The government will hold a parliamentary vote on the controversial Trans Trans-Pacific Partnership (TPP) despite the fact the US will not ratify it.
The ABC reports that, soon after President Donald Trump’s inauguration over the weekend the White House issued a statement saying that, as part of its strategy to protect American jobs, it would not participate in the TPP.
However, as AAP reports, Prime Minister Malcolm Turnbull said the Government will continue its efforts to see the deal come to fruition.
“We need trade, trade is driving jobs,” he told Triple M radio.
“We’re looking at every opportunity to expand the markets for Australian exports.”
But he tells a half truth about why the trade accord among a dozen Pacific Rim nations is a bad deal. In Trump’s view, trade agreements like NAFTA have allowed developing countries to “steal” American manufacturing jobs and decimate the well-waged middle class. This is why he says that America should reject the TPP.
But shifting the blame for American joblessness and stagnant incomes obscures the more complex, largely home-grown pressures that led U.S. companies to offshore manufacturing production to low-wage jurisdictions. Promising to tear up certain trade deals and impose tariffs on imports (chiefly from China and Mexico) will do very little if anything to reverse the problem.
The real problem is that these agreements don’t actually do enough to support freer trade. We’ve been studying trade agreements and the political foundations of industrial competitiveness in the United States, East Asia and beyond – for decades. We have witnessed how so-called “free trade deals” have become less and less about opening markets and more about entrenching monopolies. Australia, where we’re based, is also a member of the proposed TPP and, like America, stands to benefit from the deal’s abandonment.
Who’s really to blame for America’s manufacturing decline?
When Trump blames globalization for having “wiped out our middle class,” he misses the point that the main actors behind successive waves of globalization since the 1990s have been U.S. corporations themselves. And when Trump blames China (or Mexico) for stealing American jobs, he misses the point that it is U.S. companies that have been most aggressively downsizing their labour force and distributing production abroad.
Blame shifting also misses the point. It’s American corporations themselves, the key drivers of globalization (which have been the chief beneficiaries of this “downsize and distribute” approach) racking up “super profits” from what is effectively rent-seeking. They do this by exploiting – and aggressively seeking to extend – generous monopoly rights granted to them through intellectual property laws.
While Trump rails against America’s growing trade deficit with China, the reality is that the largest category of imports from that country (about 28%) is electrical equipment (for example information technology (IT) products) very often generated (designed, outsourced or contracted) by U.S. companies. These companies, like Apple, hold the patents, copyright and trademarks.
This has paved the way for some serious distortions in accounting. For example, recent research has shown that the full value of the sale of iPhones in the United States (which are assembled in China) are counted against China’s trade deficit with America.
In reality, China contributes only around 3.6% of the value of iPhone sales in parts and labor, itself importing the remainder of the more (and less) technologically advanced parts (from Japan, Germany and South Korea and beyond). U.S. companies contribute only 6% to the total parts and labor of an iPhone, but Apple takes the lion’s share of the final sale price thanks to its patent and trademark ownership.
So when an iPhone sells in the United States for about $500, only $159 of this reflects content imported from China. The rest goes to American firms. And while that $159 is counted against China’s deficit with the United States, China itself only accounts for $6.50 of that value.
Seen in this light, we should not be surprised that 55% of the price U.S. consumers pay for goods imported from China actually goes to U.S. companies. Following from this, were Trump to make good on his promise to slap tariffs on imports from China, this would effectively penalize many U.S. companies.
The related problem is that decades of downsizing the manufacturing workforce and moving production overseas have gradually denuded America’s industrial ecosystem whereby the networks of equipment makers, suppliers and manufacturers needed to turn innovative ideas into products are disappearing. As one of us has shown in research, extreme offshoring is not only undermining skilled employment in the U.S. but also putting at risk the innovation that has underpinned American technological dynamism since the end of World War II.
Consequently, it’s increasingly difficult to find workers with the skills necessary to make the technologically sophisticated goods associated with the better-paid jobs of yesteryear. For example Silicon Valley, the home of most U.S. technology companies, is now a misnomer since very few semiconductors, which are primarily made of silicon, are produced there. Indeed, a more appropriate name today would be “App Valley” – and apps are not exactly the basis for a vibrant economy.
So why abandon the TPP?
Here’s where free trade deals do come into it.
Successive American administrations have further reinforced this extreme downsizing process by pushing trade agreements like the TPP that pay lip service to market access (free trade). In reality, these agreements entrench monopolies and tie the hands of governments that would otherwise take a more proactive approach to building new advanced industries and upgrading existing ones with new technology.
The creation of the World Trade Organization in 1995 marked the first major shift in international trade deals away from those that prioritize freer market access and towards those that entrench monopolies through the award of generous intellectual property provisions – even at the expense of economic and social goals like encouraging innovation and protecting human health.
