By Brian Emerson
Over the past two decades, communities across the world have been working to build more just, sustainable and locally based alternatives to the global corporate economy. As a result, pro-local initiatives have grown by leaps and bounds, including farmers markets, food cooperatives,“buy local” and “move your money” campaigns, small business alliances, and local renewable energy projects. However,“free“ trade treaties are a mortal threat to local economies worldwide. Like trade treaties before them, the TPP and TTIP facilitate a race to the bottom that favors large, mobile corporations at the expense of local producers, small businesses, and workers. What’s more, these treaties subordinate local democracy to corporate interests, and hamstring the ability of communities to shift direction toward more prosperous local economies. To continue the inspiring success of their movements, localists need to join the global resistance against these treaties.
Ever since the North American Free Trade Agreement (NAFTA) was proposed more than 20 years ago, critics have warned about the negative implications of “free” trade treaties and other efforts to deregulate global trade and investment. Today, after two decades of deregulation, the impacts are exactly as feared: endemic unemployment and economic ‘precarity’, massive social dislocation in the global North and South, a widening gap between rich and poor, financial instability, growing hunger and food insecurity, and the weakening of public interest laws meant to protect people and the environment. Meanwhile, global corporations and big banks have grown larger and ever more powerful.
Thanks to “free” trade treaties, corporations have become unfettered and less rooted to place: in a global “race to the bottom” they can move wherever wages and benefits are low, and where tax rules and social and environmental laws are weak. This race imposes a downward pressure on wages, and compels every level of government to reduce sorely needed taxes and protective regulations, or risk losing businesses and jobs. As footloose corporations and speculative capital move from one place to another in search of profit, they leave behind shattered communities, economic insecurity, gutted regulations, and forced bankruptcy.
At the time of its ratification, proponents of NAFTA promised that it would stimulate job creation and economic prosperity. Two decades later, the treaty has become notorious for its disastrous effects on both sides of the Mexican-US border. For instance, Public Citizen has found that nearly 5 million manufacturing jobs have been lost in the US alone since NAFTA and the WTO took effect, with over 60,000 facilities closing down or moving elsewhere.[i] During the same period, NAFTA uprooted millions of Mexican farmers who were unable to compete with imports of heavily-subsidized US corn dumped into their local markets. An estimated 2 million Mexican smallholders have been forced out of farming altogether since NAFTA’s inception.[ii] And contrary to the claims of NAFTA’s proponents, new jobs have not materialized to replace the destroyed livelihoods.
“NAFTA on steroids”
Despite all the evidence, policymakers continue to promote further corporate deregulation via trade treaties. The latest and most far-reaching treaties include the Trans-Pacific Partnership (TPP), and the Transatlantic Trade and Investment Partnership (TTIP, also known as TAFTA). The scale of these new treaties is truly massive: the TPP includes the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, while the TTIP is being negotiated by the US and EU countries. The countries negotiating the TPP account for roughly forty percent of global GDP, leading some critics to call the treaty “NAFTA on steroids”. Together, the TPP and TTIP would create “free trade” zones encompassing the vast majority of global trade.
Negotiations for both treaties have been held behind closed doors, with the public left to depend on leaked documents for information about what is being proposed. Literally hundreds of corporate ‘trade advisors’, on the other hand, have had seats at the negotiating tables from the beginning.
A continuing threat to local livelihoods and food security
Governments often have good reasons to regulate the flow of goods and capital across their borders: they can aim to heighten food security, promote economic stability, protect resources and the environment, or nurture their local economies. But when global trade is deregulated through the elimination of import tariffs and other “barriers to trade”, governments lose this vital tool.
Though tariffs are already quite low between the US and the EU, negotiations for the TPP aim to eliminate tariffs on literally thousands of commodities, including agricultural products. Liberalizing agricultural trade has always been a contentious issue, with governments trying to promote the interests of their own producers. New Zealand, for instance, is hoping to gain market access to US dairy markets, a possibility opposed by US producers. Similarly, the US, New Zealand and Australia are pushing for greater access to Japan’s agricultural markets, and the elimination of key tariff protections for staples such as rice and barley. If agricultural trade liberalization goes forward, millions of small producers in Japan and other TPP countries would face the same fate as the Mexican smallholders displaced by NAFTA. Furthermore, the flood of cheap imports likely to follow liberalization would heighten dependence on imports for basic necessities, compromising food security and self-sufficiency, and increasing vulnerability to the food crises that have become more and more common in the era of globalization.[iii]
Corporate protectionism and the assault on democracy
As important as the issue of trade liberalization is, the TPP and TTIP are not primarily about trade. Instead, both treaties will likely push regulatory changes that promote corporate interests at the expense of democratically enacted laws. In short, the treaties represent an astonishing assault on democracy and national sovereignty, threatening not only existing public-interest laws, but the ability of governments to pass such laws in the future.
The treaties give corporations sweeping rights and protections in such areas as intellectual property rights, food labeling and safety standards, environmental regulations, public health laws, rules on the use of toxic chemicals, patents on critical medicines, government procurement, energy, access to labor markets, internet freedom, and banking and finance. Both treaties seek to achieve “regulatory coherence” or “harmonization” – euphemisms for reducing high national or local regulations to much lower corporate-friendly standards.
