As Yet Another Free Trade Agreement Fails To Deliver, Why Should People Believe USTR's Claims About TPP's Huge Benefits?

from the learning-from-history dept

As the US applies more and more pressure to the other nations taking part in the secret TPP negotiations in an attempt to get them to accept its demands, one issue that is starting to be raised is the central one of benefits. Given the sacrifices the USTR is demanding from other countries in order to strike a deal, people in affected countries are rightly questioning what exactly they will get in return. The growing doubts about the value of TPP are presumably why at this late stage the USTR has just released a document touting its "economic benefits". There are two things worth noting about this.

First, that no evidence is offered to back up the big numbers being thrown around there, so we know nothing about the assumptions and methodology behind the figures. And secondly, as Burcu Kilic rightly points out, if the USTR wants people to consider the economic benefits, it should also produce a similar report on the economic damage that could result from TPP so that they can see whether on balance it is worth proceeding with the deal. Needless to say, such analyses are never conducted -- at least, not by governments.

Of course, predicting the economic effects of complex trade agreements that haven't even been concluded is nigh on impossible. But as an alternative, instead of trying to squint into the future, we can perhaps look back at what actually happened with previous free trade agreements. Techdirt has already written about two major deals, NAFTA and KORUS, both of which turned out to be disastrous for the US, but what about the others?

A small, bilateral FTA was signed between the US and Colombia just under a year ago. Recently, President Obama welcomed Colombia's President Santos to the White House, and referred to the trade deal as follows:

We also had an opportunity to talk about the success so far of the Free Trade Agreement and its implementation. There's still some details that are being worked on. Nevertheless, what we've seen is a 20 percent increase in trade between our two countries since its signing. And that creates jobs in Colombia, it creates jobs here in the United States of America.
That's the kind of upbeat assessment you'd expect during these visits, but not everyone agrees with it. For example, Oxfam has recently produced a study on the effects of the FTA on Colombian farmers, in which:
[it] warned that of products important for Colombia's small-scale producers, especially whey, rice, white corn, milk powder and pork, were at greatest risk of being undercut by an increase in US imports and a fall in import prices.
It turns out that during the first nine months of the trade agreement, US exports to Colombia grew at a much greater rate than Colombia's exports to the US, leading to a 40 percent drop in Colombia's balance of trade with the US. Colombia's trade deficit with the US in processed foods deteriorated dramatically, and the country also fared poorly with regard to agricultural commodities, as its exports to the US declined while its imports from the US increased.
In other words, Oxfam claims that the reality of Obama's "20 percent increase in trade between our two countries" is lop-sided, with the US selling more, and Colombia's small-scale producers suffering as a result, since they are unable to compete with the larger US agricultural and processed food companies and their cheaper products.

Cynics might say that you'd expect Oxfam to take this line, and it's certainly difficult to tell what is really happening in the country. But this BBC news story from a couple of weeks ago gives us a hint:

Several thousand Colombian farmers have marched through the streets of Bogota to demand that the government comply with agreements reached in September.

Farmers' leaders said the Colombian government had breached 72 of 88 points agreed to end the previous protest.

"Things are as bad or worse than they were before," said one of their leaders, Cesar Pachon.

In August, the farmers had said the government's agricultural policies were driving them into bankruptcy.

They said that free trade agreements with the European Union and the United States, which had recently come into force, were flooding the market with agricultural products at prices they were unable to match.
As an Oxfam post points out, undermining small-scale farmers may have a knock-on effect with serious consequences for US policy in the region:
The US has invested a lot in Colombia -- more than eight billion dollars in US aid has gone to the country since 2000 to eradicate the illicit drug trade, promote alternative agricultural development and bolster the government's war effort. With peace talks now underway, comprehensive rural reform is the first item on the agenda of negotiations between the Colombian government and the [Marxist-Leninist terrorist organization] FARC.

Yet the evidence now shows that several of the agricultural products most important to Colombia's small-scale farmers -- dairy, rice, white corn, and pork -- are at greatest risk of being undermined by imports from the US in the first year under the agreement.
In other words, not only is the US-Colombia trade agreement de-stabilizing key parts of Colombian society, but also could well start to undo a decade's worth of US efforts to combat drug production and terrorist activity there. So much for Obama's claim that the bilateral agreement was a "success". Participating nations may want to bear this in mind when considering the USTR's cheery projections about TPP's benefits.

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Reader Comments (rss)

(Flattened / Threaded)

  1. icon
    Ninja (profile), Dec 13th, 2013 @ 2:38am

    In this Capitalist world quite a few have to lose so a handful can heap the benefits. I believe that while these agreements are bad overall they are just one "feature" inherent to Capitalism. By any means I'm not telling that Socialism or whatever regime is better or worse but it is a fact. The stock market works in that perverse logic (and some consider it to be the pinnacle of predatory Capitalism).

