Politics Of Trade: The Northwest’s Complicated Relationship To The TPP -OPB

Another article outlining some of the difficulties in getting to the truth about the TPP this election year.  As I have said before, I don’t believe that the TPP is the problem, just a symptom, and that the real problem that we face by these massive trade deals, which are always done with an eye towards helping American businesses, is that the tax law is what ultimately defines whether companies can outsource their work to low wage countries. If the tax laws make it unfavorable to move factories overseas, then they won’t. An unintended consequence of that is that they may just choose to open new factories overseas and slowly shut down antiquated ones, by not investing in them, but again, tax law dictates such issues as depreciation schedules of equipment. One reason Japan outcompeted us in the 198os was due to a very favorable depreciation schedule of 1 year to our 5 (or more) years. A company could write off the depreciation of a large manufacturing machine in 1 year, and then buy the latest state of the art one the next, making them more and more competitive. By the time our companies would have depreciated the equipment, the Japanese were 5 or more times efficient against our companies.

Part of our complicated tax law in the US gives different industries different depreciation schedules. For example, replacing computers at companies like Microsoft can be done more rapidly than standard companies, due to the ability to classify them as Research and Development (R&D) tools, rather than just standard business equipment. That Microsoft tests new Operating systems and programs like Word on their internal computer users first, allows them to take advantage of this tax law issue.

Another thing to think about, is that we currently dominate the world in software, a business that generates not only great middle class and upper class jobs, and has an enormous effect on follow on jobs for low income workers, that often supply goods and services to these businesses, and to the universe of partner companies that establish offices in the area of the business, such as we see with partners to Microsoft,Boeing and Amazon. These businesses all   generate enormous tax revenues for our country. Working towards a beneficial trade agreement that forces other countries, like China or India,  to get better at supporting our intellectual property, such as software, music and film rights, is a good thing for American workers. Fighting trade deals and making it more punitive or operating outside of trade deals leads to piecemeal implementation (or no implementation) of protection of these laws. 

There is always an inbalance between competition between nations and even states. Most people have heard that Delaware  has a special tax law that allows corporations to form easily there and shelter themselves from taxes. Nevada, likewise is a haven for companies in other states, to use as a tax haven for their revenues to be gathered. A large global company, headquartered in the Bay area, can open a subsidiary in Nevada, and have all their revenues go there first, to avoid California tax rates. You likely have heard of our massive tax breaks to Boeing and other companies. These are our states’ TPP deals with internal US companies, and external foreign companies that can bring jobs. This is the way states compete. It is legal. Allowing corporations to have signification input on trade deals is the way to get US subject matter expertise to the table so that our negotiators can best understand what we need from other countries. It’s our governments fault if they allow corporations to bury tax advantages into these but it is not the fault of the agreeement. And it is a political football to pretend that the deal is the problem.

To be clear, there are many other isssues that are concerning in TPP, and again our Congressional delegation should support taking it out from behind it’s secrecy and opening the process up for feedback.  I support the documented TPP problems and the solutions to them that were laid out in a 20 page detailed over veiw by a consortium of the Sierra Club,  Friends of the Earth, Public Citizen, Institute for Policy Studies and Earth Justice in 2012. If you like detail on these issues go and read the document.

Click to access tpp-investment-fixes.pdf

But the following article is a good generic article, useful for much more discussion, I present it with an eye on helping us better understand why our representatives in Congress in the Pacific NW are not flocking to damn TPP, while the outsiders, who have nothing to lose, are. Ultimately we need trade deals, but they need to protect our environment, our hard won intellectual property. We must make sure they don’t give hidden benefits to countries and companies that are working against these issues.

Politics Of Trade: The Northwest’s Complicated Relationship To The TPP

http://www.opb.org/news/series/election-2016/tpp-trade-oregon-economic-impact-political/?utm_source=Sightline%20Institute&utm_medium=web-email&utm_campaign=Sightline%20News%20Selections

 

 

The Environment, The Transpac Partnership and the Democrats

My wife and I spent time today with the Democrats, at the annual Jefferson County Democratic Fish Fry, a 30th anniversary of a highly successful gathering to support the Democratic Party. Given that there are no stated Republicans running for office in Jefferson County this year, I guess you can call it a victory party.

With the usual stump speeches by all the candidates, there was one that stood out in contrast to the others. Derek Kilmer, the District’s well loved US House of Representatives incumbent, gave a funny, thoughtful  speech to the supportive crowd. However, one issue he touched on hit a nerve with me. He brought up the Trans Pacific Partnership and his belief in the benefits it will bestow on businesses here in Washington and the US. He sited NAFTA and how this is a logical extension of it. And that it will help bolster environmental standards (as well as labor) that we hold dear. Among the crowd, were many with anti-TPP buttons on. This is not a simple Democratic vote.

As for me, I thought Derek’s timing someone problematic. While he claims that this TPP will somehow ensure that our environmental standards are taken over “there”, we are staring at a horrible environmental catastrophe playing out a days drive from here, in British Columbia.  The Mount Polley Tailings Pond collapse, into pristine Quenelle Lake, which flows into the Fraser and the Salish Sea, along with the subsequent  absurd government comments that it’s not a problem and lack of even rudimentary cleanup in the last three weeks, points to the problem. We were told that NAFTA would bring out environmental stances to Mexico and further south. We didn’t need to mention Canada because most people believed that Canada is at least as good as we are. But the reality is that, since NAFTA, Canada has become an political monoculture of one party rule, allowing the dismantling of all environmental regulations, and those not dismantled are ignored. Just this year, thousands of lakes were removed from environmental protection, the main science library  for the country was defunded. The books with over a century of research were literally thrown in the trash, and what little passes for environmental law was reversed by small type insertions into existing laws. Their Federal Government has passed laws allowing oil and gas exploration (and subsequent drilling) in Banff and other National Parks. Can you imagine if we decided to allow such drilling in Big Sur, Yosemite, or elsewhere? Yet the average Canadian seems to be more interested in hockey than their parks, with some exceptions.  It makes the attempts to gut US Environmental laws by James Watt during the Reagan Administration and Cheney under Bush, look like amateur hour. Canada now has some of the weakest environmental laws in the industrialized world, outside China. The air quality in some cities in Alberta resemble Peking at it’s worse.

The only real possible legal remedy that the US has is not NAFTA, but the 1909 Boundary Waters Treaty Act, which gives the US legal authority to negotiate with Canada over disputes on cross border waters. Since the pollution of the Fraser River with toxins from Mount Polley could create health hazards for decades for the Salish Sea, into which the Fraser flows, this could be a mechanism to force cleanup of the spill.

So there is great reason not to believe the political party line when it comes to TPP. What guarantees do we really have that any of our strong environmental protections will really be enforced ‘over there’? Who is demanding that Canada actually stop or slow it’s self destructive plunge to destroy it’s citizens health, it’s parks and it’s environment, just for the quick buck of this decades’ oil needs? Certainly not NAFTA. And as to NAFTA having created better environmental regulations in Mexico, well, just go to Mexico and see for yourself. Not happening.

Sorry Derek, I’ll likely vote for you, but on this one you are just wrong, you need to dig deeper. It appears to a casual glance that you are listening to the business interests over labor and environmental voices. TPP is not going to bring us anything that NAFTA or the other trade agreements have. It will put money in the pockets of huge multi-national corporations, who seem hell bent on moving corporate headquarters overseas to avoid paying US taxes.. If you want to prove us wrong, go get Canada to do something about the Mount Polley spill, before the mercury and other toxins reach the Salish Sea and our joint fisheries.

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