How do TPP's investor-state arbitration provisions differ from those of previous treaties?

[Recursion]

That's, as far as I can tell, what has people worried here (as well as at FR), but that's the difference I'm not seeing (not that we've actually seen any of it yet).

I'm not remotely a trade expert, but from what I see, everything about this looks like an attempt to make a Pacific trading bloc that can be a counterweight to China. I'm not sure that's an idea worth spending much energy on, but it's also not an actively bad idea.

Companies can sue governments that pass laws in contravention of the treaty's provisions. As far as I know, that idea goes back to Bismark's central European customs union. All the "it overrides national sovereignty" talk is weird, because that's the entire point of treaties: nations agree to give up some of their sovereignty in return for others' doing so.

Now, I get that there are a lot of people on the left who simply view modern global trade as bad; even NAFTA is very unpopular here despite the fact that after it passed the US experienced the only actual growth in middle and low inflation-adjusted wages in 30 years, and despite the fact that US manufacturing increased at a higher rate than it has since WWII after its passage (and, for that matter, the US is currently manufacturing more than it has at any point in its history).

We don't know what's going to be in TPP, but we have some guesses:

1. Way-too-strong IP protections (Japan and Vietnam have signalled they want them weakened).
2. Carve-outs for US cereals subsidies, Australian beef subsidies, and Canadian dairy subsidies (it won't get anywhere without those). Brunei and Vietnam may get a sop about fisheries (eg, Vietnamese fisherman currently can't sell their catfish as "catfish" in the US)
3. Vehicle manufacturing will probably favor cross-border products like US-built Toyotas and Vietnam-built Fords.



These big "free" trade agreements never seem to have the splash people predict, I assume because the "protections" (to use the left's terms) or "inefficiencies" (to use the right's) aren't nearly as big as people think they are (eg. Toyota has basically employeed as many people in the US since 1982 as GM has let go; this is and similar stories are part of why the south's economy has been improving and the upper midwest's has in a lot of cases been getting worse).

Anyways, this has become a ramble, so let me return to my title question: what about the investor-state arbitration procedures differs from current free trade agreements we have?

[msongs]

1. the president prefers you to not know what is in it til after it gets shoved down our throats nt

[pampango]

2. That is a good question. As you say, all treaties involve giving up some sovereignty on all sides.

All the "it overrides national sovereignty" talk is weird, because that's the entire point of treaties: nations agree to give up some of their sovereignty in return for others' doing so.

That is itself is not a bad thing depending on what the benefit is. Giving up some sovereignty is what our states did to form the US, what European countries did to form the EU. It happens in any negotiated agreement between countries.

These big "free" trade agreements never seem to have the splash people predict...

That is pretty much what Paul Krugman has said about the TPP.

[OrwellwasRight]

3. All Investor-state provisions are bad.

So why expand and replicate them? It's like saying, I don't see how a right-to-work law in California will be worse that existing right-to-work laws.

And NO, the sovereignty issue is NOT the same in all treaties. First of all, in other treaties, the dispute settlement process is either simply consultations and fact-finding (as in the ILO conventions or CITES or the UN where you might get a resolution condemning you, big whoop). Or, when the dispute settlement process is adjudicatory, like when you have to go before the International Court of Justice, or the International Criminal Court (which the US won't subject itself to) or the WTO, at least the process is between sovereign states, using institutional dispute settlement procedures.

Under ISDS, the US as a sovereign state is putting itself on a par with a private, profit seeking entity, not another sovereign state that has to consider the interests of its own public. And the process isn't an institution: it's an ad hoc tribunal, made up of primarly commercial trade lawyers in private practice.

Why allow US laws and regulations to be judged against the private interests of a corporation? The idea is objectionable on its face. And then when you look at the bias inherent in the system, and the fact that governments can ONLY be defendants (unlike in the other systems), and that corporations have NO responsibilities in the FTAs only rights (again in contrast to the other systems mentioned), the existence of the system is extremely egregious. It alone is a reason to oppose the TPP. And yes, we know for a fact that ISDS is going to be in the agreement because the trademinsiters announced bacl in 2011 that ISDS would be included. You can find that promise on this page: http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/outlines-trans-pacific-partnership-agreement

Also, you facts on manufacturing, wages, and jobs are wrong. Wages are now that same as they were 30 years ago, not higher. Manufacturing employment is less than 50 years ago. Union density has decreased. Record-profitable corporations are demanding wage and benefit concessions from workers. 95% of income gains since the crisis have gone to the top 1%. Everything bad predicted about NAFTA has come true.