    Then we come back to the waves of protests that swept the world to the day and the laboratories that are trying to come up with a system that is actually sustainable in the most broader meaning, not only in what I've just exposed.

    Sorry for drifting to the sidelines of the article but in my view these trade agreements are a collateral effect of a broader systemic failure.

    reply to this | link to this | view in thread ]

  2. icon
    That One Guy (profile), Dec 13th, 2013 @ 3:25am

    'Who?' and 'How?'

    The first two questions out of any negotiators' mouths when a new trade agreement is proposed should always be:

    -Who, specifically, will benefit from the proposed changes?


    -How, exactly, will the changes help them?

    As the US/Colombia trade agreement discussed here shows, 'increased trade' is only a good thing when both sides are getting something from it, and while I'm sure the US farmers are enjoying the changes, sounds like the local Colombian farmers are hurting quite badly from the changes, making the 'agreement' very much a one-sided deal.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, Dec 13th, 2013 @ 4:29am

    I think we all know who will benefit.

    reply to this | link to this | view in thread ]

  4. icon
    ECA (profile), Dec 13th, 2013 @ 4:31am

    read the part of report..

    ONLY money I see in this, is for import/export..

    then showing INCREASES from 2009 show increases..

    AND how is it that the USA can EXPORT machinery..without SUBSIDIES?? to nations Poorer then the USA?

    "estimated $223 billion per year, by 2025. Real income benefits to the United States are an estimated $77 billion per year. The TPP could generate an estimated $305 billion in additional world exports per year, by 2025, including an additional $123.5 billion in U.S. exports."

    I aint no lawyer, but words like COULD, WOULD, MAY, and ESTIMATE...SCARE ME BADLY..

    I dont see much on IMPORTS..and most of the idea of TRADE is getting equal value..and I dont see it. Are they going to Import FOOD? Watch that MARKUP.. they get it for pennies and sell it to us at DOLLARS, like they do our farmers..

    I get a funny feeling the USA ends up PAYING the others money...for what? its not clear. but the CORPS dont want to pay it, and this agreement will PROBABLY end up costing the people the MONEY.

    IF its what SOME of us think it is..we will send them SUBSIDIZED goods for there stuff(we paid for it) and they will end us STUFF and acknowledge CERTAIN RULES..

    This is like the Trade agreement with canada..
    A Pharma corp is SUEING CANADA, for making generic drugs.
    Which is funny, as the NATION isnt getting the money, its the business that making the drug, makes the money..

    reply to this | link to this | view in thread ]

  5. identicon
    No, Dec 13th, 2013 @ 4:33am


    So columbian farmers can't live on the food they grow, because of cheaper, processed U.S. foods.

    This is logical. The U.S. doesn't need small-scale Colombian farmers to grow food, they already make enough so-called food. (Processed products for cheaper than dirt-farming? What IS the material IN the processed food, then? Toxic waste?)

    What they want is for Colombian small-scale farmers to grow coca. THAT's not allowed in the U.S., while the U.S. certainly supplies the demand and demand the supplies. 1+1.

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, Dec 13th, 2013 @ 7:18am

    there hasn't been nor will there be a single 'Trade Agreement' that wont get whatever is best for the USA whilst getting the worst for the other nations involved. you may say that that is the whole aim of the 'negotiations' but when those other nations are threatened in various ways at the outset and again after the 'agreements' have been made, in order to get 'the best deal for the USA, it is most definitely not the right way to do things! every other nation involved in a 'Trade Deal' with the USA need to think seriously before entering in any others with it. no good will come from TPP or any other 'Deal' other than to the USA. if you are involved, get out! if you are not involved, keep out! start thinking about your own country and your own people before allowing everything to be taken away with the sole aim of improving just the USA, otherwise, you will regret it!!

    reply to this | link to this | view in thread ]

  7. identicon
    Anonymous Coward, Dec 13th, 2013 @ 7:18am

    Someone really needs to have a sit down under oath and ask them who they are really working for

    reply to this | link to this | view in thread ]

  8. identicon
    Pragmatic, Dec 13th, 2013 @ 7:18am

    Re: 'Who?' and 'How?'

    Won't somebody PLEASE think of the [children] subsidies?

    Yeah, about those...

    One of the reasons trading partners can't compete is not because we do it on a bigger scale, but because it's subsidized and they are obliged to compete with that. We get hit with the same thing on the manufacturing side, which explains why consumer groups don't seem overly worried about falling wages and fewer well-paid jobs - it seems to be keeping consumer jobs and groceries prices down.

    The question is, can we, as a nation, and as individuals, afford the kind of globalized, unfettered crony capitalism we're under?

    If the answer is, "Yes, because I might get a chance to join the 1% if I work hard enough," excuse me while I laugh. The system is stacked against the rest of us and no amount of slaving is going to change that. Only a mixed economy with reasonable checks and balances can deliver the society we want.