What’s worse, leaked documents suggest that both treaties are likely to contain so-called “investor-state dispute resolutions” that would give corporations still more leverage over elected governments, including the ability to sue against environmental, labor, health, and other public interest regulations that might limit their“expected future profits” (a controversial provision taken from NAFTA’s investment chapter). To date, there have been over 500 investor-state disputes in which corporations – or states at the behest of corporations – have sued against national laws, often in markedly undemocratic, international tribunals.[iv] Recent examples include Philip Morris v. Uruguay and Australia, in which the US tobacco giant is suing Australia and Uruguay in an attempt to overturn laws mandating anti-smoking labels on cigarette packages, and Lone Pine v. Canada, in which a US energy corporation is attempting to overturn a moratorium on hydraulic fracturing (‘fracking’) imposed by the province of Quebec.
In sum, global “free trade” is profoundly subversive to democracy. Trade liberalization, part and parcel of corporate globalization, has narrowed the policy options available to sovereign democracies, and helped to further concentrate corporate power.[v]
Handcuffing pro-local policies
Trade watchdog groups have warned that the TPP and TTIP could constrict local and national governments’ ability to protect and promote their local economies – a fact that should inspire localists around the world to join the movement against these treaties.
For instance, a recent Institute for Agriculture and Trade Policy (IATP) report notes that Malaysia currently “prohibits foreign investment in supermarkets, fostering the development of locally owned grocery stores”.[vi] Several chapters in the TPP could directly challenge this law and open the way for Wal-Mart or other transnational supermarket chains to put locally-owned stores out of business. Study after study have shown that these big-box corporate behemoths are an “economic cancer” on our communities.[vii]
The TPP and TTIP could also include provisions that prevent local and national governments from instituting pro-local procurement programs, such as local purchasing preferences that favor sustainable and locally grown foods (e.g. Farm to School programs in the US). According to IATP trade expert, Karen Hansen-Kuhn: “Both the U.S. and EU have criticized ‘localization barriers to trade’. The EU, in particular, has been insistent on the inclusion of procurement commitments in TTIP at all levels of government, for all goods, and in all sectors…”[viii]
In fact, certain free trade regimes already restrict pro-local procurement programs, requiring governments to treat foreign companies the same as local ones. For instance, the WTO’s “national treatment” rules restrict governments from favoring local suppliers over non-local companies in public contracts. Says Hansen-Kuhn, “for public programs to favor the use of sustainably produced local foods in school lunch programs, or to require a certain percentage be sourced from local, small-scale farmers, could be deemed to unfairly discriminate against foreign suppliers.”[ix] In a recent example, the WTO has ruled against a cutting-edge policy in Ontario, Canada designed to strengthen the local clean energy economy and create jobs in the province.[x]
Local governments around the world have started implementing local procurement policies for many of the same reasons consumers support “buy local” campaigns. Buying from local farmers can help preserve dwindling farmland, promote local food security and re-link urban and rural economies. Government “buy local” policies are also important tools for community economic development: re-circulating taxpayer money in the community can help revitalize local economies, stimulate job creation, and build community wealth that’s anchored in place. That’s smart policy in an economic context dominated by footloose corporations whose comings and goings can devastate local livelihoods and uproot whole communities. It also offers one powerful way for communities to flex their local democratic muscles, reclaim their right to community self-determination, and take back their economies from distant corporations. It’s no wonder that corporate interests seek to use the TPP and TTIP to prevent governments from implementing such pro-local policies.
Act locally, resist globally
Over the past two decades, communities across the world have been working to build more just, sustainable and locally based alternatives to the global corporate economy. As a result, pro-local initiatives have grown by leaps and bounds, including farmers markets, CSAs, local food cooperatives, “buy local” and “move your money” campaigns, small business alliances, local finance, and community renewable energy projects. However, free trade treaties are a mortal threat to local economies worldwide. Like trade treaties before them, the TPP and TTIP facilitate a race to the bottom that favors large, mobile corporations at the expense of local producers, small businesses and workers. What’s more, these treaties subordinate local democracy to corporate interests, and hamstring the ability of communities to shift direction toward more prosperous local economies. To continue the inspiring success of their movements, localists need to join the global resistance against these treaties.
Negotiators could reach an agreement very soon. Before the TPP can be implemented, it will not only need to be signed by the negotiators, but in most countries it will need to be ratified by another branch of government. In the US, for example, Congress will need to ratify the treaty once it is signed. But President Obama, one of the TPP’s biggest advocates, is pushing to ‘fast track’ the process by which it would be ratified, limiting Congress to a simple yes-or-no vote rather than allowing for extended debate.
There’s still time for the public – which has so far been kept in the dark about the implications of the treaty – to make its voice heard. For more information about the TPP and ways to get involved, go to: Expose the TPP
The TTIP negotiations just got underway in 2013. It’s unclear how fast negotiations are moving, but the stakes are high. To learn more and stay informed, go to: Public Citizen Global Trade Watch or Corporate Europe Observatory
Learn more by listening to ISEC’s Local Bites podcast, featuring author and long-time localization advocate, Helena Norberg-Hodge:
Brian Emerson works with ISEC in the US and India where he has coordinated alternative development and localization initiatives, and developed ISEC’s education-for-action projects. His expertise is in the area of new policies, strategies and institutions for fostering more just, democratic, and sustainable local economies worldwide.