See, e.g.,

http://www.freep.com/article/20131231/BUSINESS07/312310101/Nafta-Mexico
http://www.epi.org/blog/naftas-impact-workers/#sthash.66P1mjRS.uxfs
http://epi.3cdn.net/fdade52b876e04793b_7fm6ivz2y.pdf
https://www.citizen.org/documents/NAFTA-at-20.pdf
http://cwafiles.org/national/issues/PolicyIssues/Trade/TPP_Fact_Sheets_11_19_and_on/cwa-broken-record-broken-promises.pdf
http://www.theguardian.com/commentisfree/2014/jan/04/nafta-20-years-mexico-regret
http://www.commondreams.org/view/2014/01/15-5

[pampango]

4. Wages are actually lower than 40 years ago, but higher since the mid-1990's per Krugman.

Wages are now that same as they were 30 years ago, not higher. Manufacturing employment is less than 50 years ago. Union density has decreased. Record-profitable corporations are demanding wage and benefit concessions from workers. 95% of income gains since the crisis have gone to the top 1%. Everything bad predicted about NAFTA has come true.

Manufacturing employment has been declining for 60 years, not 50, since about 1955 in the US and since at least 1970 in every other developed country. Obviously that has nothing to do with NAFTA. The decline in US manufacturing employment neither accelerated nor decelerated after NAFTA. Wages, OTOH, were highest in 1973, bottomed out in 1995 and have been rising since then.





The countries with strong unions do not have Taft-Hartley with its 'right-to-work' provisions. The US has little legal protection and many legal hurdles for unions that are absent in truly progressive countries. Don't blame a decline in union power on trade when the countries with strong unions trade more than we do.

It is certainly true that at least 95% of the income gains have gone to the 1%. Again isn't this due to policies other than trade. Cutting taxes for the rich, deregulating corporations and the financial industry, weakening unions, shredding the safety net. Again countries with a strong middle class haven't achieved that by cutting trade or trade agreements, but by passing and enforcing progressive domestic legislation on taxation, regulation, unions and the safety net.

[OrwellwasRight]

5. I think you may be confused about the impact of trade on workers.

Also: http://prospect.org/article/40-year-slump

I'm not sure you prove any point at all by indicating that there has been a slight uptick since a 90s trough. The issue is that workers are flatlining, despite consistent productivity increases. We can't get ahead. And yet we keep signing trade agreements (NAFTA, WTO, Jordan, China in the WTO, Chile, Singapore, Oman, Peru, Korea, and on and on) and they are supposed to create jobs and raise wages. They're not doing so. If anything, they are making the problem worse. So why do we keep doing the same thing over and over and expecting a different result? Why aren't trade agreements helping workers catch up with the contributions they make to corporate profitability?


Here is the one chart that may matter most. It shows the share of the non-farm business income going to labor since they started keeping data. And it's the lowest rate ever recorded:



And here is another, slightly different measurement, share of national income going to wages and salaries (e.g., compensation for work as opposed to returns to capital):



Same trend, by the way. The idea is that money is being made, but it's being hoarded. And trade deals that keep making corporations more powerful, and give them more ways to abandon America's workers and squeeze Bangladesh's, and Colombia's, and Guatemala's, and Honduras's, and the trend won't create middle class growth in these countries either.

Why is Mexico the slowest growing economy in Latin America? Why has its minimum wage lost 24% of its purchasing power since NAFTA? Why is Mexico a hotbed of labor violence and repression? And why does its penchant for FTAs not fix any of these issues? Because so-called FTAs aren't the solution they are being sold as. They create problems--probably more than they solve.

