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Monday, October 12, 2015 10:35 AM

Hillary Clinton, Dead Rats, Toilet Paper Politics

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To some, TPP stands for Trans Pacific Partnership (an alleged free trade agreement). To me it's synonymous with toilet paper, with a dangling P at the end that stands for politics.

I will get around to "dead rats" in a bit. First let's discuss how Hillary Clinton fits into the picture.

45 times Secretary Clinton Pushed TPP, She Doesn't Now

CNN reports 45 times Secretary Clinton pushed the trade bill she now opposes.

The Slate reports Hillary Clinton Comes Out Against TPP, at Least Until the Democratic Convention.

Hillary Clinton, who as Secretary of State in 2012 said the Trans-Pacific Partnership “sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field,” has… come out against TPP.

I’m continuing to learn about the details of the new Trans-Pacific Partnership, including looking hard at what’s in there to crack down on currency manipulation, which kills American jobs, and to make sure we’re not putting the interests of drug companies ahead of patients and consumers. But based on what I know so far, I can’t support this agreement," said Clinton.

Hmmm. I have two questions.

How is it that it's more important for a private citizen to be more concerned about and more aware of details in a trade bill than the Secretary of State?

Can political expediency be the answer?

Clinton's Concern

It's safe to say Clinton does not give a damn about free trade one way or another. I am quite sure she could argue the position both ways, out of two sides of her mouth simultaneously.

The only thing remotely shocking about her reversal of opinion is the media appears to be catching on.

But why the reversal?

The answer is Hillary is attempting to keep up with Bernie Sanders and his absurd socialist policies. Her secondary reason is to distance herself from the man no one wants to be associated with at the moment: President Obama.

With that let's move on to rats.

Dead Rats

The Hill comments on TPP and "Dead Rats".

The New Zealand Trade Minister Tim Groser said, last weekend, that everyone was swallowing “dead rats” to get the Trans-Pacific Partnership done. As details come out, the economic rationale for the deal fades. Negotiators seem to have reached a deal just to reach a deal.

Given all the “dead rats,” it is not clear that the U.S. Trade Representative achieved enough to convince enough industries to support the deal and to convince enough Republican lawmakers to give Obama a win during his remaining time in office.

America’s meatpacker lobby organizations - such as the National Cattleman’s Beef Association and the National Pork Producers Council - demanded full elimination of Japanese duties on pork and beef. The TPP result fell far short.

While the average weighted tariff in Japan is about 2.5 percent overall, idiosyncratic tariffs on beef are indeed high at 38.5 percent. This will be reduced over the course of 15 years to 9 percent. Disconcertingly, the tariff reductions will be reversed if US exporters actually sell a lot of beef to Japan.

As to pork, while Japan will eliminate its 4.3 percent tariff over 10 years, it is really a farce. The country will preserve a variable tariff which prevents U.S. pork from being sold below domestic Japan prices. In other words, U.S. pork exports can never undercut domestic prices. 

Japan is also increasing its VAT to 10 percent ext April, from 5 percent in 2010. All U.S. exports to Japan will pay this added 5 percent tax at the border.

As to dairy and sugar, our trade negotiators conceded terms incentivizing more access to the U.S. market by New Zealand and others. Thus, any growth in our domestic market will benefit producers elsewhere, not necessarily Americas farmers.
The Issues

Every country is a firm believer in free trade for exports, but no country wants free trade for imports.

Obviously, that cannot work mathematically, which is precisely why the deal had to be negotiated in secret and has taken five years to produce questionable results.

But that's not all of it.

The New York Times reports "Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S.".

WikiLeaks analysis explains that this lets firms "sue" governments to obtain taxpayer compensation for loss of "expected future profits."

This agreement is a lawyer's fantasyland dream come true. Corporations will be suing governments left and right over "expected future profits." For example, Australia would not sign the deal unless it obtained a waiver for health warnings on cigarette packages that are more stringent than elsewhere.

Apparently, all other lawsuits are fair game. And it will be taxpayers who pay the bill. Imagine the lawsuits over GMOs (genetically modified organisms). Monsanto will be suing every country that blocks its GMO products.

I discussed lawsuits in Obama's Trans-Pacific Partnership Fiasco vs. Mish's Proposed Free Trade Alternative; How Will TPP Function in Practice?

What about Sugar and Steel?

The US chamber of commerce reported "[US Tariffs] raised the cost of sugar in the US and 30,000 jobs out of Chicago have gone because sugar manufacturers have left the United States to go to Canada so that they can import sugar," said, Catherine Mellor, calling on American leaders to show courage in tackling sugar subsidies and tariffs in the Trans-Pacific Partnership negotiations.

Bottom line: We protect sugar farming jobs (when climate dictates sugar is better grown elsewhere), at the expense of every company who uses sugar as an input. Loss of jobs coupled with use of high fructose corn syrup in damn near everything was an unfortunate result.

The same happens with steel. US auto manufacturers do not benefit from steel tariffs, nor do consumers who pay higher prices.

For further discussion, please see Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP.

Canadian Slush

In Canada, the agricultural minister announced his dairy and poultry farmers will be compensated for “any losses” caused by TPP. Guess who will pay for that?

For details on Canadian slush, please see TPP and Free Trade Canadian Style.

What About the Environment?

The Washington Post described TPP as a "giant free trade deal".

The White House Blog says Environmental Advocates Point to the Trans-Pacific Partnership as a Historic Opportunity to Protect Our Oceans, Forests, and Wildlife.

Which is closer?

Here's a hint: The Huffington Post reports the TTP document contains 29 chapters of which only 5 are about trade.

Imagine the lawsuits over environmental regulations and the loss of "expected future profits" because of them!

Beautiful Irony

There is a beautiful irony in all of this. Bernie Sanders does not like TPP, nor does Clinton (at the moment, but obviously that could change at a moment's notice), nor do I, a confirmed genuine free market advocate whose opinion does not change with the wind.

Sanders, and more recently Clinton, do not like the agreement because it's "too free", whereas I don't like it because TPP has very little, if anything, to do with free trade at all.

Instead, I propose TPP will create a nightmare of worldwide lawsuits at taxpayer expense, while doing nothing that will genuinely advance free trade.

Mish Free Trade Proposal

As I have stated numerous times, I am in favor of free trade. An excellent free trade agreement would consist of precisely one line of text: "All tariffs and all government subsidies on all goods and services will be eliminated effective immediately".

I maintain that the first country that does that will be the beneficiary, regardless of what any other country does!

Fair Trade

Some maintain "bad jobs are better than no jobs at all". Others disagree.

The calls for "fair trade" are running rampant.

Mirror, mirror on the wall who wrote the best "fair trade" article of all? No, it wasn't me. And the answer, if you do not already know, will likely shock you.

Who is "In Praise of Cheap Labor"?

With that question, I encourage you to read "Fair Trade is Unfair; In Praise of Cheap Labor"

Curious Points

Curiously, whether one is for or against free trade, TPP is a monstrosity that everyone but the lawyers and those on the right side of lawsuits will regret.

I strongly suspect that means TPP will pass, but hopefully Clinton, Sanders, and others can help defeat the proposal for precisely the wrong reasons.

Doing anything right, for the right reason, is simply impossible. "Our only hope rests with those whose intent is wrong!"

Mike "Mish" Shedlock

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