This video is a good summary of why the Trans Pacific Partnership is a full up assault on democracy.
H/t Americablog.
Category: International Commerce
Accountability in Free Trade, What a Concept
Following a spate of horrific fatal disasters at Bangladeshi textile industry pressure is increasing end special trade status between that nation and the US:
After several deadly factory disasters in Bangladesh — including the collapse of an eight-story garment factory last month that left at least 1,127 people dead — labor advocates are stepping up pressure on the Obama administration, calling for it to convey its disapproval of working conditions in the country by revoking its special trade status.
But federal officials remain conflicted over the American government’s responsibility for safer labor conditions overseas, and in meetings in recent weeks they disagreed over what combination of carrots and sticks would work best to achieve this goal.
Some officials, particularly in the State Department, say that if trade status is revoked, Washington will lose its leverage to pressure Bangladesh to improve building codes and labor rights. Labor advocates and officials from the Labor Department counter, however, that this leverage is lost anyway if the administration is never willing to use it.
“By failing to take serious action before now even in the face of phenomenal, unprecedented death of workers, U.S. trade officials have already sent the wrong message to Bangladesh,” said Brian Campbell, policy and legal programs director of the International Labor Rights Forum, a workers advocacy group. “It’s time to send a strong signal.”
Mr. Campbell is right.
If you are not willing to have consequences to an employment regime that is corrupt and patently anti-worker (the factory owner has to approve before employees can join a union) because you fear losing leverage, then you never had any leverage to begin with.
If the US revokes the trade status, it is likely that the EU will as well, so this is a big deal, and a well deserved response.
This is not just poor pay and working conditions in Bangladesh, it is also that the state security apparatus murder labor organizers:
Last April, Aminul Islam, a prominent worker advocate, was found dead, his body bearing signs of torture. Reporters in Bangladesh said there was evidence that the government’s security forces might have been tied to the death. No one has yet been arrested. According to American diplomats and labor officials, there has been little progress in the investigation.
It’s not going to happen now, because the Obama administration is populated by “free market mousketeers”, who believe that lowered trade barriers created improved working conditions and worker protections (they don’t Bangladesh, QED), make everyone richer, and keep your daughter from dating that guy with the piercings and tattoos.
Jeebus
The Obama administration has revealed what policies it wants changed under the Trans Pacific Partnership (TPP) trade agreement.
What do the Obama administration oppose?
They oppose things like:
- Requiring that meat packing plants have separate spaces for halal and non halal slaughter.
- Restrictions on pork and alcohol importation for religious reasons.
- Better capital requirements for banks.
- High taxes on cigarettes and alcohol to discourage their use.
- Personal data privacy protections.
- Regulatory actions to control pharmaceutical costs.
- Objecting to a fee (all of $21) to file a copyright complaint.
- Public ownership of energy resources.
- Patent policies which prohibit evergreening (renewing patents ad infinitum).
- Comprehensive food labels.
- Buy local military procurement. (which the US has)
- A publicly owned post office.
- Requiring that cheese be made from milk.
Seriously, this is a neoliberal (free market mousketeer) wet dream.
Yes, Virginia, the Trans Pacific Partnership Sucks Wet Farts from Dead Pigeons
It is a wet dream of Wall Street and IP holders.
The post is too long to summarize, but the Angry Bear goes through and summarizes the low points.
These are things like investors can sue in an extranational and secret courts for losses from:
- Strikes.
- Public protest.
The latter is the most serious. If your protest can result in a multibillion dollar judgement against your county or state, they will shut you down, constitution or no.
Tell your Congresscritter to vote no.
I Have a New Rule for Finance and Fraud
The first was coined by Eric Falkenstein:
People who meticulously avoid email should not be trusted, because it is simply too calculating, as if they know they are regularly committing crimes. A phone conversation can always be disavowed, you just say you were talking about last weekend’s bar mitzvah.
The 2nd rule, which I call Saroff’s Rule:
If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.
Well, now I have another rule, if your business plan requires an extraterritorial location not subject to any national law, it is because the principals involved intend to be lawless:
A company named Blueseed is a year away from offering entrepreneurs an inexpensive place, near Silicon Valley, in which to develop their products.