These charts show workers have no more pull despite the fact of their essential labor, and because of this, their wages are stagnating and in some cases going down. Even when corporations are making record profits like Boeing and Caterpillar (record!), they ask their employees to take pay and benefit cuts. And no, trade is not the ONLY cause. I never said it was. But the Fed says it is a cause:

http://www.clevelandfed.org/research/trends/2012/0212/01gropro.cfm

Look for the phrase " increased globalization and trade openness."
(if interested, see also this different article that goes more in depth into the problems of inequality and the declining returns to labor: http://www.clevelandfed.org/research/commentary/2012/2012-13.cfm)

How do trade agreements in crease corporate power? ISDS, deregulation, making the threat to offshore jobs more real, by encouraging arbitrage in which companies shop for countries that promise the lowest taxes, lowest labor enforcement, lowest enviro standards etc., by restricting countries from putting performance standards on foreign investors to that they can't require some of the profits be invested locally or that X number of jobs be created at Y wage rate, etc.

Here are some additional important readings:
http://fpif.org/nafta-20-state-north-american-worker/
http://www.epi.org/blog/naftas-impact-workers/
http://www.epi.org/publication/trade_policy_and_the_american_worker/

[pampango]

7. One of your charts doesn't show what you think it shows. The others I agree with.

Your first chart shows that the wages of 'full-time male workers increased after the mid-1990's which is consistent with Krugman's graph. That chart shows that the wages of all male workers fell for 20 years from 1974 to 1994 then went up for 6 years or so before falling again.

Since neither NAFTA nor the WTO existed before 1995, blaming decline in wages that began 20 years earlier seems a bit of a stretch.

Also the article at prospect.org link you posted highlights the case of Germany which has many times the level of trade (including the 'free' kind) that the US has.

That the American supremacy over the global economy in the three decades after World War II was a one-time phenomenon is a given. ... it’s worth noting that one high-wage advanced manufacturing nation has seen its workers thrive in the past 40 years: Germany. Like American multinationals, all the iconic German manufacturers—Daimler, Siemens, BASF, and others—have factories scattered across the globe. Unlike the American multinationals, however, they have kept their most remunerative and highest-value-added production jobs at home. Nineteen percent of the German workforce is employed in manufacturing, well above the 8 percent of the American workforce. German industrial workers’ wages and benefits are about one-third higher than Americans’. While the U.S. runs the world’s largest trade deficit, Germany runs a surplus second only to China’s and occasionally surpasses it.

To be sure, Germany’s identity is more wrapped up in manufacturing than America’s is, but that’s because of national arrangements that not just bolster manufacturing through such policies as excellent vocational education but also give workers more power. By law, all German companies with more than 1,000 employees must have equal numbers of worker and management representatives on their corporate boards. For the most part, German companies don’t get their funding from issuing stocks and bonds but rather by generating investment either internally or by borrowing from banks; the role of the shareholder is insignificant. By practicing a brand of capitalism in which employees and communities still matter, Germany has been able to subject itself to the same forces of globalization that the United States has while enhancing its workers’ power and income.

The last two charts show that the share of national income going to labor is declining. I don't think anyone at DU would dispute that. Indeed one of the biggest challenges in liberals politics is reversing that trend.

It is important that we focus on real solutions to that declining trend. Solutions that have worked here and in other countries in the past and the present. Focusing on trade as the cause of our labor problems ignores what works in progressive countries (with strong middle classes and strong unions) today and the focus FDR had on getting rid of high tariffs while encouraging legal protections for unions, regulating business and improving the safety net. There are no countries that have solved problem of a weak middle class by restricting trade while leaving regressive taxes, weak union protections and corporate deregulation in place. They have done it with progressive taxes, strong union protections and better corporate regulation.

[OrwellwasRight]

8. If you think that Germany has the same kind of "free trade"

as the US, you are sadly mistaken. Germany has an industrial policy. It supports manufacturing production so as to be able to make sure that its trade deals promote production in Germany rather than promoting offshoring. The US doesn't. It also has free college and skills training for workers so that workers can take advantage of any opportunities created by trade and skill up when necessary. The US doesn't. German college grads don't enter the work world desperate to relieve themselves of 70K in debt. Germany also has robust safety nets so that when and if workers are harmed by trade, demand doesn't shrink as much as it does in the US and whole communities don't die. Germany also has a VAT which acts like a tariff in that it makes imported goods more expensive and exported goods cheaper. The US doesn't have a VAT to go along with our trade deals. Also of key importance is that, within the EU, Germany takes advantage of the structure of its economy as compared to Spain, Portugal, and Greece. There are several article about how the US-China trade is relationship is like the Germany-Southern Europe relationship. So no, Germany doesn't have the same kind of "Free Trade" policy as the US.

