What are the “Tougher” TPP Labor and Environmental Standards?

5/8/2015

The new locus for discussing the balance between labor and trade in the controversial Trans-Pacific Partnership (TPP) agreement is literally on the feet of millions. President Barack Obama is in Beaverton, Oregon today at the Nike headquarters to deliver a speech promoting the value of the proposed trade deal, especially with regards to imports. Critics have found the choice of location surprising, given Nike’s record of using sweatshop labor, especially in Vietnam, where 330,000 workers in 67 Nike factories earn less than $1 per hour. Nike spokesman, Greg Rossiter, says the company, however, has “fundamentally changed the way we do business,” with the president expected to highlight Nike’s improvement of overseas labor conditions as an example to model the TPP deal after. The choice was especially offensive to New Balance, the Boston-area shoemaker who is the last remaining major footwear manufacturer to make the shoes in America, employing 1,350 employees in a Maine factory. The appearance in Oregon comes a day after Nike’s announcement that they plan to bring up to 10,000 manufacturing and engineering jobs to the U.S., adding that the company’s $2.5 billion impact in the state of Oregon is much larger than New Balance’s overall economic impact in the Northeast. Nike is pushing hard for the elimination of all tariffs in Vietnam, saving the company hundreds of millions of dollars in the process. New Balance, on the other hand, could be seriously impacted by reductions in tariffs, risking more job losses due to cheaper outsourced labor by competitors.

Meanwhile, 750 miles southwest in California’s Central Valley, representatives from labor unions and the Sierra Club gathered in front of the office of Democratic Representative, Jim Costa, urging him to vote against the fast-tracked measure, a vote that is scheduled to take place in the next few weeks in both houses of congress. For labor groups in the area, the main concern is preventing a repeat of the job-slaughter in the heavily agricultural Central Valley that resulted from the North American Free Trade Agreement (NAFTA). For the Sierra Club, their main concern is that local and state governments will lose the ability to create and enforce their environmental standards due to the supranational Investor-State Dispute Settlement (ISDS) system. Precedent has been set under NAFTA, in the Bilcon-Canada dispute, resolved in March in Bilcon’s favor after the company was denied a mining license from Canada after the country wrote a negative environmental impact report on a series of projects. The ruling will result in a taxpayer-funded settlement, possibly in the hundreds of millions. Environmental opponents fear that occurrences such as this will become more frequent in this deal, which encompasses 40 percent of the world’s economic output, putting the rights of multinational corporations over the environmental standards of sovereign nations.

Despite the fears, the president and TPP proponents disagree that TPP is a repeat of NAFTA, and in fact, have stressed heavily the improvements over trade pacts of the past. Although White House Press Secretary, Josh Ernest says that TPP is a “responsible trade agreement that includes enforceable labor and environmental standards,” very few details have surfaced regarding labor. The administration has stated on nearly every occasion that TPP will have the strongest and most enforceable labor standards of any trade deal ever, including closing sweatshops in Vietnam. Unions have been emphatically opposed to the deal, as they have been with virtually all trade pacts of the past generation. Nothing has been disclosed regarding the labor provisions regarding wages and worker’s financial standards. However, one assumed provision is that supranational labor disputes will also be subjected to the same ISDS regulation as other sections of the deal, which may produce mixed-results.

There are a few congressional measures, however, that may force Obama’s hand when it comes to the labor standards. As a pre-emptive strike against prospective TPP-member Malaysia’s poor record on human-trafficking, Senator Robert Menendez (D-NJ) was able to pass an amendment through the Finance committee on a bipartisan basis preventing the United States from joining in any trade pact with countries that tolerate human trafficking. Currently the country rates high on the State Department’s list of violators, although the department has the option remove Malaysia from the list if it bars TPP from ratification. The move would be highly controversial, however, and likely cost needed congressional votes. If that bill passes, it puts the president in a tough position, stating publicly that he does not want to disincentivize Malaysia by excluding the country from the group, yet trying to maintain his assertion of improved international standards. Another potential roadblock, especially with concern for Nike, is a child-labor provision that was included in a customs bill that passed committee last month. The bill would bar imports from countries accused of using child labor, allegations of which are frequent in both Malaysia and Vietnam.

There is a little more known about TPP’s environmental standards than the labor portion because a chapter regarding it was published by Wikileaks in November, 2013. It is quite possible; however, that some of the information has become antiquated. The most noteworthy element of this chapter, writes professor and analyst, Jane Kelsey, is the fact that the United States has been a consistent outlier in the negotiations, with Canada being the Chair country for this round of talks in Salt Lake City. In the negotiations, the U.S. included memorandums from environmental groups to include “over-fishing and shark-finning, illegal logging, and trade in endangered species and wildlife” as areas that need to be addressed in the provisions. The U.S. also consistently found the environmental standards to be lacking the same sufficiency as their own standards set in a 2007 compromise between President Bush and the Democratic Congress. At the same time, the U.S. opposes language present in the 2013 chapter regarding climate change. Although TPP requires discussions regarding climate change there are no concrete actions required in the deal. Despite that, the U.S. and Australia do not even want to discuss climate change at all as part of TPP, although it was tentatively included. The other major cause for the U.S.’s outlier status is its demand to include environmental issues within the ISDS resolution framework, to the opposition of each of the 11 other countries. Also, notes Kelsey, it is very unclear how the other 28 suspected chapters of the bill mesh or clash with the environmental section; therefore it is difficult to ascertain the true environmental impact and standards of the agreement.

Of all of the topics regarding TPP that I have analyzed, these are the most troubling for me by far. I have heard the line that the bill will “toughen labor and environmental standards worldwide” ad-nauseam, but there has been little concrete evidence and nearly zero transparency as to what the supporting details are to this claim. Without full disclosure of these two matters, it is impossible for me to endorse passage of this agreement. Much work needs to be done by the administration and the deal’s supporters to explain to the American people how TPP is truly an improvement over deals like NAFTA when it comes to labor and the environment.

Sources:

Huffington Post – Zach Carter

Politico – Doug Palmer

The Fresno Bee – Tim Sheehan

Wikileaks – Jane Kelsey