“Blueseed will station a ship 12 nautical miles from the coast of San Francisco, in international waters. The location will allow startup entrepreneurs from anywhere in the world to start or grow their company near Silicon Valley, without the need for a U.S. work visa. The ship will be converted into a coworking and co-living space, and will have high-speed Internet access and daily transportation to the mainland via ferry boat. So far, over 1000 entrepreneurs from 60+ countries expressed interest in living on the ship.”
No Civil Rights Act, no Equal Employment Opportunity Commission, no Fair Labor Standards Act, no Securities Exchange Act, no RICO statute, no consumer protection laws, no laws against slavery or indentured servitude, and indeterminate tax jurisdiction.
If you get an offer from these people, run the other way.
H/t Naked Capitalism.
Attention Greece: You Now Have the Chance to Screw the Germans, Do IT!
I was listening to NPR this morning, and discovered that the privatization/fire sale of Greek owned state assets that the IMF and the EU (really, the Germans) is not going as as quickly as expected, and one of the reasons is that some of the privatization deals actually effect the Germans and the rest as well, and they are objecting:
European governments, as well as Washington, are reportedly concerned over Russia’s possible expansion into Europe. Gazprom, Russia’s state-owned gas monopoly, has made a high bid for the Greek gas utility company. Media reports suggest the privatization agency has delayed choosing a buyer — under international pressure.
There are also other strategic concerns, such as conflict with China over Greek ports.
George Stathakis, an economist and lawmaker for the opposition leftist party Syriza, says China wants to expand its current control of a part of the Port of Piraeus and also buy the south-north railway link, raising fears China will flood the European markets with its inexpensive products.
“German and Dutch interests are opposing the idea of using Greece as the primary source of Chinese trade with Europe,” Stathakis says.
(emphasis mine)
It’s not like the cheap Chinese crap will put Greek manufacturers out of business. The Germans and the Dutch already did that.
Someone Greek will unload the ships, and someone Greek will fuel the ships, and someone Greek will operate the locomotives.
If some Germans lose their jobs over this, why should Greeks care?
Sauce for the gander. The EU austerity caucus, with the Germans at the lead, had demanded, and got the dismantlement of the Greek public health insurance system.
Share the misery.
Awsome!!!!!
The WTO has just granted Antigua and Barbuda the right to ignore U.S. Copyrights because of our clamp-down on gambling:
A long-simmering trade conflict between the United States and Antigua and Barbuda appears to be boiling over.
Antigua and Barbuda, which has a $1 billion economy, is planning on getting legal retribution from the United States’ $15 trillion economy over its refusal to let Americans gamble at online sites based in the Caribbean nation — perhaps by offering downloads of American intellectual property, like Hollywood films, network television shows or hit pop songs. On Monday, the World Trade Organization gave its go-ahead for Antigua and Barbuda’s tentative plan.
“The economy of Antigua and Barbuda has been devastated by the United States government’s long campaign to prevent American consumers from gambling,” Harold Lovell, Antigua’s finance minister, said in a statement. “These aggressive efforts to shut down the remote gaming industry in Antigua have resulted in the loss of thousands of good-paying jobs and seizure by the Americans of billions of dollars belonging to gaming operators and their customers.”
The conflict’s roots are a decade old. The World Trade Organization said that the United States had violated its trade agreements by preventing Americans from betting at sites based in Antigua and Barbuda. Because Washington is unwilling to make the betting legal, the countries have been locked in a dispute over what constitutes fair trade practices and fair compensation.
The online gambling industry was at one point the second-largest employer in the Caribbean country, its government has said, and economists estimated its worth at $3.4 billion. Gambling employment has dropped to fewer than 500 people from more than 4,000 as a result of the United States’ trade policy, it said.
On Monday, a dispute settlement body in Geneva gave Antigua and Barbuda the nod to, in essence, violate American intellectual property rights to make up its losses, calculated at $21 million a year.
It remains murky just how the Antigua and Barbuda government might go about it. But trade watchers suggested it might set up a site where viewers could pay a pittance to watch a film or television show with an American copyright. The United States might not be able to shut the site down under international law.