And yes, my chart shows exactly what I think it does. You are focused on some minuscule and possibly statistically insignificant bump in wages in the 90s that went away almost immediately. If NAFTA was so great, its effects would have been significant and long lasting, and as we signed more and more trade agreements on the same NAFTA model (we have the same trade relationship with Oman, Jordan, Singapore, Honduras, the DR, El Salvador, Colombia, Chile, Australia, Peru, Korea, Bahrain and more--not to mention the WTO) the effect would have been additive--it would not have disappeared. The point is, you are wrong. Neither NAFTA nor its subsequent agreements reversed the trend that was in its infancy stages when NAFTA went into effect, which was the decoupling of wages and productivity. As I said in a prior post, which you choose to carefully ignore, is that neoliberal trade policies are not the sole cause of wage stagnation, inequality growth, the disproportionate share of growth going to capital, or the other economic ills we face, but they are a contributing factor, along with other neoliberal policies such as neoliberal taxes, neoliberal deregulation, etc.

And we will not reverse the trend by doubling down on the same policies that haven't reversed those patterns in any prior trade agreement. Doing the same thing over and over and expecting a different result is called insanity.

Your point about "better corporate regulation" is a joke. Don't you know that NAFTA=style trade agreements CAUSE deregulation and lock it in? Try reading the services or financial services chapter of the Korea FTA. It says specifically the kind of regulation that countries are not allowed to engage in. It's why challenges have been brought (and won) under trade agreements against zoning laws, corporate contributions to environmental funds, bans on clove cigarettes, tuna caught with purse-seine nets, and country of origin meat labels, corporate clean up requirements and on and on. Trade agreements put an ever shrinking box around what democratic societies are able to do. If you don;t even get that, you have a lot to learn.

YEs, "real solutions" = do not pretend that another NAFTA is going to solve what it hasn't solve before. Take a dose of your own medicine.

[pampango]

9. I heartily endorse all of the German industrial policies that you listed.

The US would be much better off if we provided "free college and skills training for workers", had "college grads who don't enter the work world desperate to relieve themselves of 70K in debt" and have "robust safety nets so that when and if workers are harmed by trade, demand doesn't shrink as much as it does in the US". There is nothing stopping us from doing any of things. No trade agreement or any other treaty stops us. What stops us is ourselves.

Apparently German liberals spend a lot more time and energy making sure that college and vocational training is free and the safety net is strong and well funded and much less time worrying about the danger of poor Polish workers right across the border. The result: a strong economy with high wages, strong unions and a strong middle class.

However, a VAT is not a tariff. (Or a very poor one at best. German imports are 35% of the economy vs. 15% in the US.) A tariff raises the cost of imported goods without affecting the pride of goods produced domestically. The idea is that the now relatively cheap domestic products will sell more and the expensive imported ones less. A VAT increases the cost of all goods both domestic and imported. (If the US adopted a 15% VAT, an imported car that now costs $20,000 would then cost $23,000. BUT the cost of a $20,000 car made in the US would also rise in price to $23,000. While the extra $3,000 might be well spent in funding the safety net, it does not do anything to penalize imports.)

That said the VAT may be good domestic policy assuming it is used to fund the safety net as it does in Europe. Again there is nothing in our trade agreements or any other treaties that prevent us from adopting a VAT if we choose to do so.

Germany doesn't have the same kind of "Free Trade" policy as the US.

Actually it does. Its 'free trade' policy is even 'freer' than that of the US. What is different is its industrial policy, precisely as you outlined it. Such an industrial policy is a wise one and one that we could adopt without changing any of our trade agreements. And the huge advantage of adopting those policies would be that it would benefit all workers not just those in companies facing import competition or that export their products. Every American would benefit from the policies you detailed.

And yes, my chart shows exactly what I think it does. You are focused on some minuscule and possibly statistically insignificant bump in wages in the 90s that went away almost immediately. If NAFTA was so great, its effects would have been significant and long lasting ...

No, it does not show that 'bump in wages' in the mid-90's went away. It shows that wages (at least for 'full-time, male workers) increased from the mid-1990's until about 2001 (guess who came into office that year), decline for about 8 years (coincidence) though not back to pre-NAFTA levels then started increasing again. Krugman's chart shows about the same thing - an increase in wages from the mid-1990's to about 2002, then flat under Bush, then increasing under Obama.

