TPP – Agreement for the Rich

tppa walk away

By Joshua O’Sullivan

As an International Trade agreement very little within the Trans-Pacific Partnership (TPPA) is actually new. The TPPA has been an ongoing process since the early 1980s that has grown in scope and power to now attempt to cover 40% of the world’s GDP. It’s important to place it in its context of imperialism to understand why the TPPA is being pushed through now by the US. The US are spooked by China’s economic rise to dominance and want to maintain control in the Asia Pacific region economically but also through their latent strength of the military.

The TPPA taps into a long history of international trade and the methods by which it is secured. International ‘agreement’ is a euphemism for control; capitalists forcing their political ideology through business arrangements like the TPPA. International agreements are never agreed to or discussed on an equal playing field, one country is always more developed, or more powerful. The military is an important part of that equation.

In our modern world debt is another important way for capitalists to exert control. Debt as a force for control has been mediated in modern capitalist history through supra national entities – such as the International Monetary Fund (IMF) and World Bank. These institutions are directly related to the TPPA and in some ways are its foundation. These international agreements and institutions limit democracy and exist to control and enforce capitalist power: to force open new markets, to control more market share and people, and to exploit resources.

International agreements serve capitalism


Looking at international agreements through the last 100 years shows the reality of the international capitalist system and its priority of profit over everything else. Other international agreements, such as nuclear arms proliferation treaties, treaties against chemical weapons, climate agreements such as the Kyoto protocol, and international labour agreements can be wholeheartedly ignored by the respective countries involved with little to no consequence.

Let’s take the Kyoto protocol for instance. Climate change is one of the most serious international issues which will require a large amount of international solidarity and action to actually solve it. Yet this agreement, signed in 1997, was non-binding with countries throwing ballpark figures of emission reduction as to what they could get away with, that wouldn’t impact their financial position.

The United States, at the time the world’s largest producer of greenhouse gases, flatly refused to sign, even though there were no penalties for failing to meet emission targets. New Zealand actually increased its emission nearly 3 times over since 1990, making New Zealand the worst performing country in the OECD for controlling emissions. So much for the clean green image!

However, countries’ attitude to the application of these international agreements change when money comes into play. The way that leading capitalist countries enforce their laws in other countries is to threaten sanctions and bundle up these agreements in trade deals, the threat of military force is latent in the background. Legislating new rules for the expansion of capitalism through international agreements is not a new idea. It’s one of the key methods the tendrils of capitalism spread throughout the world.

The old capitalist argument “that politics has no place in deciding business matters” has come to dominate the modern world. Over the past 30 years, we have seen a restriction in the powers of government to regulate and control business interests under the mantra of neoliberalism. The politicians and Ministry officials like to claim the market is the most efficient controller of the economy and that government’s role is to maintain and control the rate of inflation of currency and securing better terms of trade for their own national capitalist blocks. But neither the state nor business is apolitical. Throughout history we have seen the state and business working hand in hand to maintain their control over markets and their drive for profit. The 2003 War on Iraq is a point in case, where the US invaded Iraq to maintain control over the production of oil.

Business and trade have been a way in which control has been forced upon less powerful nations. Empires have guaranteed for themselves access to markets, access to consumers, rights to mineral and wealth extraction from less powerful nations. Companies of speculative investors paid for rights to new territories to develop new markets, and establish capitalism in every part of the globe. Examples of these can be found in the history of the East India Company or the disastrous New Zealand Company. These companies were created to generate positive returns on investment as profitable enterprise, and importantly begin the process of expropriating land from indigenous peoples to kick start the process of primary accumulation in the colonies on which later stages of capitalism rest upon. It was imperialism that necessitated systems of mass slavery, genocide of indigenous peoples, and the alienation of land and also lead to world wars over access to markets. Thus in Marx’s words, “Capitalism comes into the world dripping from head to foot, from every pore with blood and dirt.”

The role of debt and imperialism

Today we have a different imperialism, but really it is the old imperialism under a new guise. Countries around the world are now controlled through debt and terms of trade particularly in currency. But again, this is not a new story. The Caribbean history of liberation shows how financial manipulation and debt have been used to punish and control ‘wayward’ colonies. When the Haitian slave rebellion finally achieved liberation from the French empire in 1804, twenty years later France regained economic control over the country by imposing a huge indemnity, by which the new nation would be indebted for 122 years. This money was owed to the French state on behalf of the slave owners who lost their ‘capital’, the slaves. This debt was 150 million Francs (an amount equal to 14 times the annual production of the entire country in 1822).

