Citizen Trade Commission members Sen. John Patrick (D-Oxford), Sen. Troy Jackson (D-Aroostook), Rep. Sharon Treat (D-Hallowell) and Michael Herz listen to testimony at a hearing on the Trans Pacific Partnership in Belfast on December 12. - Photo By Andy O’Brien
Citizen Trade Commission members Sen. John Patrick (D-Oxford), Sen. Troy Jackson (D-Aroostook), Rep. Sharon Treat (D-Hallowell) and Michael Herz listen to testimony at a hearing on the Trans Pacific Partnership in Belfast on December 12. - Photo By Andy O’Brien
On December 12 in Belfast, farmers, fishermen, public policy experts and activists of various stripes testified at a public hearing held by the state's Citizen Trade Policy Commission on the proposed Trans Pacific Partnership (TPP) trade agreement.

The TPP includes the United States and 11 other Asia-Pacific nations - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. If approved, it will govern 40 percent of the global GDP and one-third of global trade.

All negotiations have been held in secret and even Congress has not been briefed on specifics, despite the fact that 600 corporate advisors have been granted access and input into the draft texts of negotiations. Mainstream news coverage of the TPP debate has been limited, but a series of leaks has provided a glimpse of what to expect. Covering 29 chapters, the goal of the TPP is to harmonize regulations and eliminate trade tariffs, but those testifying expressed fears that the agreement will put profits for multinational corporations over environmental standards, public health, food safety, local agriculture, consumer rights, and jobs.

Support for the TPP

In response to mounting opposition to the TPP, the Business Round Table, an association of CEOs of major U.S. corporations, has argued that the trade agreement has the "potential to create new opportunities for Maine" through "increased commercial engagement with these countries." In a report released in December, the group stated that 67 percent of Maine's exports of goods and 21 percent of service exports go to TPP countries that are currently free-trade partners. Currently, 100 companies from TPP countries, predominantly Japan and Canada, employ about 8,200 workers in Maine.

The BRT estimates that 76 percent ($460 million) of Maine's exports to TPP countries are semiconductors and components. Proponents argue that the TPP will stimulate more commercial activity by opening markets in non-partner countries like Japan, Malaysia, New Zealand and Vietnam. The report notes that high tariffs on imports, such as on footwear and blueberries into Japan, present trade barriers to Maine companies.

But in spite of the potential for increased commercial activity, others say that it won't translate into more opportunities for average workers. According to the left-leaning Center for Economic Policy Research, while the wealthy stand to gain under the TPP due to enforcement of copyrights and patents, median-wage earners will likely lose due to increased competition from lower-paid foreign workers.

"NAFTA on Steroids"

"A giant sucking sound" was how 1992 presidential candidate Ross Perot famously described the sound of jobs flowing out of the U.S., which he believed would happen if the North American Free Trade Agreement (NAFTA) was approved. While business groups have credited NAFTA with increasing trade with Canada and Mexico three-and-a-half-fold since 1994, others say Perot was right.

"Every trade agreement that has come forward since NAFTA is looking to drive every standard down to the lowest common denominator," said commission member Sen. John Patrick (D-Oxford) at the hearing in Belfast.

And Patrick, who is also a mill worker, says he has seen the effects of so-called "free trade" agreements firsthand.

According to the Economic Policy Institute, between 1994 and 2010, over 700,000 U.S. jobs were lost or displaced to Mexico due to a $66 billion trade deficit with our southern neighbor. Maine was hit particularly hard, with 30,000 manufacturing jobs lost during the past 20 years. Since 1994, a dozen free-trade agreements have been signed and there are currently 16 proposed, including the TPP, which has been dubbed "NAFTA on steroids" by its critics.

Most recently, debate over U.S. trade policy was stoked after 200 workers at the Lincoln Paper and Tissue Mill were laid off because they were underbid by a producer in Indonesia. Following news of the layoffs, retired Lincoln mill worker Rep. Jeff Gifford (R-Lincoln) didn't mince words about his views on the TPP.

"I can tell you that it's the worst thing that we have ever entered into," said the Lincoln Republican. "If you put the US in competition with third-world countries, we lose every time. We have strict environmental regulations and labor laws and we just can't compete. Free-trade agreements are designed to kill the American economy."

Impact on Maine Farms

Speaking at the Citizen Trade Commission hearing in Belfast, Maine Farmland Trust Executive Director John Piotti said that the TPP had the potential to wipe out Maine's struggling dairy industry. The price that dairy farmers receive for their product is currently set by a federal pricing system, and although it has put many local farmers out of business, as it sets prices below the cost of production, it has also cushioned farmers from the harmful effects of international market competition. However, according to Piotti, it wouldn't take much to finish off Maine's dairy farms.

"Right now we're exporting about 15 percent of our dairy products," said Piotti. "If that dropped by 2 percent, it would probably have roughly a 20-percent negative effect on the price paid to farmers, which would be devastating. These farms are on the edge now, and any kind of international policy that potentially puts in place competition that will reduce our export market threatens to [put them out of business]."