Is the decline in wages from the mid-70's to the mid-90's also "possibly statistically insignificant"? Or was that due to some other cause than NAFTA and subsequent 'free trade' agreements?

If NAFTA was so terrible (to flip your question around), I don't see how we could have experienced even a "possibly statistically insignificant" rise in wages - which has not gone away.

neoliberal trade policies are not the sole cause of wage stagnation, inequality growth, the disproportionate share of growth going to capital, or the other economic ills we face, but they are a contributing factor, along with other neoliberal policies such as neoliberal taxes, neoliberal deregulation, etc.

At least we partially agree on this. Cutting taxes for the rich, deregulation, eliminating legal protections for unions, slashing the safety net - those all are a HUGE factor in the our economic ills. And, not coincidentally, they are all things that countries like Germany do not do.

If we want to have an economy similar to Germany with a strong middle class, high wages, strong unions and an effective safety net, we should pursue similar policies - progressive taxes, empower unions, rehabilitate the safety net, free college and technical education. German liberals do not spend their time worrying about Poland, nor should we fixate on Mexico. Liberals in both countries have got more important things to focus on.

[OrwellwasRight]

10. Endorsing the policies is not that same as having the policies.

And endorsing more NAFTAs without changing domestic policies is advocating more of the same that we have had for the last 30+ years. It is advocating for more inequality that won't be fixed by simply having more NAFTAs.

You don't understand VATs, clearly. When a country with a VAT exports a product, the company that made the product gets a rebate on its VAT, which makes the product artificially cheaper in the export market. When a country with a VAT imports a product, it adds as a surtax that amount of the VAT that would have been collected if it had been made in that country. Thus, European products here are cheaper than they would be, and US products sold in Europe are more expensive that than they would be -- the VAT acting like a tariff making imported goods more expensive.

"Germany doesn't have the same kind of "Free Trade" policy as the US.

Actually it does. Its 'free trade' policy is even 'freer' than that of the US. What is different is its industrial policy, precisely as you outlined it."

Actually, it doesn't. You are being purposely obtuse, aren't you? If we do not have the same domestic policies, then the "Free trade" that is practiced is absolutely not the same. And it's either facile or purposely deceitful to say so.

"If we want to have an economy similar to Germany with a strong middle class, high wages, strong unions and an effective safety net, we should pursue similar policies - progressive taxes, empower unions, rehabilitate the safety net, free college and technical education. German liberals do not spend their time worrying about Poland, nor should we fixate on Mexico."

a) You cannot have an economy like Germany's by ONLY implementing one part of it, which is what you are advocating when you are for the TPP without tying it to a complete overhaul in our tax, education, regulatory, and industrial policy.

b) You are woefully uninformed if you think Germany is perfect. Germany's unions, like unions in other advanced industrialized countries, are concerned about the effects of neoliberal policies and the fact that there is a race to the bottom created by unrestricted competition with workers in places where they cannot freely exercise their rights (http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CDUQFjAD&url=http%3A%2F%2Fen.dgb.de%2Fpublications%2F%2B%2Bco%2B%2Bdef183b6-40be-11e0-5bb3-00188b4dc422&ei=HC_kUrOcJcPNsQSKsIDoDg&usg=AFQjCNGMwZLMqRhI3L3yLy8fxZVKHug0Xg&bvm=bv.59930103,d.cWc). Here is an article about how Americanized labor practices are already leaking into Europe (including Germany http://www.nytimes.com/2013/12/04/business/economy/the-americanization-of-european-labor-policy.html?_r=0) and here is a post on all the concerns that European labor unions (including the DGB of Germany) have about the proposed TTIP (http://www.etuc.org/a/11228). Check out the OECD database on union density: it's pretty much degrading in most countries listed (not all, and not all at the same rates) since the Reagan-Thatcher and the Washington Consensus created the hegemony of neoliberalism world wide http://stats.oecd.org/Index.aspx?QueryId=20167)

c) You cannot "empower unions" by enshrining in policy incentives for companies to move off shore. Then the companies will continue to do what Boeing and Caterpillar have done--make RECORD profits and at the same time tell their employees )who made the record profits possible) to take pay cuts or else they will move the factories off shore.

d) You NEVER once address why ISDS is so great and why need it in the TPP and why it is great for workers (or the services and financial services issues either), and yet you blindly advocate for more NAFTA model trade.

e) Life doesn't function like your college econ 101 textbook. And corporations aren't benevolent. Empowering them to control the world economy through trade deals hasn't made the world better, and won't do so, no matter how many times you try.

