US Sours on its Own Secretive Trade Shocker

Yves here. This article refers to a New York Times op ed with criticizes the presently stalled TransPacific Partnership. I hope you can read it in full. The piece by Thomas Edsall is noteworthy for its length (far longer than the Grey Lady usually allots) and for standing in opposition to an editorial that endorsed the pact.

By Leith van Onselen who has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs. You can follow him on Twitter at Originally published at MacroBusiness

I have warned repeatedly about the risks posed to Australia’s sovereignty and consumer welfare from the Trans-Pacific Partnership (TPP) – the proposed regional trade deal between 12 Pacific Rim countries, including Australia.

If the TPP goes ahead, it will establish a US-style regional regulatory framework that meets the demands of major US export industries, including pharmaceutical and digital.

The draft chapter on intellectual property rights, revealed by WikiLeaks, included a “Christmas wishlist” for pharmaceutical companies, including the proposal to extend patent protection and strengthen monopolies on clinical data. As part of the deal, the US is reportedly seeking patents for “new forms” of known substances, as well as on new uses on old medicines – a proposal which would lead to “evergreening”, whereby patents can be renewed continuously.

The pact poses a huge risk to Australia’s world class public health system, which faces cost blowouts via reduced access to cheaper generic drugs and reduced rights for the government to regulate medicine prices. It also risks stifling innovation in the event that patent terms are extended too far.

The US is also seeking to insert an Investor-State Dispute Settlement (ISDS) clause into the agreement, which could give authority to major corporations to challenge laws made by governments in the national interest in international courts of arbitration. Effectively, US companies would be allowed to sue the Australian Government under international law – a move that is being pursued by Philip Morris against Australia on plain packaging and graphic warnings for cigarettes.

The US is also opposing a proposal that would allow the circumvention of technology that restricts products to certain regions, even though this was recommended by the Australian parliament’s Inquiry into IT Pricing, as well as opposing the parallel importation of goods made under authorisation in other countries – both of which would act to maintain higher prices (to the detriment of Australian consumers).

Australia’s Trade Minister, Andrew Robb, has signaled Australia’s support for the TPP provided Australia gains significant access to agricultural markets, labeling the agreement as a “platform for 21st-century trade rules”.

Yet, warnings about the deleterious implications of the TPP have been voiced across the globe.

Nobel Prize winning economist Joseph Stiglitz, recently posted an open letter questioning negotiators’ secrecy and warning about “grave risks on all sorts of topics” posed by the TPP, as well as claiming that it contains “many of the worst features of the worst laws in the TPP countries, making needed reforms extremely difficult if not impossible”.

And now, the New York Times has reported that the US Congress and trade experts are alarmed at the secrecy surrounding the TPP and the manner in which the deal has been hijacked by US pharmaceutical and digital interests, risking dangerous outcomes:

Members of Congress on both sides of the aisle have voiced anger over their limited access to negotiation proceedings…

“The majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations – like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America – are being consulted and made privy to details of the agreement. As the Office of the USTR [U.S. Trade Representative] will tell you, the President gives it broad power to keep information about the trade policies it advances and negotiates secret. Let me tell you, the USTR is making full use of this authority.”

That same month, Issa, chairman of the House Oversight Committee, unilaterally released what had been the administration’s secret position on intellectual property rights, one of the most contentious subjects under negotiation. Issa wrote:

“At a time when the American people and Internet users all around the world are rightfully wary of any closed-door negotiations that could adversely impact their ability to freely and openly access the Internet, the Obama Administration continues to pursue a secretive, closed-door negotiating process for the Trans Pacific Partnership…

[International Trade expert, Jagdish] Bhagwati described the procedures governing the TPP negotiations as “ludicrous,” noting that the secrecy surrounding the talks makes it difficult for the administration to win critically important congressional approval of voting on the TPP under special (“fast track”) rules barring any amendments or filibusters…

The Electronic Frontier Foundation, a leading nonprofit advocate of open access on the Internet, argues that under a cloak of secrecy, the TPP …”puts at risk some of the most fundamental rights that enable access to knowledge for the world’s citizens”…

Oregon senator sent an email response to my inquiry:

“Right now, because of the shroud of secrecy, it is impossible for the public to be informed of what’s at stake in potential trade deals like the TPP. This secrecy and lack of informed public input makes it difficult for Congress to oversee and direct trade negotiations”…

These agreements go well beyond traditional market access issues of tariffs and quotas to become de facto industrial policies…

[The TPP] reflects a larger shift in the balance of power. As multinational or “stateless” capital diminishes the sovereignty of individual countries, including the United States, and strengthens the autonomy of international corporations, it weakens the already fragile economic security of millions of out-of-work Americans. Their plight appears to be unheeded in the world of “advisory committees.” One can only fear what comes next.