But the improvements being made at the WTO level are sorely missing from most bilateral and regional trade deals, especially those being driven by the U.S. Many of these – from the Australia-U.S. Free Trade Agreement to the now defunct TPP – have sought to further extend the monopoly rights of IP-protected firms. These are the very corporate actors that most aggressively pursue the “downsize and distribute” approach.
From Apple and Dell in the IT space to Pfizer and Merck in pharmaceuticals and Nike and Gap in clothing, America’s patent, copyright and trademark-rich businesses reap major rewards for their shareholders by aggressively reducing labor costs through outsourcing. They also do it through extracting monopoly rents from their patented and trademarked technologies and designs. As recent research revealed, this also has major, negative implications for corporate investment and wage levels in the United States.
A better approach to trade
Obviously, the promotion of rent-seeking by entrenching monopoly rights has nothing to do with free trade. But the reality is that, for the United States at least, this has become a primary goal of its “free trade” agreements.
This is why the United States should abandon the TPP – and why Australia should support its abandonment. Abandoning the TPP, and requiring our governments to focus their efforts on trade deals that take a prudent approach to market access and a tough line on rent-seeking – would be beneficial for both our countries.
With the negotiations for the Trans-Pacific Partnership (TPP), completed, consumer group Choice has urged the Federal Government to make all details publicly available as soon as possible and for the Productivity Commission to conduct a full cost-benefit analysis of the agreement.
“At about midnight last night, Trade Ministers confirmed that the TPP negotiations were finished, however, the text of the agreement still won’t be publicly available for a number of weeks,” says Choice Campaigns Manager Erin Turner.
More than 7,400 Australians signed a petition calling for the Department of Foreign Affairs and Trade to release the text of the TPP.
“The agreement has the potential to impact every aspect of the Australian economy. It’s too big to ignore the fine print which is why we need a dull and transparent assessment of its impact before its impact.”
TPP has described the transformation as a modern agreement that will deliver huge benefits to citizens of nations involved.
“Now the agreement has been signed in the dark, all Australians will be waiting nervously to see what the government has traded away,” Ms. Turner says.
“Choice urges the Government to commit to a full cost-benefit analysis of the TPP before Australia signs on to complex new rules, governing everything from financial regulations to copyright provisions,” says Ms. Turner.
Beston Global Food Company (BFC) – which is set to float on the Australian Stock Exchange this month – has secured distribution for its premium Australian dairy, meat, seafood and health food products in 150 cities across China.
The company has signed the distribution deal with Chinese retail giant Dashang Group, which also has agreed to subscribe to 14.9 per cent of Beston’s stock as part of the $AUD130 million Initial Public Offering. Institutional investors committed $AUD100 million to BFC within four days of the offer being released earlier this month.
BFC’s Chairman, Dr Roger Sexton AM, said BFC had been invited to be the preferred supplier to Dashang for all Australian food and beverages. BFC also has the opportunity to create and stock a Beston Pure Foods section in the up-market stores operated by Dashang.
“BFC has formed a close working relationship with Dashang following on from the signing of the Free Trade Agreement between China and Australia,” Dr Sexton said. “Our two companies share a common objective of taking lean, green and safe products from high quality producers in Australia into the discerning consumer markets in China.”
￼Dr Sexton said BFC had also established a wholly owned subsidiary in China through the acquisition of the Dalian Australian Food Expo Company. The company – which consolidates about 7,000 distribution outlets across China – will manage the import, customs clearance and distribution of BFC’s food and beverage products.
In addition, BFC has a customer relationship with on-line supermarket product distributor Yihaodian – 51% owned by Walmart and with 57 million registered users at the end of 2013.
“Beston Global Food Company will operate as a branded food company which, through its stable of quality food investments, will aim to provide high quality, safe, clean (natural and/or organic) food and beverage products to consumers,”
Dr Sexton said. "Our goal is to be recognised as a reliable, high quality and consistent provider to burgeoning global consumer markets which are becoming increasingly concerned about issues of food safety.
“With ingredient integrity and a secure supply chain consumers will be assured of an authentic, genuine, healthy food experience.”
"This approach not only recognises our responsibilities to the environment, but also maximises returns to shareholders through the ability to achieve higher "price maker" margins from health conscious consumers."
Calls for food democracy, which date back to the sustainable agriculture movement of the 1980s, have become more common with the increasing concentration of power in the global industrial food regime.
The current regime is inherently undemocratic. The intervention of democratic food publics – based on their shared experiences of the adverse effects of global foodways – is essential to transform a broken system.
This political project depends on recognition that this is a global public problem and that its solutions depend on new conceptions of citizenship.
Global regime requires citizens, not consumers
Corporate control of the global seed sector is one symptom of an undemocratic food system that favours transnational agribusinesses. Ten companies account for 55% of the seed market. Several dominate value chains from seed to supermarket shelf.