Maybe when your pay gets cut even though you are doing great work, because your employer cares more about impoverishing workers than empowering them, you'll understand. Till then, adios.

[pampango]

12. The VAT applies to imports and and domestically produced goods that are consumed

in the country. A $20,000 VW produced in Germany and purchased there would cost $23,000 (assuming 15% VAT). If that same German VW is exported, you are right the VAT would be rebated to the company and its cost in the US would be just $20,000. A $20,000 VW car produced in the US and imported to Germany would, as you say, have the VAT added so that it's cost to a German consumer would be $23,000.

In either case the $20,000 VW is going to cost a German consumer $23,000 whether it was made on Germany or in the US.

And if the VAT really functioned as a tariff Germany would not import more than twice as much as the US.

Trade policy is trade policy. Both Germany and Singapore can have a lot of 'free trade'. If Germany provides free college education, a strong safety net and progressive taxes, while Singapore does none of these things, than Germany has a much better "industrial policy" (as you yourself called it). Germans will benefit much more from trade than will Singaporeans.

You are saying that Germany and the US can have the same trade policy but different outcomes because we have different "industrial policies". I certainly agree with you that Americans do not benefit from trade as Germans do because of our regressive "industrial policy", as you call it.

Of course, if we eliminated trade altogether, the American 99% would still not benefit because of our regressive taxes, shredded safety net, expensive colleges, etc. we actually tried that in the 1920's and the 99% did not benefit.

You cannot have an economy like Germany's by ONLY implementing one part of it, which is what you are advocating when you are for the TPP without tying it to a complete overhaul in our tax, education, regulatory, and industrial policy.

I agree. The TPP is irrelevant. The complete overhaul of our tax, education, regulatory and industrial policies are critical.

I am not advocating more NAFTA model trade. I have posted many times that I am a proponent of international agreements that enhance labor rights and the environment. That is why I do not support the TPP as it seems to be structured. The only way to achieve this is through negotiation.

[OrwellwasRight]

13. Still wrong.

What is with "the only choice is TPP or the elimination of trade" ? Point to where I advocated "eliminating trade." Please.

The rules under which trade occur matter, and opposing the TPP isn't opposing "trade," it is opposing replicating the NAFTA model.

And no, just because countries all "trade" does not mean that they trade under the same model of "trade." A "free trade model" is the complete model-- the model under which a country trades, which includes its industrial policy -- because the two interact and impact on each other. In fact, many trade agreements limit the subsidies that governments can give to their businesses, thereby limiting the amount of industrial policy they can implement. The more neoliberal the trade agreement, the less a country will be able to rely on its domestic industrial policy. Advocating the TPP while saying that industrial policy is separate and apart is facile or deceitful.

Another spurious lie about the Smoot-Hawley Tariff. It was not designed to eliminate trade and did not even raise tariffs that high when compared to historical levels. It did not cause the Great Depression.

Evidence:
http://speri.dept.shef.ac.uk/2013/11/21/ghost-smoot-hawley-global-trading-system/
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x2472520
http://www.huffingtonpost.com/ian-fletcher/protectionism-didnt-cause_b_527274.html

And the point about Germany importing twice as much as the US is both wrong on its face and irrelevant.

In 2012, Germany imported 1, 239 billion dollars worth of goods from the world (https://www.destatis.de/EN/FactsFigures/Indicators/LongTermSeries/ForeignTrade/lrahl01.html;jsessionid=A19EAF1C512BF65FC09778A758FEA2D0.cae1) whereas the US imported 2,275 billion (http://www.census.gov/foreign-trade/balance/c0004.html). Conversion performed here: http://www.x-rates.com/calculator/?from=EUR&to=USD&amount=905.9. Ergo, Germany does not import twice as much as the US.

