The Lies The USTR Is Spreading About Fast Track Authority To Push TPP Through Congress

from the don't-buy-it dept

With the introduction of fast track authority (also known as "trade promotion authority") in Congress, by which Congress abdicates its constitutionally-granted sole power to regulate foreign commerce, the USTR (which gains that power) is out in force, spreading all sorts of lies about what this means. It's not exactly encouraging when the organization that has been hiding all the details of the TPP agreement for years is now trying to push it forward by directly lying to the American public. It's almost as if the USTR can't be honest or people might realize that it's spent the last few years pushing forward on an agreement designed to prop up old legacy businesses at the expense of the public and new innovators.

The USTR's statement on the fast track proposal is full of lies, half-truths and misleading statements. Let's look at a few.

TPA does not provide new power to the Executive Branch.

Hell yes, it does. Trade Promotion Authority gives the power of regulating foreign commerce directly to the USTR, rather than Congress. It allows the USTR to negotiate a "final" agreement with other countries, which Congress cannot seek to change, amend or fix. Instead, Congress can only give a simple "yes or no" vote on what the USTR comes back with. Without TPA, the USTR actually needs to engage Congress, and win its support and approval on everything within the agreement. That gives Congress -- which is supposed to represent the public -- a chance to make sure that (as the USTR has shown a proclivity to do) the agreement is not filled with ridiculous "gifts" for cronies and friends at the expense of the public and disruptive innovation.

TPA is a legislative procedure, written by Congress, through which Congress defines U.S. negotiating objectives and spells out a detailed oversight and consultation process for during trade negotiations.

If TPA didn't tie Congress' own hands, the USTR might have a point here. But it's not true. While the TPA bill does officially "define" the negotiating objectives, those objectives listed in the current bill are basically the USTR's own list of what it's working on, reprinted by friends in Congress. And, honestly, how is it possible that it "spells out detailed oversight," when what the bill really does is make sure that the USTR can give Congress whatever it comes up with and say "take it or leave it"? Without TPA, the USTR actually has to go convince Congress that what it's been proposing (secretly and with no public review) is actually in the public interest.

Under TPA, Congress retains the authority to review and decide whether any proposed U.S. trade agreement will be implemented.

Misleading at best. Insulting to anyone with at least half a brain. Congress has significantly less authority under TPA to review and decide any trade agreement. That's because without TPA, Congress can review and question different aspects, or introduce amendments and fixes to all the stuff that the USTR screwed up. With TPA, Congress can only give an up or down vote on the entire package. That means, as long as the USTR includes enough "pork" to outweigh the crap for the majority of Congress, it can get through a ton of dangerous proposals -- like those we've already seen in the still officially "secret" intellectual property chapter.

TPA ENSURES TRANSPARENCY AND PUBLIC ENGAGEMENT IN TRADE

TPA bills establish consultation and notification requirements for the President to follow throughout the trade agreement negotiation process – ensuring that Congress, stakeholders and the public are closely involved before, during and after the conclusion of trade agreement negotiations.

It's tough to read this and not laugh. This is an out and out lie. And it's a direct insult on the public. Remember, the TPP negotiations have been going on for years, and we still don't officially know what's in the TPP, other than what's been leaked. The idea that the public is "closely involved" is an insult. The public is not involved at all, entirely by the choice of the USTR, which has chosen to keep them out. As for Congress? They're also mostly in the dark. Yes, elected officials can go see the negotiating text, but they have to go to the USTR's offices, and they're not allowed to bring any staffers, make any copies or take any notes.

The USTR keeps pretending that because it will "meet with anyone who asks" that it's being transparent. But transparency is not about listening to whoever knocks on your door. It's about the other direction: it's about providing information out to the public -- something that the USTR has absolutely refused to do. The TPA does absolutely nothing to increase transparency, and actually gives the USTR fewer incentives to be transparent because now it knows there's no real oversight any more.

The USTR is flat out lying here, and it's a disgrace.