This debt was so enormous and combined with other countries embargoes and bad terms of trade drove Haiti in such a debt that it still today has not been able to pay it back, even though the original debt was absconded in 1893, and all previous debts were forgiven in 2005. New debts were piled on. When Haiti faltered on paying these debts the U.S. used the dictatorship under the Duvalier family to control economic interests and encourage the country to keep digging into debt in order to have further control over it. The story of Haiti is important because it sits as an exemplar of subjugation through debt.

The violence of the colonial system did not end once the former slaves threw out the French. Rather, the “brute force” of the military colonial system was perpetuated by financial imperialism. Marx argued that the colonial system forced the development of the credit system; the development of the international credit system creates the debt that subjugates the colony and continues to provide resources to the colonizer. This often hidden source of primitive accumulation and resource expropriation, debt, is what has strangled Haiti’s development for two centuries and continues to do so today.

This is a story repeated all over the world throughout modern capitalist history and showing that although written differently, the new methods of imperial financial control still produce outcomes that are largely the same.

Central to this story of debt as control, are the large international financial institutions the IMF and the World Bank. Both largely funded by U.S. they secure the terms of trade and offer loans to countries in need of debt relief or development. In response to the new difficulties of capitalism in the 1970’s such as the OPEC crisis and the crisis of profitability after the post-war boom, these institutions changed from financial aid lenders to become credit-enforcers. In 1973 the IMF became the world’s credit enforcer, demanding that all national debts must be repaid. From here on out, no country could default on its debts and refinancing your loan came with political stipulations, privatise your economy, lower your wages and remove protective barriers and tariffs.

So how does this financial “Aid” work? Unsurprisingly, it has a few stipulations with it if you sign the contract. Countries involved have the IMF appear in their countries and analyse the specific economic gains of large public works projects, such as a national highway system, ports or national electricity grids. They analyse the economic gains of the project and speculate wildly promising up to 20% economic growth. But the actual aid money can only be spent with registered institutions in particular American companies such as Bechtel or Halliburton. Thus the ‘Aid’ acts as a stimulus for the US funded institutions to the US economy and generates no productive increase in capacity in the aided nation. When the debt balloons out of control because the economic return is weak, the IMF ‘graciously’ offers to refinance the loan – with the added political stipulations of privatise your economy, lower your wages, and remove any protective barriers to trade.

Nowhere is this more prevalent today than in Greece. In the mid 2000’s Goldman Sachs, one of the world’s largest derivative trading banks, started working with Greece on the sale of government bonds on the international market. It manipulated these bond stocks in order to hide the mounting debt of the Drachma (the Greek currency) not only from the people they were selling it to but also from the Greek government itself. Thus a debt developed through this manipulation that was unpayable and continued to grow especially when shit hit the fan in the 2008 crisis. It came as a shock to Greek politicians and also the Greek people, but the political solution offered was for the IMF and the European Central Bank to loan money to cover the loss to European banks. When it came to refinancing this loan it came with its usual political stipulations. This debt which was incurred without the Greek people knowing about it; has resulted in untold of poverty, as the Greek people are forced to pay back this illegitimate debt through cuts in public sector jobs, social provision, healthcare, education and pensions.

The IMF is not the only institution, but it is the most dramatic case in point. It stands at the pinnacle of a great, emerging global bureaucracy consisting not only of the United Nations, the World Bank and the World Trade Organisation but also the endless host of economic unions and trade organisations and non-governmental organisations that work in tandem with them. All of which operate on the principle that “one has to pay ones debts” no matter how odious. All of which are unaccountable to the countries that they preside over.

Precedents of governments being sued by corporations

Fast forward to today and the new multilateral agreement is the TPPA, in which seeks to enjoin 12 countries into an international agreement that uses paltry reductions of tariffs on imports in order to get countries to accept new draconian laws and accept a global arbitration system outside of national jurisdictions and wholly beholden to business.

The TPPA will empower an investor or groups of investors to sue a government for reneging on contract terms in a court modelled on WTO and World Bank guidelines, like the Investor State Dispute Settlement (ISDS). In other words, the right for corporations to sue governments. The agreement is done through substantive rules that compel compensation for expropriated property, ensures that foreign firms enjoy the same rights and benefits as local firms (national treatment), and require governments to give “fair and equitable treatment” to foreign firms. This system has no transparency – courts are not required to publish any decisions, and also has no appeal system.

ISDS provisions have already been introduced in over 2700 bilateral investment treaties between countries. It has only become more important as the suspicion of the IMF and WTO increased through the 1990’s and into the 2000’s. The IMF policies of insisting that debts be repaid almost exclusively from the pockets of the poor were met by an equally global movement of social rebellion, the anti-globalisation movement.