BTW, it was the US that insisted on having cross-retaliation, where misbehavior in one industry could result in penalties at another industry.
In a best case scenario, I hope that this doesn’t get resolved, and the “content owners” (actually the holders of exclusive licenses) find their stuff on the internet for next to nothing.
Hollywood and Silicon Valley will doubtless freak out, but if this continues down this path, and Antigua does distribute IP protected content, the US is forbidden from retaliating, so we see what happens if a bit of IP sanity breaks out.
My guess is that it won’t be the apocalypse that the MPAA and the RIAA predicts, and maybe they will be viewed like the proverbial “Boy Who Cried Wolf.”
My previous posts about this are here, and it appears to me that this is moving very slowly, my earliest post is from 2007(!), and the complaint, and the remedy, remain the same as my original post, but we now finally have a ruling.
It’s the Bankster’s World, We Just Live in It
Case in point, Moberly Missouri, where the New York Times scolds them for not paying debts incurred through fraud and the corruption and/or incompetence of banks and regulators:
Residents of Moberly, Mo., got a shock last year when they discovered that their city had guaranteed $39 million in bonds, sold by an independent authority, to help a Chinese company build a plant to make sucralose, an artificial sweetener.
The project fell apart in a matter of months, and residents learned that they had been misled about the company’s track record in China — and that they were now expected to make the bond payments.
But municipal bond market participants say they were shocked, too, by how quickly the city of about 14,000 would walk away from a solemn promise to guarantee the debt payments through 2025, the life of the bonds.
Cities like Moberly that guarantee debts for entities that borrow for projects like parking garages and hockey arenas often “don’t understand that they are responsible for making these payments,” said Matt Fabian, managing director of Municipal Market Advisors, a research and consulting firm. However, he said, “It’s as if your kid runs up a $400 cellphone bill. You can’t get out of paying it by saying you didn’t authorize that.”
Moberly, where the biggest employer is a state prison, had responded eagerly to a pitch by the Missouri Department of Economic Development to host the project, hoping for hundreds of jobs. The company, Mamtek International, was said to have a sucralose plant in Fujian Province producing a sweetener called SweetO, for use in drinks, candy and pharmaceuticals. Most of the authority debt, to go toward building and equipping the plant, was issued under a federal stimulus program allowing private investors to use tax-exempt municipal financing.
But when a bond payment came due last August, with the building still unfinished, Mamtek officials said they didn’t have the money. Construction stopped; the handful of employees in Moberly were laid off. Weeks of confusion followed, with subpoenas from the Securities and Exchange Commission, rumors of a split between the Chinese company and its United States subsidiary, reports that the plant would be liquidated and fears that the bond proceeds were gone forever.
………
Investigators also learned that state development officials had learned — before the bonds were sold — that Mamtek’s sucralose plant in China had never opened, because of environmental concerns. But that information was not relayed to Moberly, according to a report by the Missouri House Interim Committee on Government Oversight and Accountability.
Let’s be clear here: the good citizens of Moberly were swindled by Mamtek, state development officials, and likely whoever issued the bonds.
There were serious material discrepancies.
This is the very definition of odious debt, and it should be repudiated without penalty.
I Wonder if This Will Effect Coverage of Outsourcing
Romenesko is reporting on a This American Life story about how a local news service is using overseas reporters and having them use aliases in order to conceal the fact:
The latest “This American Life” looks at hyperlocal content provider Journatic and interviews Journatic writer-editor Ryan Smith, who reveals that the company uses fake bylines for its Filipino writers — or did, until “TAL” blew the whistle on them.
Smith tells TAL’s Sarah Koenig that “when I ended up looking at the names on a lot of the stories [he edited], the names on the stories that were published weren’t the ones that I saw had written the stories.”
One piece, for example, had the byline of “Ginny Cox,” when the story was actually written by Gisele Bautista in the Philippines.
Producer Koenig says: “Looking at the computer system that the company uses to manage its stories, it seems that when Gisele worked on this real esate story, there was a button called SELECT ALIAS, and when she clicked on it, she had a choice: she could either be Ginny Cox, or Glenda Smith.
Journatic and the Chicago Tribune’s TribLocal have used other fake bylines for stories written by Filipino writers, including Jimmy Finkel, Carrie Reed, Jay Brownstone and Amy Anderson.
