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TPP AND CITIGROUP (PART I)

June 30, 2016

 

TPP AND CITIGROUP (PART I)

Can a leopard change its spots, the old saying goes? Is it even possible? Are the spots, as the new saying goes, baked in, and if so, can such spots be unbaked?

Let’s apply this to the ongoing TPP brawl, where Wall Street and the Treasury (and other departments) exchange personnel back and forth from time to time (aka revolving door), as in, can a Wall Street banking executive come to Washington and suddenly lose his or her money grubbing status and mindset and become a champion of the people? Do he or she feign such a change in order to be appointed so that they can serve their former banking and corporate masters back at Wall Street, or is the change genuine, and if it is, where is the evidence to support this “spot-changing?”

This issue is one of several treated by David Dayen in the Summer (2015) edition of The American Prospect, with a special focus  on the stream of banking executives who run backwards and forth between Citigroup and government (exclusive of the stream from other Wall Street banks’ backwards and forth with government). Dayen writes that the Obama administration entered office promising to renegotiate unbalanced trade agreements which have cost us millions of manufacturing jobs over the past twenty years, but that the TPP (or what we know of it), a proposed trade pact with eleven other Pacific Rim nations, “mostly adheres to the template of corporate favors masquerading as free-trade deals. Of the 29 TPP chapters, only five include traditional trade measures like reducing tariffs and opening markets. Based on leaks and media reports – the full text remains a well-guarded secret and is still in flux – the rest appears to be mainly special-interest legislation.”

Since when are we making legislation via trade pacts? The Constitution is clear that only Congress can make legislation. Some history in how this happened is helpful. How did this political transfer of power per the Constitution that gave Congress the exclusive power to legislate fall away from Congress and into a potent but relatively obscure executive branch office: the United States Trade Representative (USTR)? The full story of how this happened is too long for me to set out each step in the road, so I will hit the high points in how this happened and, I will speculate, why it happened.

While the Congress has the exclusive authority to “lay and collect Taxes, Duties, Imposts and Excises” and “to regulate commerce with foreign nations,” only the chief executive (president) can negotiate international treaties. This led to an uneasy check and balance in which chief executives could not  pursue their own trade preferences without approval of Congress, a plan endorsed by Hamilton in Federalist Papers No. 75 in which he stated that it would be unwise to “commit interests of so delicate and momentous a kind to the sole disposal of a created and circumstanced as would be a President of the United States.” I think Hamilton was right then and now, but his descriptive “delicate and momentous” has yielded to a crass view of trade as a vehicle to make money by special interests.

Congress defined tariff rates without executive approval for over 100 years until 1934, when FDR’s Reciprocal Trade Act gave increased power to the president, though within a narrow range. The Congress, allowed a president to negotiate reciprocal tariff cuts with other nations within such narrow range. Johnson subsequently failed in obtaining congressional approval for authority to adjust pricing certain goods at the U.S. border and anti-dumping authority, but Nixon in a push for increased presidential authority succeeded (though the Trade Act of 1974 he wanted was passed after he resigned). It gave the president authority to “fast track” trade pacts, circumventing the normal legislative process. The president could now pick partners, launch negotiations, sign agreements, and get an up-or-down vote in Congress in 90 days, with no committee markups, no amendments or filibusters. I think the Congress gave away their exclusive constitutional authority by this act, and that Hamilton would agree with me that the act should be repealed.

That is not going to happen, of course, as corporate interests have intervened in trade matters under the guise of “free markets” to obtain rights in trade pacts they could never get if such rights were to be argued out under public and congressional scrutiny, such as, for instance, in the so-called 1995 Uruguay Round of GATT, which started the World Trade Organization (WTO) and, among other things, gave pharmaceutical interests 20 years of patent protections for medicines, weakened our Marine Mammals Protection Act (which forbade the sale of tuna caught by nets that also ensnared dolphins).

So how did corporate interests and their handmaiden banking interests take over trade policies of the United States? How did the “tuna lobby” do by trade pact what federal law (presumably the “will of the people”) forbade? How did they persuade Congress to (essentially) give up their constitutional authority to “lay and collect” etc. to the executive in the face of Hamilton’s excellent defense of the rationale for the authority given and withheld in the Constitution? They did it by concentrating the power (and ease of lobbyists) via one-stop shopping with the greatly empowered U.S. Trade Representative. Why should the corporate and banking world’s armies of lobbyists and lawyers have to go to the many members of Congress to make their respective cases when they can go to the office of the USTR and circumvent those who represent “the people?”

Think that’s bad? In Part II I will discuss how empowering the USTR’s office is not the end of the banking and corporate grab. They have taken over the office itself and peopled the office with banking and other corporate Wall Street people friendly to such banking and corporate interests who come looking for trade favors in the interests of those they represent.

The foxes have taken over the hen house, and with (bought) congressional consent (see campaign contributions). Trade policy as provided for in the Constitution has been transferred to Wall Street banks and corporations; we the people are thrown a few crumbs in re labor and environmental sections (which history shows are not enforced after the deals are made) in order to gussy up the free trade masquerade, to which Lori Wallach of Public Citizen’s Global Trade Watch comments: “The good name of free trade got hijacked for every retrograde, mortifying policy you can think of.”

She’s right; trade has become a food fest for Wall Street banks and corporations to get things done via trade agreements they could never hope to have done (monopoly pricing for drugs, for instance) if the people through their representatives in Congress were to hear just what it was that such lobbyists wanted in trade agreements. Much of what we have going on now and (from what we know) in the TPP could never withstand the glare of publicity afforded before congressional committees where those testifying would have to defend their positions (on tuna catches in contravention of law, for instance). I think this area is in need of such “glare” of publicity BEFORE the vote on TPP. Stay tuned in Part II for my further contribution to the debate.   GERALD     E

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One Comment
  1. Dee permalink

    Indeed – yet another way that corporate interests are taking We the People to the cleaners – and we foot the bill!

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