Clearly, the whole process surrounding the TPP is overly opaque. As a bare minimum, the text of the TPP should be released for public and parliamentary scrutiny before it is ratified.

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  1. Ulysses

    Thanks for sharing this! I’m fascinated by the internal divisions within the NYT that allowed for the Edsall piece to be published. Maybe someone over there noticed the near unanimity with which Prof Krugman’s (normally slavish) fans took him to task for his obliviousness to the dangers posed by the TPP? In any case, we all owe you tremendous gratitude– for continuing to shed light on this dangerous attempt by the multinationals to erase what vestiges of national sovereignty remain to ordinary citizens. They will keep it secret, because they want to allow politicians the chance to speak in positive platitudes about “the benefits of free trade” without having to defend any of the devilish details.

    1. BigRed

      Well, we’re seeing this too rarely nowadays but this is what newspapers should be like, shouldn’t they? Not just a unified propaganda outlet but multifaceted.

  2. Middle Seaman

    The other side of the NSA coin appears to be the TPP. One has difficulty imagining our own government spying on us while hiding its attempts to expend the rights of the 1% globally before the great recession. The US democratic system is being hollowed out by repeated anti-democratic acts whose basic source is the taking over of the country by the Fortune 100.

    Why do we even bother with the bought elections. Let the Chamber of Commerce nominate a ruler. After all, such a ruler would do NSA and TPP too. The Supreme Court is already doing the rest.

    1. Sufferin'Succotash

      “2012,” he shrilled, and then fell to cackling grotesquely. “That was the year Morgan the Fifth was appointed President of the United States by the Board of Magnates. — Jack London, “The Scarlet Plague”.

    2. jrs

      And in line with the government spying on us, while negotiating trade deals in secret.

      The NSA is engaged in industrial espionage against companies in other countries, then wants absolute protection for IP to the point of wanting to patent medical procedures (all about protecting innovation or something – yea right). Because heaven forbid we start copying medical procedures while the NSA steals what trade secrets it can.

  3. arby

    Perfect synchronicity with the megafauna article! Hopefully, people have learned enough about the values of unbounded global corporate citizens that we will use this ice age to reassert biodiversity in human affairs as against these megapredators. These global legal agreements are the plant matter allowing them to prosper. Eradicate the protein rich plant food and eliminate the predator.

      1. hunkerdown

        Actually, that would be only the first step in realigning the right to exclusion/property with social purpose.

  4. Expat

    What continues to amaze me is that these trade agreements are not called “cartels.” An honest trade lawyer would have to tell you that from a legal standpoint OPEC and the TPP are functionally equivalent. Yet we properly call OPEC a cartel, while NAFTA, which gifted economic advantages to cerain established businesses and blocked the distribution of privileges for others, still goes by an innocuous name. Trade agreements all aim to do the same as OPEC. These are groups of businesses that use their governments to enforce barriers to entry, maintain high prices and limit supply.

    In truth, the conspiring parties could agree to overcharge for their products without cutting wages, increasing hours and polluting the enviromnent, but the sadists who negotiate these agreements never seem to consider this point.;

    Leaked portions of the TPP show that it is even more cartel-like than its predecessors. What struck me was the extreme difficulty of exiting the group: many months’ notice, written exchanges and agreement, etc. These constitute a flashing red light for anyone looking for unlawful economic association. That’s because the rentier benefits of cartelization depend on all parties playing by the rules. If even one party breaks with the others by somehow charging less for the product or using a different formulation or some other form of unpermitted differentiation the whole thing is liable to collapse. Every participant benefits in a cartel, but some benefit more than others and once the collective is breached, each party pursues its individual best interest.

    Like other rich peoples’ movements, cartels are designed to shovel benefits into the bank accounts of the rich while bankrupting, starving and poisoning the mass of humanity. No wonder the TPP chapters read like the ALEC (American Legislative Exchange Council of “stand your ground” fame) wish list. What these corporations can’t get through the visible leglislative process they seek by sneakier, creepier means.

  5. Jay

    “. . . the TPP should be released for public and parliamentary scrutiny before it is ratified.”

    Um, maybe it shouldn’t be ratified?

  6. barrisj

    Not to be neglected, of course, but the “Western” counterpart to TPP is the notoriously secretive TAFTA/TTIP negotiations currently taking place between EU and US trade envoys. All with the exact same agenda: to remove any constraints upon multinationals to acquire “just and equitable profits”, constraints that include national regulatory policies covering environmental, labour, capital formation and transborder flow, public-sector funding, etc., etc. Make the entire planet safe for untrammelled penetration and operation of corportate behemoths whose power will be consecrated by treaty, and whose global reach is not answerable to so-called “sovereign states”, in itself a quaint concept in international relations that unfortunately was an early casualty of globalisation.

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