Agreement (NAFTA), adding China into the World Trade Organization (WTO), and a deal with Korea – led to net losses of four million U.S. jobs, and incalculable drops in consumer spending, as dominant companies shut off domestic competition even as they moved their operations overseas.
In short, because of who’s at the table, the deal will end up serving leading companies in established industries, whose goal is to protect themselves from potential disruption by innovative upstarts and nascent industries. The “fast track” process will make it harder to stop a deal that could shield those companies from competition, and will hinder the ability of innovators to usher in the next wave of economic growth.
As more information about the TPP leaks out, we become more concerned. One potential provision could prevent local and state governments from enforcing domestic policies and advancing local procurement – and any government that violates these could be sued in an international tribunal. Another is the so-called “Stop Online Piracy Act” (SOPA), which would give an unearned competitive advantage to the largest, oldest media companies. There’s language that would undermine toxic chemical regulations, and give a greater edge to the fossil fuel industry at the expense of renewables. All of this is bad for most businesses, and for our long-term economic health.
Done right, trade can move our economy in a positive direction. Done wrong, it can be devastating. Take the story of TS Designs in North Carolina. Before NAFTA, the company had over 100 employees making t-shirts for name brands in the US. After NAFTA, many clothing companies cut costs by moving their procurement and manufacturing overseas. TS Designs, committed to U.S. farmers and employees, was forced to cut back to 14 workers.
Since then, they’ve slowly started growing again by encouraging the growth of organic cotton in North Carolina, then spinning and knitting it into clothing, all of it in-state. Efforts like these are slowly helping to rebuild North Carolina’s economy, and it’s exactly the kind of innovation that could be undone by this deal. For example, the National Council of Textile Organizations estimates that the TPP will result in 522,000 jobs in textile and related sectors lost to Vietnam, one of the TPP countries. Each of those lost jobs is a lost customer for companies like TS Designs.
Any trade deal must foster sustainable economic development, with living wages, environmental safeguards and opportunities for innovation and entrepreneurship. Across the globe, we’ve seen an incredible growth of sustainable and responsible businesses that are finding footholds in sectors like safer chemicals, organic agriculture, renewable energy, and more. All of this could be threatened if we allow this agreement to move forward.
Trade agreements should not encourage nations to weaken their standards, block enforcement of domestic rules that advance responsible business practices, or place corporations above democratically elected governments. We must focus on building a vibrant and diverse economy that enhances our prosperity and security.
As of now, we must assume that any “fast track” deal will not meet these important criteria. That’s a good reason for anyone concerned about our economic future to oppose it.
Levine is CEO of the American Sustainable Business Council, which has member organizations that span more than 200,000 businesses across the country.