CT Blue

When I saw this article's (White House to File Case Against China at W.T.O. Over Subsidies for Exports) title in this morning's Times, I immediately smelled a rat. The stench grew stronger as I read. I could tell by the title that this “case” was a PR move intended to smooth the way for the Trans Pacific Partnership corporate protection treaty. And, indeed, my suspicions were confirmed:

The Obama administration accused China on Wednesday of providing illegal export subsidies to critical industries, flexing its muscle on trade as it presses Congress to expand President Obama’s authority to secure major trade accords.

…

The administration wants Congress to give it the power to negotiate a Trans-Pacific Partnership, which is intended to lower trade barriers while adding a range of measures that protect patents and other forms of intellectual property across a dozen Pacific nations. Crucially, it is pressing Congress to accept, as it has for past trade deals, that any agreement be subject to a yes-or-no vote with no amendments allowed.

If you've been following this debate at all, you know that the TPP is primarily designed to give corporations a free hand to exploit the rest of us, soak up whatever income remains to us, exempt transnational corporations from domestic law, and destroy the environment. You can read one of Dean Baker's many treatments of the subject here. It is a mystery why a Democratic administration is trying to do this. Well, it's actually not a mystery; Obama has handed economic policy to Wall Street, and this is of a piece with that.

But, you may say, it's still all to the good if Obama is going after those nefarious Chinese. They must be doing something horrible.

Well, of what does their crime consist?

The administration accused China of providing almost $1 billion in illegal subsidies over three years by offering so-called common service platforms to help exporters. The administration is also contending that China set up 179 “demonstration bases” for exporters in these industries, providing at least $635,000 apiece at some of the bases.

An objection immediately popped to my mind, and a few paragraphs later, I see it has occurred to others:

The administration’s case might be tricky, though. Mr. Froman said that by receiving free or discounted back-office services, Chinese export companies were able to lower their cost of doing business, thus helping reduce what they charge foreign customers for their goods. But the W.T.O. could see such indirect subsidies as widely used, even in the United States. (Emphasis added)

Ya think? Subsidies can take many forms. For instance, here in Groton, when the Town Council gives a business a tax break, it is effectively subsidizing that business by “lower[ing its] cost of doing business”. Cities and states across this great nation are competing with each other to lower the cost of doing business for every swine with enough muscle to get to the trough. Maybe China is being more transparent about the subsidy, but there's no functional difference-it is shifting the cost of doing business from the businesses involved to Chinese taxpayers, just as our federal government, states, cities and towns have been doing for years with various tax breaks, not to mention actually building stadiums for professional sports teams (and letting the NFL avoid taxes as a non-profit) and bailing out criminal enterprises known as banks, which certainly lowered their costs of doing business.

Who knows, maybe the huge TPP cloud with have a slim silver lining. Maybe the administration's legal theory will be extended to its logical conclusion and our states, cities and towns will be barred from giving these subsidies. That would, at least, stop one race to the bottom.