So you haven’t heard about the Trans-Pacific Partnership (TPP) agreement? This is not surprising since it is being negotiated in secret. So afraid is the Australian government of its citizens knowing details about what is being negotiated that the Department of Foreign Affairs and Trade banned journalists from a public briefing on the TPP.
The agreement is about trade and investment liberalisation. DFAT puts it this way:
“The Australian Government will pursue a TPP outcome that eliminates or at least substantially reduces barriers to trade and investment. The TPP is more than a traditional trade agreement; it will also deal with behind-the-border impediments to trade and investment.”
The target of the US-led agreement is China. The rapid trade and investment liberalisation that the agreement seeks means China, with its state-run protected businesses, cannot join unless it fundamentally restructures its economy. It won’t.
The US is building on an earlier Trans-Pacific Strategic Economic Partnership Agreement between Brunei Darussalam, Chile, New Zealand and Singapore. The TPP includes these four parties plus Australia, Canada, Japan, Malaysia, Mexico, Peru, the US and Vietnam.
Japan’s membership is interesting. Such is its fear of China that the current Japanese government is prepared to join the TPP despite the fact that this will mean abandoning protected rural industries that are the voting mainstay of the current Abe government.
In essence this is the US corralling friendly forces in an economic and political agreement against the growing power of China. It is an integral part of US imperialism’s “pivot to Asia” with its main goal to contain China.
It will do this by creating open trade and investment borders between the signatories. Almost 800 million people reside in those countries, including the US – the most powerful political, economic and military power in the world. The integration of these economies through the proposed agreement will create an economically unified group that competes with China in the region and globally.
So what does it do? Because it is secret, we don’t know that much, except for what has been leaked thus far.
First, it will abolish or significantly reduce tariffs between the signatories. For example, Japanese agricultural tariffs run at about 25 percent but are 778 percent on rice imports, 328 percent on sugar and 218 percent on powdered milk. While the US government appears to have given the Japanese some wriggle room, such tariffs would eventually go. So too would Australian car tariffs.
The agreement also covers investment. The idea is that investment will flow between the countries without any restrictions, direct or indirect. This will benefit capital exporters like the US at the expense of capital importers like Australia, which might in the past have tried to regulate foreign investment. Thus Australia’s foreign investment rules could be dumped or sidelined for the TPP partners.
Any disputes about this would be sorted out through what is called investor-state dispute settlement or ISDS. This would allow foreign corporations to sue governments. For example, if the Australian government harms a corporation’s investment (“reduces its expected profits”) through, say, environmental regulation, the door to litigation may be opened.
The TPP and its ISDS clause could, to name a few, threaten coal seam gas restrictions, plain packaging of tobacco, GMO regulation and Australia’s pharmaceutical benefits scheme and lower medicine prices (including $5.90 for pensioners). Longer copyright periods would strengthen US companies, which own 90 percent of world copyrighted material and increase prices in the areas concerned.
The US negotiators want to water down labour rights and environmental standards. No agreement on keeping these rights and standards has been reached.
The debate among capitalists has been whether to let the market rip or to regulate it just a little bit. Both the Howard and Rudd and Gillard governments rejected ISDS. The Abbott government looks set to accept it.
This looks to me as not just being about rabid free marketeers running wild. It is also that the Abbott faction of Australian capital is making a decision more fully to side with US imperialism in its encirclement and containment of China.
The plan is for the TPP to be finalised by the end of the year. No wonder the Abbott government is, once again, keeping us in the dark.

John Passant

Keeping us in the dark on free trade

Imagine a government announced that it was setting up a new pension scheme in which the richer you were, the more pension you got. It would be laughed out of office. But that in effect is what happens with the compulsory superannuation guarantee (SG) scheme and the associated tax concessions.
Back in 1992, Treasurer Paul Keating and the Australian Council of Trade Unions did a deal for compulsory superannuation. The ACTU agreed that all workers would forego a wage increase of 3 percent for their employer to contribute that amount as compulsory superannuation to retail or industry funds.
The argument was that, as the population aged, it would cost the government more and more in pensions. The compulsory SG scheme would alleviate budget pressure and ensure workers were better off when they retired. In addition, the government introduced tax concessions on contributions, fund earnings and superannuation pensions to encourage voluntary contributions.
The SG payments increased over time to 9 percent of ordinary wages. That will now increase gradually to 12 percent by 2019 as a result of changes the Gillard Labor government made.
Notionally, the employer pays the SG contribution. In fact, it is workers who bear its burden through reduced wage increases in enterprise bargaining. The lost 3 percent of wage increases meant that Keating could brag that real unit labour costs fell when SG was introduced and every time it increased.
Far from reducing budget pressure, the SG scheme adds to it. According to the 2013 Treasury Tax Expenditures Statement, the revenue foregone from the superannuation tax concessions last year was $31 billion; taking into account the increased SG, that will rise to $45 billion in 2015-16. Pension payments totalled $30 billion last year, so Australian taxpayers will pay more in superannuation tax concessions than in pensions.
Those tax concessions go disproportionately to the rich. The top 10 percent of income earners will receive, according to the Australia Institute director Richard Denniss, more than 31 percent of the benefits of the superannuation tax concessions. In other words, by 2015-16 over $15 billion in revenue from the top 10 percent will be foregone. By contrast, the poorest 10 percent receive no benefits from the tax concessions. In dollar terms this is zero, zilch, nothing.
The combination of the compulsory SG and tax concessions means there is now about $1.6 trillion in the hands of superannuation funds and their managers. That is the equivalent of Australia’s annual gross domestic product.
These funds get to make decisions about where our trillions are invested. They play with our lost wages on the share market, in property and even productive investment. During the global financial crisis, for example, returns fell. The beauty from the point of view of the funds is that under accumulation schemes it is workers who bear the risk of falls in the market. In defined benefit schemes, workers are paid a pension based on salary and length of service, regardless of the amount the fund has earned. Not surprisingly, defined benefit schemes have declined.
At the moment, assuming a rate of return of 5 percent, you would need to have saved $800,000 over your working life to be able to retire on a modest superannuation pension of $40,000. The average balance for retirees today is less than $100,000. On the other hand, the top 1 percent of income earners do have balances of $800,000 or more.
Superannuation is a scam. The system is rigged in favour of the rich. It is paid for by lower wage increases and gives the greatest benefits to the wealthy. It gives trillions to unaccountable funds and managers so they can invest our money in big casinos like the stock exchange.
Disgracefully, but typically given it rules for the 1 percent, Labor has promised not to make any changes to the superannuation lurks and perks for five years, locking in this rort for the rich.
Is there an alternative? Imagine if we abolished the superannuation tax concessions for the rich. That would give government enough to increase the current $19,000 pension to $30,000, up to $200 a week extra for the 2.2 million age pensioners.

Keeping us in the dark on free trade

The great super scam uncovered

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