    Steering too far left or right will only leave us in a hole we may never get out of.

    reply to this | link to this | view in thread ]

  9. identicon
    Jerrymiah, Dec 13th, 2013 @ 7:19am


    I beliieve all countries involved in the TPP negotiations should get together and tell the US negotiator "Go fuck yourself". That's the only language they seem to understand.

    reply to this | link to this | view in thread ]

  10. identicon
    Pixelation, Dec 13th, 2013 @ 8:02am


    It sure would be nice if they would stop insulting our intelligence by saying how beneficial TPP will be for everyone.

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, Dec 13th, 2013 @ 8:31am

    Re: TPP

    Can you imagine if the US was put under Export sanctions as a result of its government's extortionate tactics?

    reply to this | link to this | view in thread ]

  12. identicon
    Anonymous Coward, Dec 13th, 2013 @ 8:58am

    Why does any country bother dealing with the US at this point?

    reply to this | link to this | view in thread ]

  13. icon
    Spaceman Spiff (profile), Dec 13th, 2013 @ 9:01am


    Beware TLUC - The Law of Unintended Consequences! Though I have to admit, that I am only assuming that the consequences were unintended!

    reply to this | link to this | view in thread ]

  14. icon
    John Fenderson (profile), Dec 13th, 2013 @ 9:05am

    Beware the isms

    By any means I'm not telling that Socialism or whatever regime is better or worse but it is a fact.

    Every "ism" has its benefits and drawbacks, and no pure ideology leads to justice. The US system is mongrel, taking aspects of all the different isms to create something that is better, on the whole, than any of them.

    reply to this | link to this | view in thread ]

  15. identicon
    Anonymous Coward, Dec 13th, 2013 @ 9:15am

    Of course there is benefits if the TPP passes. Just not for 99 percent of people.

    reply to this | link to this | view in thread ]

  16. icon
    btrussell (profile), Dec 13th, 2013 @ 11:29am

    Why the Trans-Pacific Partnership sucks: short, funny animation

    reply to this | link to this | view in thread ]

  17. icon
    Woadan (profile), Dec 13th, 2013 @ 2:57pm

    Paul Krugman over at the NYT has this to say:

    "The big talk about TPP isnít that silly. But my starting point for things like this is that most conventional barriers to trade ó tariffs, import quotas, and so on ó are already quite low, so that itís hard to get big effects out of lowering them still further."

    In other words, from the economic side, it's hard to show any big gains.

    Which means that TPP is really only being negotiated so the IP industries can get their way without the messy business of having to buy off politicians in every country.

    reply to this | link to this | view in thread ]

  18. icon
    ECA (profile), Dec 13th, 2013 @ 3:24pm

    Re: read the part of report..

    Around 80% of the Food grown in the USA is Exported..

    Why is it subsidized? Because someone in Africa cant afford $1 per pound of potato?..(thats what we pay)
    $1 in the USA is EQUAL to 1 weeks wages in many countries..

    THAT ISNT FREE TRADE. WE ARE PAYING to send food to other nations.

    Even if we sold USA foods to other countries they WOULDNT be able to afford it.( AT COST) After shipping and handling..

    WE almost give it AWAY to many countries, even if they DONT NEED IT..


    reply to this | link to this | view in thread ]

  19. icon
    That One Guy (profile), Dec 13th, 2013 @ 4:36pm


    They'd just lie, the one you'd need to 'question' to get the truth would be their bank accounts(both the public and private ones).

    reply to this | link to this | view in thread ]

  20. identicon
    Anonymous Coward, Dec 14th, 2013 @ 2:46am

    I have to laugh, because really what was Colombia expecting?

    American farmers get heavy subsidies and can sell well below the cost of actually producing it, this is a game that the one with more money will always win, the US will destroy the farmers in other countries so they can sell at inflated prices after when there is nobody else to compete with them.

    reply to this | link to this | view in thread ]

  21. identicon
    Anonymous Coward, Dec 14th, 2013 @ 3:47am

    "more than eight billion dollars in US aid has gone to the country since 2000 to eradicate the illicit drug trade, promote alternative agricultural development and bolster the government's war effort"


    8 billion plus US taxpayer dollars have been spent to make friends in high places among Columbia's wealthy ruling class and to help maintain the high price of Columbian Drugs for the Columbian Cartels, to insure the continuity of the lucrative War on Drugs in the USA.

    Business as usual.

    reply to this | link to this | view in thread ]

  22. identicon
    Anonymous Coward, Dec 14th, 2013 @ 11:15am

    Seems to me the arguments against are just as arbitrary and anecdotal as the arguments for.

    reply to this | link to this | view in thread ]

  23. identicon
    MichaelG, Dec 14th, 2013 @ 12:00pm

    Re: 'Who?' and 'How?'