An endless array of processed, packaged and scentless products confronts us as consuming subjects, not citizens. We are forced to rely on the expert knowledge of food manufacturers, labellers and processors in our dietary choices.
In response, eaters concerned with “food from nowhere”, as Josè Bovè puts it, aspire to recreate authentic relationships built on trust between growers and consumers. Shortening food supply chains – by buying directly from producers or opting for Fair Trade products – may bring us closer to this goal.
In respecting local foodshed boundaries by buying at farmers’ markets, we express our dissatisfaction with corporate control through what Michele Micheletti calls “political consumerism”. But individual action cannot counter the overpowering influences of liberalised markets and their impacts on rural livelihoods in a global economy.
While consumers’ local micro-encounters may represent important attempts at communal autonomy, they do not address inequalities within and between communities. Privileged groups find it easier to participate. It is not simply that marginalised people lack the means to participate in farmers' markets and buy Fair Trade or organic produce; they have limited input into these initiatives.
For one of the industrial food regime’s fiercest US critics, farmer-activist Wendell Berry, the revitalisation of local food economies is the strongest counter to a system that puts profit before human health, culture and the environment.
Multi-stakeholder structures such as food policy councils in the US and Canada and associations for the maintenance of smallholder agriculture (AMAPs) in Europe support many of these innovative models. They are creating and connecting new spaces for democratic debate on environmental sustainability, social justice and economic viability.
Rather than seeking to maximise local consumption, critics of industrial agriculture should concentrate on creating democratic food publics to tackle structural problems with the food system. These include food deserts in poor neighbourhoods and rules that grant corporations property rights over seeds.
When the industrial food system is perceived as a public problem, rather than a personal responsibility, a greater diversity of experiences and perspectives can contribute to solutions. The vision of localised food systems is not sufficient to bring about food democracy for the one billion people most affected by poverty and hunger. This is particularly so when the intellectual property, free trade and investment agreements that govern food and agriculture transcend national borders.
Drawing on John Dewey, democratic publics are comprised of individuals who recognise the adverse impacts of the activities of others and act collectively to demand the state protect their interests. Globally, demands for an alternative food system must be made by a democratic food public that shares citizenship on a basis other than that of the nation-state.
Uniting in a fight for food sovereignty
One such public is the transnational peoples’ movement La Via Campesina. It represents small-scale producers, pastoralists, migrant workers, fisherfolk, landless peasants and indigenous peoples in 70 countries across the global north and south. For more than 20 years, members have embodied an “agrarian” citizenship that goes beyond class-based notions of political representation.
La Via Campesina provides a model of rural action based on common interests in the different struggles against policies that impact negatively on farmers worldwide. These impacts include low crop and livestock prices, exploitative temporary farm labour, distorting subsidies and the disappearance of family farms.
The question of food is fundamentally social. Who should provide food and how? Whose livelihoods should be protected?
La Via Campesina’s concept of food sovereignty, the right of peoples to define their own food and agriculture policies, is a proposal for radical social transformation to make food systems more democratic. It has evolved from a catch-cry opposing trade liberalisation to a concept adopted by broader constituencies. Among these are food democracy advocates in the global north who share the view that the corporate food system actively contributes to global hunger, poverty and malnutrition.
The campaign for food sovereignty spans many issues including gender inequality, land reform, genetic modification, intellectual property, biodiversity, urban agriculture and labour migration. It has emerged as a political project that talks to power at venues including the United Nations Committee on World Food Security.
Hundreds of members of La Via Campesina and like-minded organisations met recently in a very different forum in Sèlinguè, a village in Mali, West Africa. The resulting Declaration of the International Forum of Agroecology presents the peoples’ alternative to conventional industrial agriculture and the destructive elements of international trade.
It states that traditional methods of food production such as intercropping, mobile pastoralism and composting play an integral role in creating equitable, sustainable and healthy food systems, as opposed to monocultures and biotech solutions.
The meeting declared:
Agroecology is the answer to how to transform and repair our material reality in a food system and rural world that has been devastated by industrial food production and its so-called Green and Blue Revolutions … [it is] a key form of resistance to an economic system that puts profit before life.
A revolution of a different colour, agroecology is based on farmers’ local innovation and peer-to-peer information sharing and diàlogo de saberes (ways of knowing through dialogue). It seeks to return power to communities, to:
… put the control of seeds, biodiversity, land and territories, waters, knowledge, culture and the commons in the hands of people who feed the world.
Relocating control of food production and distribution to growers and eaters rather than corporations requires the mobilisation of publics of citizens committed to resolving the public problem that is our food system. The building of coalitions between consumer-oriented initiatives and the more radical food sovereignty movement is essential to develop a long-term constructive agenda for widespread change.
While practising political consumerism and strengthening local food economies are important, only the emergence of democratic food publics based on new notions of citizenship can achieve such change.