In addition to our congressionally mandated committees of industry and public sector advisers , the United States consults with all interested stakeholders at each trade agreement negotiating round and in between. We do this to share information and get views that make the negotiated product better. For TPP, these stakeholders have included representatives from academia, labor unions, the private sector, and non-governmental organizations. Under TPA, this activity would continue and be strengthened.

Misleading again. Yes, the USTR "shares" information, but only with a very small list of advisors -- who almost exclusively come from old legacy businesses. Everyone else? The USTR's response is to give them the middle finger. The claim about consulting with "interested stakeholders" at each round is also misleading. As we've covered in the past, at many (though not all) of the negotiating rounds, there would be an hour or two where "stakeholders" would have the opportunity to sit at a table and hope negotiators came to talk to them. Sometimes this would be done far away and at times when negotiators had better things to do -- like eat lunch. Sometimes stakeholders were allowed to give presentations, but with no guarantee that any negotiators would attend.

As for using those meetings to "share information" -- that's again highly misleading. Again, the USTR has been negotiating the TPP for years and still has not released any information at all on what's in it. What we know is what's been leaked out, and that little that's been leaked shows exactly why the USTR fears transparency and fears the public: because they're crafting an agreement designed to protect a few corporate interests at the expense of just about everyone else.

An honest an forthright USTR wouldn't fear the public, and it wouldn't insult and lie to the public as is happening here. The USTR is trying to pull a fast one over on the American public. It's negotiating an agreement in secret, pretending that it's being transparent, and then encouraging Congress to give up its right to review the agreement (without even seeing it), with insulting promises that by doing so, that will create more transparency.

Filed Under: congress, fast track authority, lies, tpa, tpp, trade promotion authority, transparency, ustr

Congress Introduce Bi-Partisan Bill To Abdicate Its Own Role And Screw Over American Public All At Once

from the shameful dept

We knew this was happening sooner or later, but Senate Finance chair Max Baucus, along with ranking member Orrin Hatch, have introduced the "fast track authority" bill in the Senate. Over in the House, the same basic bill has been introduced by Rep. Dave Camp. There had been rumors that the introduction of the bill would be delayed because not a single House Democrat would co-sponsor the bill, but apparently the existing bill supporters decided not to wait. Fast track authority or "trade promotion authority" is a very dangerous concept. It is basically Congress completely abdicating its Constitutional authority under Article I, Section 8, Clause 3, which grants Congress the sole power "to regulate commerce with foreign nations."

Instead, what fast track authority means is that Congress is saying, "that's okay, you guys in the administration can handle that." Basically, it's Congress flat out telling the White House and the USTR that it, and not the Congress, can come up with trade agreements with foreign powers, and Congress will tie its own hands in being able to challenge or review the various provisions. Instead, it will limit Congress entirely to an up or down vote on the entire trade agreement. And, in this case, the fast track authority will be used to approve the TPP (and likely TAFTA/TTIP after that). These are trade agreements that, as we've already discussed, are designed to help certain legacy industries at the expense of innovation and the public. Specifically, this would grant the administration four years of "fast track authority" with an easy three year extension after that.

The most ridiculous part is that the sponsors of the bill that will give up Congress' own powers are claiming that it does the opposite:

TPA-2014 also provides greater transparency and gives Congress greater oversight of the Administration’s trade negotiations.

Uh, no. It does the exact opposite. It takes away Congress' Constitutional powers to regulate commerce with other nations, providing less oversight for trade negotiations and guaranteeing even less transparency than the almost none that exists today. The sponsors of the bill are pretending that the details in the 107 page bill "instruct" the USTR how to properly negotiate things like the TPP, but it's basically just repeating the USTR's existing wishlist. Included are, of course, a section on the importance of "high standards of intellectual property protection" as well as support for dangerous corporate sovereignty tribunals, commonly referred to as "investor state dispute settlement" plans.

While this bill is moderately bipartisan in the sponsorship (with Senator Baucus selling out the majority of his party who is opposed to it), it's the Republicans who are the driving force behind this. And that makes no sense at all. This is the same Republican party who shut down the entire federal government to block the president's healthcare proposal, and has spent years attacking anything that even has the mild stench of the executive branch taking on a role that goes beyond what the Constitution allows. And yet here they are gleefully handing over the Constitutionally-given reins for regulating foreign commerce... to the president they hate? How does that make any sense at all?

