The TPP and Inequality

By Will Lasky

ECSN BRICSAM Program Officer

On Feb 4. 2015 12 nations signed the Trans-Pacific Partnership (TPP) trade agreement. Among BRICSAM countries, Mexico is a signatory and Indonesia has declared its intent to join1. While proponents 2 argue that TPP will further humanitarian causes, critics have countered that the TPP deal will further a corporatist economic agenda3Additionally, some scholars argue that the economic benefits are totally overstated and that for the most part, increases in GDP will be minimal while the overall labor share of income will decrease thereby exacerbating inequality4. These are only some of the concerns voiced in the run up to the release and signing of the trade agreement.

Beyond implementation, there are already systemic issues in place that inhibit the free flow of wealth and GDP gains to all members of society. A discussion of these issues is necessarily linked to a conversation on equitable trade between nations.

Much of the work we have done in the CSN BRICSAM program has been promoting policies that enhance equality and create growth by unlocking the economic potential of the poor. For example, in Nov. 2015 at the UN Business and Human Rights forum in Geneva, partners cited a revolving door between business and politics in BRICSAM countries giving rise to policies that favor the wealthy. The recently commissioned BRICSAM report For Richer…or Poorer: The Capture of Growth and Politics in Emerging Economies 5 explores institutional drivers of inequality in greater detail, such as the effect of capital flight to neuter the power of wealth to ‘lift all ships.’ Our findings have been mirrored at the highest level enshrined by the UNDP as a Sustainable Development Goal6.

It seems additionally vital to encounter the trade agreement and enforcement of its precepts through the notoriously hard-to-measure rubric of corruption. Corruption is a relevant player in the enforcement of agreements, particularly those regarding humanitarian and environmental goals. These goals more than others represent short-term economic losses for politically entrenched business interests. In searching for a framework, Transparency International’s perceptions of corruption index might be a good place to start7. For example, Vietnam, a member of the TPP Agreement, is ranked 112 out of 168, and Mexico is ranked 95. Malaysia scores a bit better, is on par with perceptions of corruption in south Europe. How does this bode for the agreements implementation and oversight in countries where corruption, the revolving door of business and politics, perpetuates issues like child labor by sequestering gain among society’s economic elite?

Although we must analyze the trade agreement itself, its potential effects on inequality and on humanitarian issues, the details regarding the institutional convergence of business and politics producing inequitable systems of taxation should become commonplace subject matter for everyone. We should all be conversational in the main talking points. Civil society should foster economic literacy in the subjects of taxation and corporate and political capture so that populations beyond the level of CSOs can participate in a unified and affective global policy discourse.   

It will hardly come as a surprise if trade deals such as TPP prove toothless drivers of a humanitarian mission if societies cannot come to a clear consensus on equitable income tax codes and massive tax sheltering. Additionally, we must come to see providing for basic health and human services and guaranteeing gender equality less in terms of charity and more as vital means of freeing up the economic power of billions of economically and politically disenfranchised to produce a more prosperous world for everyone to enjoy.

Signatory Countries of the TPP by Gini Coefficient  

Australia: 30.3

Brunei (none available)

Canada: 33.7

Chile: 50.5

Japan: 32.1

Malasia: 46.3

Mexico 48.1

New Zealand 36.2

Peru: 45.3

Singapore: 46.4

United States: 45.0

Vietnam: 37.6

1Tod Williamson (5 Dec. 2015), Why Indonesia Joining the TPP Would Be a Good ThingThe Diplomat, Retrieved 16 Feb. 2016

2The White House Web PageThe Trans-Pacific Partnership, Retrieved 16 Feb. 2016

3Zach Carter, Ryan Grim (13 Jan, 2014) Noam Chomsky: Obama Trade Deal A ‘Neoliberal Assault’ To Further Corporate ‘DominationThe Huffington Post, Retrieved 16 Feb 2016

4Jeronim Capaldo and Alex Izurieta (Jan 2016), Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership AgreementGlobal Development and Environmental Institute Working Paper, Retrieved 15 Feb. 2016

5 Alice Krozer (Jan 2016), For Richer…Or Poorer: The Capture of Growth and Politics in Emerging Economies CSN BRICSAM Report, Retrieved 16 Feb. 2016

6 UNDP Webpage, Goal 10: Reduced Inequalities, Accessed 16 Feb. 2016

7 Transparency International Webpage, Corruptions Perceptions Index 2015 , Accessed 16 Feb. 2016

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