Romenensko (and apparently TAL), are focusing on the journalistic ethic issues of fake bylines.
I’m actually more interested in the effect that this will have on the coverage of outsourcing and moving overseas that we see from the mainstream media.
I have always felt that one of the conceits which gave us generally laudatory coverage of moving jobs overseas was the conceit that reporting could not be outsourced.
Now that they know that it’s their jobs on the line, I wonder if the tenor of the stories will change.
Jeebus
Some of the provisions of the Trans-Pacific Partnership have been leaked, and this is absolutely awful:
- limit how U.S. federal and state officials could regulate foreign firms operating within U.S. boundaries, with requirements to provide them greater rights than domestic firms;
- extend the incentives for U.S. firms to offshore investment and jobs to lower-wage countries;
- establish a two-track legal system that gives foreign firms new rights to skirt U.S. courts and laws, directly sue the U.S. government before foreign tribunals and demand compensation for financial, health, environmental, land use and other laws they claim undermine their TPP privileges; and
- allow foreign firms to demand compensation for the costs of complying with U.S. financial or environmental regulations that apply equally to domestic and foreign firms.
Just in case you are wondering, there are proposal to make the agreement more people friendly, and less corporation friendly, but it appears that the Obama administration is opposing this at every level.
Note that this is not atypical of US foreign policy, though it it is in direct contravention of of what he promised during the 2008 campaign.
I guess that Austan Goolsbee was told the truth when he was said to representatives of the Canadian government that Obama’s populist statements regarding free trade agreements were lies.
The Big Picture is that the Current International Regime is Anti-Democratic
That is the big picture of the fact that Greek PM Papandreou started pushing for a referendum on the Greek bailout, and was forced to back down under international pressure.
When we look at both international financial policy, and international trade policy, it is predicated on the idea that ordinary people will never support these policies, because they are simply too stupid to understand the bigger picture, and see that these policies are too their benefits.
What the very serious people don’t understand is just why the ordinary people don’t like this.
The fact is that we are dealing with tribal issues, and the people at the top, the ones who make these policies, have very little meaningful interaction with the people who actually produce the stuff that makes the economy work.
They go from the equivalent of Phillips-Exeter to Harvard to Wall Street to Washington to Wall Street to Washington to Wall Street to Washington ………
The reason that people don’t support these policies is because they see the effects on their lives of the policies that favor multinational corporations and mega-banks, and these effects are negative, while the policy makers, who roomed with the banksters and the executives to be at college, simply have no clue as to how the other half (actually 99%) lives.
The fact that this has been aggressively sold for decades, and a society which embraced the Snuggie® with open arms has rejected these policies.
While it is true that the commons are not universally correct, the fact that the public has continued to be extremely skeptical despite a full court press does seem to indicate that there is a disjoint between the conventional wisdom and the reality.
After all, we have advertising firms that could sell snow to Eskimos with a 6 month campaign.
What the Shrill One Said
Yes, Paul Krugman is correct in noting that the US dollar is overvalued, and that the
Chinese Yuan is undervalued.
He only has 800 words, so what should also be noted is that the dollar is not just overvalued versus the Yuan, but versus the whole world, though he does note that the Chinese are deliberately pushing the value of the Yuan in addition.
Since the undervalued Yuan is, at its core, a tariff on Chinese imports, and a subsidy of their exports, it is clear that the sanctions bill in the Senate is justified.
That being said, there are also structural issues that overvalue the US dollar, to the advantage of Wall Street and the disadvantage of Main Street (Hence Robert Rubin’s* full throated support of a “strong dollar policy when he was SecTreas), and these need to be addressed as well.
*Why is this corrupt ratf%$# not under criminal investigation?
Missing the Point Completely
This article notes that Israel appears to have made significant discoveries in offshore natural gas, but that access to foreign markets will be difficult:
Israel can look forward to long-term energy security after the discovery of a huge off-shore natural gas field but obstacles lie ahead in exporting its output, experts said Thursday.
Israel will find it hard to secure foreign buyers as European gas consumption is weakening while competition is stiff in the expanding Asian market, they said.