This comparison, even if you had the numbers correct, would only be relevant if the US and German economies were comparable and they aren't. The US economy is much larger than Germany's and has always been less integrated with the rest of the world's in terms of its lack of an export orientation and its much lesser need to import raw materials. We are also not a member of an economic union--Germany is.

Your comparison of Singapore and Germany is also specious. Singapore is not an industrial economy. Its economy is far more based on investment and services than on industry, and it is one of the richest places in the world. No, it is not losing out due to its trade model because its trade model is largely based on investment and trade in services, and its trade agreements thus far have maximized the benefits to Singapore, while US trade agreements maximize benefits to corporations. Huge difference.

And you still don't get it about the VAT. A car made in the US and exported to Germany (which would not be a VW by the way -- the only cars we export there are a few specialty cars like corvettes) has already had taxes paid on it, Social Security taxes, income taxes, state disability taxes, property taxes for the land the factory sits on. Then it gets imported into Germany and has the VAT placed on it, so essentially the product has been double taxed and its price is higher than it otherwise would be and is therefore less competitive than a car built in Germany that is only taxed once. This is the tariff effect. Not only does the US not do this -- it does not add to the price of an imported Mercedes, BMW, or VW the costs of the taxes the manufacturer would have paid had the car been produced here. In fact, the car doesn't even carry with it the costs that it took to build the car in Germany. It's essentially discounted in comparison to a US-made car.

I love how you once again fail to address the issues of ISDS, services, and financial services.

Please point to the "many" prior posts in which you said you were against trade agreements that didn't enhance labor rights and the environment. Or don't. I don't really care. I am pretty much over this conversation.

[pampango]

14. A country's trade policy is not the same as its tax policy, education policy, safety net policy.

They are all important and they all play a role in the health of a society and its middle class. Other policy is important too - civil rights (minorities, women, gays, etc), immigration, minimum wage, etc. There are many policies that affect the health of a society. Is there a cookie cutter position for all such policies in your 'free trade model'?

The benefits of trade (which all progressive countries seem to value) are only shared fairly throughout society with the right "industrial policies" (education, tax, safety net,etc.).

Let's say countries A & B both have an identical structure of tariffs, belong to the same trade agreements and organizations, etc. (They copied each others' trade rules and just changed the name of the country at the top of the page.) They have the same trade policy.

Now let's say country A provides free education and vocational training, has relatively high and progressive taxes, a strong safety net, legal protection and empowering of labor unions, etc. Country B does none of that. College graduates leave with large debts to repay, taxes are regressive, the safety net is ineffective and the legal structure weakens unions rather than empowering them, etc.

The problems that the people in country B have are not going to be solved by the country withdrawing from a trade agreement. Nor are they going to be solved by it entering a new trade agreement. The problems are going to be solved when country B "provides free education and vocational training, has relatively high and progressive taxes, a strong safety net, legal protection and empowering of labor unions, etc.". Perhaps we agree on that.

You cannot have an economy like Germany's by ONLY implementing one part of it, which is what you are advocating when you are for the TPP without tying it to a complete overhaul in our tax, education, regulatory, and industrial policy.

While I am not a proponent of the TPP (because it is flawed), I agree that changing trade policy is insignificant to a progressive economy without "a complete overhaul in our tax, education, regulatory, and industrial policy."

A "free trade model" is the complete model-- the model under which a country trades, which includes its industrial policy -- because the two interact and impact on each other.

Where is 'free trade' defined as such a 'complete model'? Or is that a OrwellwasRight definition? France, Germany and Poland have 'free trade' with each other just as Canada, the US and Mexico have. Canada has more progressive 'industrial policy' than the US or Mexico, just as Germany and France are more progressive than Poland. Germany, France and Poland do not have 'free trade' under the OrwellwasRight model?

Given the diversity of 'industrial models' of countries that have 'free trade' with each other, how do you combine industrial policy and trade policy into a 'free trade model' that is the same for every country? You seem to be saying that countries with 'free trade' have to have the same industrial polices, as part of the 'free trade model', when that is not what the reality is. Or are you saying that Germany, France and Poland do not have 'free trade' with each other (despite the lack of tariffs or other barriers to trade), because they have different 'industrial policies'?

Another spurious lie about the Smoot-Hawley Tariff. It was not designed to eliminate trade and did not even raise tariffs that high when compared to historical levels. It did not cause the Great Depression.

