If we’ve learned anything in the past 15 years, it should be that offshoring jobs and deregulating financial services are certain to weaken the U.S. economy.
In light of those painful lessons, it’s hard to understand why the U.S. Trade Representative would push a trade deal with Panama.
The deal would not only encourage U.S. companies to move jobs to Panama and elsewhere, but it would encourage banks to set up subsidiaries there to avoid regulation.
In the State Department’s own words, “Panama is an offshore financial center that includes offshore banks and various forms of shell companies that have been used by a wide range of criminal groups globally for money laundering.”
The proposed trade deal would do nothing to change Panama’s status as a haven for money launderers and tax cheats.
But the banks and the multinationals are used to getting what they want -- despite the failure of trade deals modeled after NAFTA, despite the public’s rejection of them, even despite President Obama’s pledge to crack down on tax havens.
What the banks and multinationals ultimately want is a global marketplace with rules to protect economic elites, but not the public interest. Ever since NAFTA, they’ve succeeded.
Senate Majority Leader Dick Durbin put his finger on the reason why when he said the other day, “The banks – hard to believe in a time when we're facing a banking crisis that many of the banks created – are still the most powerful lobby on Capitol Hill. And they frankly own the place."
And so the banks now have the gall to lobby for a trade deal with Panama. It is especially outrageous that many recipients of TARP funds with Panamanian subsidiaries – AIG and Citigroup, for example – are lobbying hard for it. The deal would allow them to avoid paying taxes.
The deal would also give Panama-based subsidiaries of U.S. banks greater rights within the United States than the Constitution provides U.S. citizens. It would give Panama-based investors the same rights that NAFTA gives foreign investors – the rights to challenge state and federal laws. Companies like AIG want this trade deal so they can get the right to directly sue the U.S. government in foreign tribunals.
AIG is already suing the U.S. government for $306 million. It wants to recover taxes that it tried to shelter in a Panama-based affiliate.
Deregulating financial services was a colossal mistake. It directly led to the housing bubble and an overleveraged financial system that created the current financial crisis.
Approving NAFTA and the other deals modeled on it was another colossal mistake. Trade deals ever since NAFTA have caused millions of jobs to leave the country. They’ve depressed wages, shuttered factories, led to the loss of 300,000 family farms and brought about the trade imbalances that also contributed to the current economic crisis.
So if you’re wondering why we’d want to repeat two colossal mistakes in one trade deal, you might want to ask AIG for the answer.