Piotti also pointed out that the formula that sets federal milk prices includes the price of cheese and non-fat milk powder. In the past, the price of cheese was higher, but there's recently been a spike in the price of milk powder coming from international markets. As a result, said Piotti, the price that a Maine dairy farmer receives is determined by the world market price for milk powder. New Zealand, with its large subsidized dairy industry, could potentially flood the U.S. market with milk powder in the same way that the U.S. dumped subsidized corn into Mexican markets under NAFTA. In 2004, Piotti helped develop Maine's dairy subsidy program, which helps stabilize the price farmers receive for their milk from the fluctuations occurring under the federal pricing system.

"Farmers have just enough to keep the industry alive, and it wouldn't take much to have that industry fall apart. [The TPP] could do it," said Piotti.
Maine's dairy industry represents 20 percent of Maine agriculture production, and milk sales generate about $100 million a year, with an economic impact of $525 million a year. The capital-intensive dairy farms also support a vast agricultural infrastructure that could have an adverse effect on all local farming if it collapsed. As for whether the TPP would help local farmers by opening up overseas markets, Piotti was skeptical, because farmers generally get the most benefit from markets closer to home.

"The truth is, farms that are operating at that commodity scale, even if they're exporting a lot more, it doesn't necessarily mean that much benefit for the farmer," said Piotti. "The benefit ends up flowing to somebody else. I'm not against exports as a concept, but I don't think it's the best way on which to build the farm economy in Maine."

A Threat to National Sovereignty?

Many critics, who range from progressive reformers to right-wing libertarians, also believe that the TPP will enshrine a binding system of global corporate governance at the expense of national and local sovereignty. Through a trade agreement mechanism known as the "investor-state dispute settlement," enforcement of trade rules can override democratically enacted state, local and federal laws by allowing companies to sue governments for violations of trade laws in a tribunal of unaccountable international trade lawyers. Public Citizen estimates that over $340 million in compensation to investors has been extracted from NAFTA governments through this process.

Environmentalists have also cited examples of environmental protections facing such threats due to trade agreements. A Canadian mining company sued El Salvador for $315 million for the loss of its anticipated future profits after the country prohibited the digging of a gold mine due to public fears of water contamination. Similarly, UK-based Churchill Mining is seeking $2 billion from Indonesia in an international settlement court for imposing a mining tax among other regulations.

Speaking by phone at the hearing in Belfast, Karen Hansen-Kuhn of the Institute for Agriculture Trade Policy, said that the TPP and its cousin, the pending Transatlantic Trade and Investment Partnership (TTIP) with the European Union, could further allow companies to sue countries with higher standards and more regulations on the basis of a trade agreement.

"There's a real danger with both the TPP and TTIP that these trade agreements could create binding rules that really go against these decisions being made at the local level, so that food safety laws and even GMO labeling could be rendered illegal under the trade deal," said Hansen-Kuhn.

Hansen-Kuhn added that the trade agreement could also restrict procurement policies that require governments to give bidding preference to American companies and schools to purchase locally produced food.

"Our position is that taxpayer money in these kinds of public procurement contracts should be used to promote the well-being of taxpayers and doesn't need to be included in the trade agreement," said Hansen-Kuhn.

Speaking to the Guardian newspaper, one tribunal judge validated some of the worries expressed by critics of free-trade deals:

"When I wake up at night and think about arbitration, it never ceases to amaze me that sovereign states have agreed to investment arbitration at all," the judge said of the process. "Three private individuals are entrusted with the power to review, without any restriction or appeal procedure, all actions of the government, all decisions of the courts, and all laws and regulations emanating from parliament."

Making Medicine More Expensive

Citizen Trade Commission chair Rep. Sharon Treat (D-Hallowell), who is also an official adviser to the Office of the US Trade Representative (USTR) and director of the National Legislative Association on Prescription Drug Prices, says she worries that under the TPP Maine would be bound by proposed provisions protecting patent monopolies of drug companies. This would make it harder for Maine to negotiate rebates for prescription drugs through the state's Medicaid program. Maine is currently one of the only states that allows the purchase of drugs from Canada; Maine's program has faced legal challenges from the pharmaceutical industry and it could be threatened under the TPP.

Recently the drug company Eli Lilly decided to sue Canada for violating its obligations to foreign investors under NAFTA by allowing its courts to invalidate patents for two of the company's drugs, allowing for the sale of less costly generic drugs.

Current Status of the TPP

Although Congress has "advise and consent" power on trade agreements, in recent decades it has granted "fast track" promotion authority, which only allows for an up-or-down vote on trade treaties, avoiding amendments or filibusters that could require the whole agreement to be renegotiated. Congress is set to act on TPP early in 2014, but in recent months, some Democrats as well as a handful of conservative tea partiers like Congresswoman Michele Bachmann have been pushing back against fast-tracking the TPP. In November, 170 House members sent two letters to the White House expressing opposition to fast-track. Among the signatories were Congresswoman Chellie Pingree and Congressman Mike Michaud.

According to various press reports, in recent months trade negotiations have also hit some stumbling blocks over various government-subsidized industries, currency issues, tariff reductions, and patent and intellectual copyright enforcement, which the U.S. favors.

But although the TPP will face challenges, speaking by phone at the hearing, Pingree's legislative assistant Matt MacKenzie said the agreement remains one of President Obama's top priorities and groups like the U.S. Chamber of Commerce have been out in force lobbying for its passage.

"[The fast-track promotion authority] on NAFTA was a close vote," said MacKenzie. "It's going to be both a regional and ideological debate, and it will be interesting to see where the fault lines are. I do think that there will be very close votes on everything."