I did not say any of that. And I was not talking about Smoot/Hawley. The Crash and Depression had already started by then. I said we tried high tariffs (passed by republicans in 1921 and 1924) "in the 1920's and the 99% did not benefit." Income inequality in the US reached record highs under those republican high tariffs. While trade plummeted after tariffs were raised, the 99% did not benefit because of bad industrial policy - regressive taxes, weak unions, etc.

FDR understood that. He did not further restrict trade. He strengthened our 'industrial policy' (progressive taxes, union protection, safety net, etc.) without touching trade policy until 1937 when he started to lower tariffs, not raise them.

The 1% does fine with high tariffs. And the 1% does fine with low tariffs. What the 1% does not prosper under (at least to the same degree), and what benefits the 99%, are progressive taxes, strong unions, an effective safety net, etc. FDR understood this and rightly focus on these policies not trade.

In 2012, Germany imported 1, 239 billion dollars worth of goods from the world whereas the US imported 2,275 billion. Ergo, Germany does not import twice as much as the US.

Fine. I should have said "Imports (38%) are a 3 times larger part of the German economy than they are in the US (13%)." Is that better?

You are right. German economy has always been much more "integrated with the rest of the world" than the US'. And yet it is Germany that has strong unions, progressive taxes and an effective safety net.

I love how you once again fail to address the issues of ISDS, services, and financial services.

And I love how you have moved on from claiming that wages have not risen since the mid-1990's after falling in the 20 years before NAFTA.

Please point to the "many" prior posts in which you said you were against trade agreements that didn't enhance labor rights and the environment. Or don't. I don't really care.

Something tells me that you would not be impressed if I did point out those posts. Since you don't really care, I will decline. If you come across them acidentally one day, you can come back and tell me.

[OrwellwasRight]

15. I'm supposed to come across your posts "accidentally"?

You know for a fact you implied you had said that in this thread, to me, which you know admit you have not. You expect me to spend my valuable time on DU for what you may or may not have said before? Right. That's not how it works. If you want to say something say it. If you want to back it up, include links. Don't pretend I have made a study of your DU history or that I am somehow obligated to do so. I haven't and I won't.

I also LOVE how you admit exactly what I am saying and then turn yourself in cartwheels to prove I am wrong. Of course the "free trade model" includes all of the interacting parts. As I previously said, which you don't get, "free trade" is not the same as the model under which you pursue free trade trade. The choices are not "free trade" or no trade and I am not against trade. I am against the TPP, I am against more NAFTAs, and I am against the current us model of trade. No sane country that cares about its own middle class pursues "free trade" under the same model as the US. Not Germany, not Poland, not France, not China. If the model is different, its impacts are different. Who made that up? Not OrwellwasRight. Try progressive economists. Try the EPI, which you would know if you ever clicked on any of the links I included.

I also love how you accuse me of avoiding the topic. No, I have addressed your wage issue MULTIPLE TIMES. Wages have been essentially flat --even if not perfectly flat--since roughly 1980--and that is what I claimed from the beginning and have not strayed from -- that was the onset of neoliberalism of which NAFTA was just one part. And yes, I addressed your blip and said I think it is meaningless. In the real world, as compared to your David Ricardo theories from 200 years ago, there are no straight lines. You seem to think some tiny blip in wages in the 90s (a tiny blip that promptly went away despite the fact that the US kept signing more trade agreements on the NAFTA model, which should have strengthened the good effect if indeed there was one, which there wasn't) proves that NAFTA was good for workers. It doesn't. If NAFTA was, then signing more NAFTA-style trade agreements would have compounded NAFTA's "good effects." Since more of NAFTA could not replicate the minor wage increase you seem so proud of, then it is unlikely that NAFTA caused the minor wage increase -- which was still decoupled from productivity gains.

And, no I don't care about other posts you claim to have made. You are bending over backwards to defend NAFTA. I'm not convinced. And won't be. Happy Sunday.

[BelgianMadCow]

6. What's different is that we now live in a world in which banksters crash the economy,

walk away scot free rolling in cash and join in repressing OWS. So now we know real well what corporate overreach can do and is doing.

Oh, and there's also this thing called "democratic deficit". It's huge and it isn't going to stand, now matter how one tries to limit or reframe the debate.

[OrwellwasRight]

11. +1