Texas-based Noble Energy and its Israeli exploration partners described Wednesday the Leviathan prospect — 130 km (80 miles) off the Mediterranean port of Haifa — as the world’s biggest gas find in the past decade
This misses the reality of the situation.
When one looks at oil exporting nations, with the exception of Norway, the truth is that it does not bring prosperity to the masses, nor does it make for a better society.
Simply put, Israel should not plan to export the gas in any significant quantity.
First, from a defense perspective, the natural gas serves as a way to achieve energy independence in the relatively short term, and exporting the gas diminishes this.
Secondly, natural gas is the raw material for much of the petrochemical industry, and this could be used to establish such an industry in Israel. A focus on exports would serve to subvert the development of this industry and the additional profits, and jobs, that they would create.
Consumer Sentiment and Exports Surge
Both good pieces of news:
A rise in U.S. consumer confidence to its highest in six months and a much bigger-than-expected contraction in the country’s trade deficit pointed to a firmer economic recovery on Friday.
………
Consumer sentiment in December rose to its highest level since June and was at its third-highest since the start of 2008, according to a Thomson Reuters/University of Michigan survey. Government data showed U.S. exports in October rose a robust 3.2 percent while imports declined slightly.
………
The survey’s preliminary December reading for consumer sentiment came in at 74.2, up from 71.6 in November. That was above the median forecast of 72.5 among economists polled by Reuters.
This is unalloyed good news.
It’s particularly good news because we are in the Christmas shopping season that accounts for a disproportionate amount of consumer spending.
My guess is that the the exports are helped by the general trend down with the dollar over the past month. (see graph pr0n)
In an odd way, if Obama’s disastrously bad tax capitulation compromise may actually help our economy if it convinces the currency markets to go short on the dollar.
Another Day, Another Sellout by an Obama Flunky
This time, it’s FCC Chairman Julius Genachowski making a proposal that would place a fig leaf on the elimination of net neutrality.
There are a number of problems:
- It does not cover wireless, except for vague language.
- Paid priority is acceptable so long as it is not “unjust and unreasonable,” which allows Comcast to gig over the internet video to prop up its cable business.
- It is likely not legal, since the court of appeals has already said that the FCC has little or no authority to regulate to regulate Title I (information services), and the plan refuses to reclassify the services as Title II (communication services), where there is explicit statutory authority.
- How actual infractions would be handled are unclear.
I would also point you at comments by the President of Public Knowledge, and would further note that PK, as well as Harld Feld’s commentary on Wetmachine are probably good starting points for developments.
The FCC meeting will be on December 21, and the Republicans on the board, 2 of the 5, have already announced that they will oppose any regulation, so it’s possible that Genachowski will have to move in the consumer’s direction to deal with his more consumer friendly board members.
Economics Update
Unemployment Claims 2008-Present
Things aren’t getting better, they are just running out of people to lay off.
H/t The Washington Independent.
It’s jobless Thursday, and initial unemployment claims are back in the 450K-480K “sweet” spot, with initial claims rising 13,000 to 462K, the 4 week moving average rising 2¼K to 459,000, though both continuing and emergency claims fell.
Seeing as how the number really needs to be below 300,000 for any meaningful recovery in jobs, we remain in a bad place.
In non-existent inflation land, we saw producer prices rise 0.4% in September, though that was largely on food, the core rate was 0.1%, and the price of imports fell by 0.3%, even as the trade deficit rose.
I would note here to all the free trade fetishists, we have a deflation problem in our economy right now, and most of it is being imported.
Meanwhile, the us dollar has fallen to a low for the year.
This Means Nothing
The House just passed a bill allowing for sanctions against countries that manipulate their currency, which is actually in accordance with free trade theory; an undervalued currency is a tariff on imports and a subsidy on exports.
The “free trade” absolutists would disagree, arguing since free trade creates democracy, cures rainy days, and keeps your daughter from dating that guy with the tattoo and the tongue studs.
Of course what they are really arguing is that they want to do whatever they can to depress American worker’s wages, because that’s how they get their consulting gigs.
