from Paul Craig Roberts:
On Trump’s third day Trump is one up on the Establishment. Can this last? I am not a Trump booster. I am a scorekeeper.
On the third day of his presidency Donald Trump signed an executive order withdrawing the United States from the Trans-Pacificic Partnership (TPP). Based on this we must assume he will also deep-six the Trans-Atlantic Partnership.
Trump and his advisors regard the Pacific and Atlantic partnerships as trade deals like NAFTA, the North American Free Trade Agreement that sent American jobs to Mexico at the expense of Americans.
However, the most strategic part of these agreements is that they make global corporations immune from the laws of the countries in which they do business if those laws adversely impact the profits of the global corporations.
Who decides the question? Not the courts of the countries or a world court.
The question is decided by a corporate tribunal staffed only by corporations.
In other words, the sovereign laws of sovereign countries, such as France’s laws against GMOs, are subject to damage suits decided by corporate tribunals, which means the end of the legal sovereignty of countries.
The so-called trade partnerships are weapons of American economic imperialism.
Whether Trump and his advisors are aware of this or not, Trump has on his third day dealt a lethal blow to a power lusted after by US global corporations.
How will this formidable force respond to this blow inflicted upon them by Trump?
That remains to be seen if the blows that Trump has promised against the interests of the elites continue.
Global corporations are Fifth Columns in the countries in which they are incorporated and also in the foreign countries in which they do business. They have no loyalty to any country, only to the profits that comprise their bottom line. Anything that increases those profits they regard as legitimate. Anything that diminishes those profits they regard as illegitimate.
Modern capitalism is a profit-driven world, in which capitalists are devoid of the loyalty to their native countries that Adam Smith and David Ricardo assumed them to have. US global corporations have demonstrated their disloyalty to the US by moving US jobs to Asia. Think Apple, Nike, Levi, and all the rest. Jobs offshoring separates consumers from the incomes associated with the production of the goods that they consume, which leads to penury.
The rewards for the offshoring global corporations have been large profits from reduced labor and regulatory costs, resulting in executive “performance bonuses” and capital gains to shareholders and to executives with stock options or some similar income booster.
The costs have been the dismantling of the ladders of upward mobility that made the US an “opportunity society.” High productivity, high valued added manufacturing and professional skill jobs, such as software engineering jobs, have been moved offshore, and in the case of software jobs also given to foreign H1B work visa holders. The consequence is the collapse of the state, local, and federal tax base, and the consequent assault on Social Security, Medicare, and state and local pensions.
A county like the US that gives its GNP away to other countries is locked into a transformation from First World to Third World. This is what Trump has said he will reverse.
How can he do it? Is this something that he can deliver by cutting corporate tax rates and by imposing an import or border tax?
The US is a member of the World Trade Agreement, which prohibits tarrifs or “border taxes.” If this is correct, Trump would first have to pull the US out of the WTO, something that might be difficult.
However, what Trump can do is to offset the labor cost advantage to corporate profits from offshoring their production for US markets by changing how corporations are taxed.
If US corporations add value to their product in the US, that is, if they produce the products that they market to Americans in the US with American labor, they would have a lower tax rate than if they produce the products abroad with foreign labor. The difference in the tax rate can be calculated to offset, or more than offset, the advantage of the lower labor and regulatory costs abroad. This is a matter of domestic taxation and not a matter of tarrifs on foreign-produced goods, and, therefore, it is not subject to WTO rules.
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