Minimum wage and the Trans-Pacific Partnership

Under the earlier NAFTA “free trade” agreement, an International Labor Organization-based trade tribunal in Geneva, Switzerland, entertained the bizarre claim that if a NAFTA participating country does not have a minimum wage it is not allowed to adopt one, and if a country already has a minimum wage (e.g. Egypt) it is not allowed to raise it — even to keep up with inflation. Why? Because, said three rotating corporate lawyers acting as “judges” on the tribunal, that could adversely impact corporate investors’ “expected future profits” — the NAFTA definition of “restraint of trade.” Clearly, the main purpose of NAFTA was to protect profit, not trade.

Now comes the “Trans-Pacific Partnership” (TPP), which Hillary Clinton once held up as “the gold standard” of international trade agreements, before wisely changing her mind once she actually got to read the text. The White House, and notably Vice President Joe Biden, continue to tout the TPP for its alleged assurance of (largely voluntary) environmental protection standards and recommended labor rights. Most important, they say, is that the TPP requires that all participating countries adopt a minimum wage for workers. So far, so good.

The devil, as usual, lies in the details. To discover in several thousand pages of text what the TPP actually means is a challenge. According to media reports, the TPP does establish a rigorous minimum wage: 10 cents an hour if certain additional benefits are provided, or 20 cents an hour if no such benefits are provided. Thus, so long as Asian partners pay 10 to 20 cents an hour, the TPP standard has been met, and those countries are then “free” to undercut and out-compete U.S. standards and practices. What kind of “gold standard” is that?

Actually, virtually all the states participating in the TPP already have their own mandated minimum wage. For example, Vietnam has a minimum wage of 52 cents an hour. So the TPP doesn’t change minimum wages in these countries. The TPP uses all the right words, but has little substantive effect. The TPP deals in extraordinary detail with tariffs, but fails to control currency manipulation or ensure a living wage for workers. Not much to brag about.

The drafters of the TPP were extremely clever in the use of language to obfuscate reality and disguise true intent. For example, unlike NAFTA and CAFTA, TPP doesn’t use the words “investors’ expected future profits,” preferring to speak of “anticipated participatory benefits,” to mean exactly the same thing. The full text of the TPP, formerly kept secret (by what authority?) from the president and then from Congress, is finally available to Congress (albeit on a no-amendment “Fast Track” basis) and to the public, so “We the People” can learn at last what we are being schemed into.

The TPP text avoids the word “tribunal,” and speaks only of “free-trade panels.” But it’s the same rose, by any name, and smells the same. Without specifically saying so, the TPP perpetuates the panels’ alleged power, under the “Investor-State Dispute Settlement” process (ISDS), to bypass all courts of law, impose huge damage awards, and overturn laws previously adopted by the U.S. Congress, other national Parliaments, state and local governments. What might a future TPP “Free Trade” panel decide to do to overturn U.S. federal and state minimum wage laws? What happens to U.S. sovereignty over its own laws, policies and practices?

The bottom line is this: Whatever its impact on jobs, wages, exports and the economy, the TPP, because of its ISDS process, is a flat-out violation of the U.S. Constitution, and it undermines some of the most fundamental principles of American democracy. The answer? Delete the TPP, start over, and this time, get it right.


Sharon, Conn., resident Anthony Piel is a former director and legal counsel of the World Health Organization.