This bill means nothing, and it never will, because it will never pass the Senate, and because in order for the tariff to be enforced, the US Commerce department must rule that the currency is “fundamentally undervalued,” which it will never do, because, it’s run by guys who worry that if they do so, their daughter will start dating that guy with the tattoo and the tongue studs.
Basel III
Click for full size
Additional Capital Requirements
Phase In Schedule
I’ve been looking at the Basel III international banking proposals, and I find them rather weak tea.
The 10¢ tour of the proposal is that they are requiring more capital, 4.5% tier 1 capital (basically capital that can be redeemed for cash in a market essentially immediately), a further capital conservation buffer, and a “counter-cyclical” buffer that would kick in when times are good.
This will all be phased in over a 5 year period starting in 2013.
As to what it all means, I agree with Yves Smith that, “the reality is that a Basel III world will not look hugely different to the one from which the last crisis sprang.”
In particular, there is next to nothing on synchronizing accounting standards, which will send banks to places where they can call a bouquet of flowers a Tier 1 asset, does not deal with the shadow banking system in any meaningful way, and ignores the vast pit of putrescence that is the ratings agencies.
The Next Chapter of the Airbus/Boeing Pissing Contest
And it does not involve the tanker.
The WTO, after ruling that Airbus was the recipient of illegal state subsidies, has now ruled that Boeing has also received billions of dollars in illegal state subsidies:
The long-running trans-Atlantic spat over government support of the world’s two biggest aircraft makers gained fresh momentum on Wednesday as a trade panel found that Boeing had received subsidies that violated global trade rules, people briefed on the decision said.
American lawmakers said on Wednesday that the subsidies, $5 billion from federal and state agencies, were just a fraction of the $24 billion that Europe had alleged and were far less sweeping than the benefits its rival, Airbus, had received.
But European leaders said that the finding, by a panel of the World Trade Organization, showed that the United States had also relied on subsidies in the fight for plane sales, and that the ruling would help prompt negotiations to resolve the problems.
What is interesting here is that they cite the military contracts that Boeing gets, but also the tax abatements with the WTO board determining that, “Boeing had received subsidies through some of the research contracts from the National Aeronautics and Space Administration and the Pentagon, as well as through tax incentives linked to its facilities in Washington State, Kansas and Illinois.” (emphasis mine)
This is about more than just the Airbus/Boeing subsidies. The WTO just ruled that the shakedowns that business inflict on communities by way of tax breaks are illegal subsidies under the current international trade regime..
This is a good thing.
I’d like to see Congress to find a way to ban this little bit of corporate pay-to play.
Why Yes, The Obama Administration is Paying to Offshore Your Job
It’s called the Business Process Outsourcing (BPO),and USAID is spending $30 million dollars to train workers in Sri Lanka in order to outsource IT jobs from the United States:
Under director Rajiv Shah [an Obama political appointee], the United States Agency for International Development will partner with private outsourcers in Sri Lanka to teach workers there advanced IT skills like Enterprise Java (Java EE) programming, as well as skills in business process outsourcing and call center support. USAID will also help the trainees brush up on their English language proficiency.
USAID is contributing about $10 million to the effort, while its private partners are investing roughly $26 million.
“To help fill workforce gaps in BPO and IT, USAID is teaming up with leading BPO and IT/English language training companies to establish professional IT and English skills development training centers,” the U.S. Embassy in Colombo, Sri Lanka, said in a statement posted Friday on its Web site.
“Courses in Business Process Outsourcing, Enterprise Java, and English Language Skills will be offered at no charge to over 3,000 under- and unemployed students who will then participate in on-the-job training schemes with private firms,” the embassy said.
Oh, I forgot to add, they are also doing this in Armenia.
I don’t think that Barack Obama really wants to send your jobs overseas, but I do think that there are people in his administration are “strongly free trade” and they think that being “strongly free trade” means that agencies of the US government have an obligation to move jobs out of the country in this manner, on the theory that one day, eventually, these countries will develop a middle class that will buy the sh%$ that we make.
Still, if this is not on the front page of some right wing blogger in the next 3 days, I would be very surprised.
It betrays a level of political incompetence and arrogance that positively boggles the mind.
I’m going to check and see if it is on Slashdot, and if not, I’ll do some blog whoring with the story.