An example of where the IMF hurt the economy to recover after a crisis was Argentina. In 2001, Argentina committed the ‘cardinal sin’ of defaulting on its national debt after a particularly nasty crisis, where its currency devalued by 40% in a matter of days, and it refused to pay government bondholders (investors) a return. It rejected the terms of an IMF bailout and flatly refused to pay all of the debt to the IMF, which acted as an arbiter for the investors affected. However it is important to note that by 2010 a full 93% of the total value owed was paid back to investors through ISDS claims at the ISDS court. The investors essentially still got their money back as they had aimed to from the start, though instead of being mediated by the IMF, it was performed through the ISDS court.

These arbitration courts are a way for the developing global bureaucracy to deal with wayward countries, where other methods have failed, and can have a chilling effect on the democratic process within those countries.

Global movement against debt and austerity

However, this practise doesn’t always work. Just like in Haiti, people have always rebelled against debt and the financial control that underpins them. Sometimes there are political revolutions that happen that say no to the odious debt repayments and the political control of this widening global bureaucracy. With the IMF becoming more demonised and hated, other methods were developed to encourage the repayment of loans and further develop this so called “beyond statehood” settlement of claims. This overarching bureaucratic structure is of course not actually above nations or “Beyond Statehood”, as it still holds the interests of business at its heart, and in particular the interests of U.S. multinationals whose state funds it.

The anti-globalisation movement in the late 90s and early 2000s is an example of the fight back against such odious debts and the political control that comes with them. This movement challenged the validity of debt and fought against imperialism and “free-trade”. This solidarity movement had its antecedents in the fight against Thatcher and Reagan and the resolution of the African debt crisis. It was a movement that reached its peak, in the late 1990s to early 2000s, with protests and movements that inspired our generation – from the battle in Seattle against the WTO, the huge marches against the Iraq War and even to more recent times where those same elements appear within the Occupy movement. The vast majority of these movements and protests were vehemently anti-capitalist and incredibly inventive when it came to protesting.

Just one story to illustrate that – during a protest in 1996 in the UK, stilt walkers marched along the crowd with massive hoop dresses, underneath them were people with jackhammer’s ripping up the road and planting trees in the middle of the road. This was to protest the meeting of the G20 by blocking streets and obstructing the movement of capital.

This movement was effective at limiting and slowing down the process of development that would eventually lead to the TPPA today. The first version of what would later become the TPPA was called the Multilateral Agreement on International Trade (MAI). This agreement was pushed by the U.S. state department in the early 1990s and had been in development since the early 80s.

International protest, coupled with the financial rebellion I mentioned earlier weakened this agreement to the point that no countries signed and negotiations failed. The differences between the TPPA and the MAI are surface level only, some provisions such as copyright infringement are new, however the basis of the agreement is to standardise investor state disputes across a wider playing field and therefore consolidate and increase the reach of capitalists into other nations. The protesters succeeded because of the huge social pressure they were able to force on the government by shutting down cities where these agreements were taking place.

The success of the mass movement against the MAI is undeniable, but without actually being able to tackle or develop a movement against imperialism and as such capitalism as a whole it is ultimately a fight against time. Without organisational capacity most of these anti-globalisation movements could not pass on the lessons they had learned from decades of struggle, lessons that have had to be relearned particularly with occupy and now today with the movement against the TPPA. Lessons like the police aren’t our friends, like the fact we cannot ask politicians to do it for us for no saviour from on high delivers, like the idea that appealing to courts has its limitations – particularly when the agreement you are trying to prevent is designed to be “beyond statehood”.

This is the important lesson – to fight against an international agreement requires a mass movement, joined across borders by international solidarity of workers against exploiters. We need to forget the false idea of national sovereignty. The sovereignty of ‘our’ country has always been questionable, whether its colonial atrocities from the founding of New Zealand, its imperial expansion into the pacific, or its control by entrenched monopolies. New Zealand has been ruled by the capitalist  class that dictates to the rest of us. In reality we don’t have a decision over what laws are passed in New Zealand, just a purely symbolic vote for a party every three years and so too is it in every other capitalist country. There is no country of the working class. For many TPPA activists it should be obvious that neither Labour nor National would step in the way of this trade agreement. In fact, in their recent conference, Labour makes a point of saying that they support ‘free trade’ and will support the TPPA if it contains “key protections”.

That global mass movement is sporadic, but it does exist, the TPPA is being protested in every nation that is party to it, resistance is also abundant in Europe where they are negotiating TTIP, its sister agreement. Also the ground is being prepared for TISA again an issue that deserves international attention and protest. Public movements can force concessions from governments – particularly when the international pressure is added. I encourage those of us in the TPPA movement to contact other people from around the world, find out about their struggles, form sustained organisations as opposed to single campaigns and read the history of this battle. It is a big fight but we can win it.

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