    So far I don't see a single comment noting that consumers in Columbia have benefited from cheaper food. They do count too, you know. It's not just about production jobs and trade deficits.

    reply to this | link to this | view in thread ]

  24. icon
    ECA (profile), Dec 14th, 2013 @ 12:04pm


    that all countries, must Quit subsidizing.. EXCEPT the USA..
    We already have good trade with most of these countries..
    so, what do we get? not much.
    What do THEY GET?? WE subsidize selling them tools and hardware. which means WE PAY for it..

    But, what is FREE TRADE?? this isnt free trade. the only persons making money, are the middle men..the Import/export of goods..
    THINK about something stupid here..
    HOW can the USA ship food to other nations AT the cost that YOU PAY for food?
    Unless there is a MONSTROUS markup to what WE are paying for food..THEY CANT. WHO pays for the Export of food to other nations from the USA..YOU DO.
    WHY do it? to undercut THEIR FARMERS.. and WE pay for it..

    reply to this | link to this | view in thread ]

  25. icon
    ECA (profile), Dec 14th, 2013 @ 3:04pm

    Re: Re: 'Who?' and 'How?'

    ALL I see is another way to DEFEAT another nations farmers..
    AND after they give up farming, we have them in our hand..
    GIVe us your OIL or we shut off the food..

    reply to this | link to this | view in thread ]

  26. identicon
    Anonymous Coward, Dec 14th, 2013 @ 6:51pm

    Re: incentivization

    You know why US food is cheaper?
    The US government subsidize those, that is why, take away all the benefits the government hands out to its farming operations and it won't be so cheap.

    This is why American big stores can go down there and vanquish the competition. This is why American produce can compete, not because of its merits but because the US is cheating. surance.html

    $256 billion dollars in subsidies since 1995 alone. or-agribusiness /downloads/2009/10/green-box-web-1.pdf

    Worse the American public is paying for it all.
    Now I do understand the need to keep farmers is a strategic thing for any country, but how the US was able to dupe the Colombian government into accepting such ridiculous terms is beyond me. Is like the people in power everywhere never gave a damn about their own people.

    reply to this | link to this | view in thread ]

  27. identicon
    Anonymous Coward, Dec 14th, 2013 @ 6:59pm

    Re: incentivization

    You know who is paying for that cheap food?
    You with your American taxes.

    Unlimited crop insurance subsidies now cost the taxpayer $9 billion a year and overwhelmingly flow to the largest and most successful farm businesses. Unlike other farm subsidies, crop insurance subsidies are not subject to means testing or payment limits and farmers are not required to adopt basic environmental protections in exchange for premium support from the taxpayer. While some farms annually collect more than $1 million in crop insurance premium support, the bottom 80% of policyholders annually collect about $5,000.

    The US government is destroying the agrobusiness of another country because it has more money to subsidize it, not because it can produce cheaper, worse it probably costing money to the US taxpayer, billions of dollars each and every year.

    The US doesn't want the Colombian small farmers to be able to compete period they want to take over all their operations and assume control of it all and they can do it because the US has more money.

    reply to this | link to this | view in thread ]

  28. identicon
    Anonymous Coward, Dec 15th, 2013 @ 1:57am

    Re: Re: 'Who?' and 'How?'

    That will be short lived, the American produce is cheap because of subsidies 256 billion since 1995 between 9 and 12 billion each and every year, so it is not competence that is keeping the American farmers competitive, Colombia can't compete with that, they will all fold and become "the poor" that can't sustain themselves straining government resources bringing a whole new set of social problems and challenges.

    For Americans, well the American public is actually the ones paying for it all with tax money and they get nothing, absolutely nothing in return, any benefits accrued will be almost entirely for the food industry barons, while Colombia farming will be left in shambles in the control of a few big that actually can do what American corporations can do and have access to the same subsidies.

    reply to this | link to this | view in thread ]

  29. identicon
    Anonymous Coward, Dec 15th, 2013 @ 1:59am


    There is one that may interest you if you are American.
    The low prices American produce can have i snot natural, is from taxes the Americans pay.

    9 billion dollars a year, is almost money laundering.

    reply to this | link to this | view in thread ]

  30. identicon
    Anonymous Coward, Dec 15th, 2013 @ 5:11pm

    The same thing happened with "free trade" between US and China. Except in America, the "farmers" are the middle class labor workers.

    reply to this | link to this | view in thread ]

  31. identicon
    Kronomex, Dec 17th, 2013 @ 5:24pm

    Tony "Corporation and US Bicycle Stand" Abbott is going to do to us with the TPP what the FTA has done with Colombia's economy. Except in our case rights and freedoms are going to be destroyed as well.

    reply to this | link to this | view in thread ]

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