Filed Under: congress, dave camp, fast track authority, max baucus, orrin hatch, tafta, tpp, trade promotion authority, ttip, ustr

USTR Sued For Failing To Reveal TPP Details In Response To FOIA Request

from the national-security? dept

William New, the guy who runs the excellent IP Watch website has been trying to find out more about the TPP agreement for quite some time. Working with some students from Yale's Media Freedom and Information Access Clinic, New filed a Freedom of Information Act (FOIA) request for TPP-related documents. The USTR waited nearly a year to respond (well beyond the 20 working days required by the law), and then told New that they weren't providing the documents, saying that the draft text of the TPP is classified as "national security information."

Yeah. A draft of a trade agreement that will impact us all, but is being negotiated in secret by the USTR and a small group of corporate lobbyists, is "national security" information.

In response, New and the MFIA clinic have now filed a lawsuit against the government concerning the failure to provide this information. I have no idea how the lawsuit will turn out, but it seems likely that the TPP text will be revealed as "finalized" before anything really happens with the lawsuit. Still, hopefully they'll be able to argue that they were seeing the draft texts, rather than the final agreement, and set some sort of precedent.

When asked about the lawsuit over the near total lack of transparency, the USTR's spokesperson Carol Guthrie repeated the same completely bogus talking point she sends to everyone (she's sent it to me in the past as well about other TPP issues):

The reality is that TPP negotiations have been more transparent and consultative than any U.S. trade agreement in history while maintaining the confidentiality appropriate for a government-to-government negotiation. Releasing internal deliberative documents would undermine U.S. leverage in negotiations and impair our ability to pursue the strongest possible outcomes on issues ranging from labor and environmental protections to market access for U.S. goods and services.

This statement is as obnoxious as it is misleading. First of all, being "more transparent" is meaningless if the baseline is "totally opaque" and this is a tiny bit more transparent. Second, and more importantly, Guthrie and the USTR continue to use this bogus assertion that listening to lots of people is "transparency." We've explained (and I've told her directly) that transparency is not listening, it's about information flowing in the other direction. Listening is about taking information in. Transparency is about information flowing in the other direction. Claiming that being "consultative" is being "transparent" is simply false. It's not.

Finally, the claim that releasing "deliberative documents would undermine U.S. leverage in negotiations" is equally bogus. As many have pointed out, all sorts of international agreements are negotiated in public, with proposals being released publicly while the negotiations are ongoing. The recently concluded Marrakesh Treaty for the Blind worked that way. It's becoming completely obvious that the USTR has absolutely no interest in even the slightest bit of honest debate over its role in pushing the agenda of a few large companies against the best interests of innovation, jobs and the American public. While it may get them high paying jobs with lobbyists in a couple years, it's a shame they feel the need to sell out the public for their personal benefit, and it's worse that they're doing this with the stamp of approval from the White House.

Filed Under: foia, tpp, trade agreement, transparency, ustr, william new
Companies: ip watch, mfia

When Even Bloomberg Is Saying The TPP Is A Dangerous 'Corporatist Power Grab' That Everyone Should Avoid...

from the put-it-out-of-it's-misery dept

For years now, we've been arguing about the dangers of the TPP agreement, how it's nothing more than the USTR teaming up with giant legacy companies to create a secretive massive corporatist, crony capitalist attack on the public, on innovation and on the economy. As the agreement moves closer to completion, it appears that others are noticing the same thing. Incredibly, while the NY Times has columnists endorsing the agreement, Bloomberg News, a publication that sometimes seems so beholden to promoting blind corporate power over all else that it recently censored itself to avoid losing business deals, now has a columnist flat out calling the TPP an ugly secretive "corporatist power grab" that pretty much all countries should avoid.

U.S. lawmakers and civil-liberties groups have complained for some time about the opacity surrounding the treaty’s terms. Mild grousing turned into outrage last month after WikiLeaks did what Barack Obama’s White House refuses to: share portions of the document with the public. The draft of the intellectual-property rights chapter by Julian Assange’s outfit validated the worst fears -- that TPP is a corporatist power grab. Rather than heed the outcry, the U.S. doubled down on secrecy, refusing to disclose more details.

From there, columnist William Pesek explained that most of the more advanced economies in Asia know that it's a bad idea to be involved in the TPP, and that's why they're staying away:

Hasn’t the U.S. wondered why so many of East Asia’s most promising democracies have so far avoided the treaty? The popular excuse for why Indonesia, the Philippines, South Korea, Taiwan and Thailand aren’t yet among the 12 TPP economies is that they aren’t ready or are trapped by their own timidity. A better explanation is that their leaders realize that truly transparent and accountable governments, to borrow Kerry’s own words, shouldn’t be leading their people into the unknown.

The article goes on to mock the USTR's arguments that it knows what it's doing better than the public and that you peons shouldn't worry about the TPP at all. Pesek points out that the secrecy in all of this from the Obama administration is more along the lines of what you'd expect from a "closed Communist Party state" and the only reason to negotiate like that is "to circumvent the legislative process."

Here's a general tip to the good folks at the USTR: when Bloomberg News, of all places, is calling the trade agreement you're working on "a corporatist power grab," comparing the secrecy to "closed Communist Party states," telling every other country to back out, and decrying the general lack of democracy in the agreement... perhaps it's time to rethink your strategy.

Filed Under: corporatist power grab, crony capitalism, tpp, trade agreement, ustr
Companies: bloomberg

Hidden Within The TPP: The RIAA's Secret Plan To Screw Musicians Out Of Their Rights

from the but-of-course dept

We've written a few times about how the RIAA has been fighting hard to screw over tons of musicians by taking away their "termination rights." Termination rights are a bit confusing, but the simplest way of thinking about them is that after 35 years, if a copyright holder had assigned the copyright to someone else -- such as a record label -- the artist can simply take them back. There are a few exceptions to this rule, such as in cases where the work was done under a "work for hire" setup. And while many people think they know what "work for hire" means, it has a very specific meaning that most likely does not apply to the many situations you might think it would. It certainly does not apply to music, in part because at the time the law was rewritten, the RIAA didn't have anyone in the room to add that into the document (seriously). Now, I tend to think termination rights don't make much sense, but given that they were a tradeoff for extending copyrights massively, at least it's some very, very minor push back on companies that exploit artists.

Still, the recording industry, in particular, hates termination rights. In a somewhat infamous case, which we've written about a few times before, a Congressional staffer named Mitch Glazier snuck four words into a totally unrelated bill (literally) in the middle of the night -- allowing a bill to be passed in 1999 that secretly made sound recordings suddenly qualify as "works made for hire," allowing the RIAA members (the major labels) to deny termination rights to their artists. The addition of those four little words: "as a sound recording" into the "definitions" part of the completely unrelated bill, basically went unnoticed until after the law was passed -- and then suddenly people realized what Glazier had done. There was an outcry from musicians, and Congress actually went back and repealed that section of the law.

Just three months after Glazier put this language into the bill, which everyone admits was suggested to him by the RIAA, he was hired by the RIAA to a job with a half a million dollar salary. He remains at the RIAA to this day, where he's currently the number two guy.

While musicians spoke up and were able to get this part of the bill repealed, it should be abundantly clear that the RIAA and Glazier in particular have always been anti-artist, and are focused on figuring out ways to help the recording industry screw over musicians even more. While he lost the termination rights battle, Sarah Jeong and Parker Higgins, over at EFF, have noticed that in the leaked version of the TPP's IP chapter, there appears to be a hidden attack on termination rights.

The section of the TPP labeled QQ.G.9 appears to be a more direct challenge to termination rights.  It says:

Each Party shall provide that for copyright and related rights, any person acquiring or holding any economic right in a work, performance, or phonogram: may freely and separately transfer that right by contract; and by virtue of a contract, including contracts of employment underlying the creation of works, performances, and phonograms, shall be able to exercise that right in that person's own name and enjoy fully the benefits derived from that right.

The termination right, of course, is a limit on free transfer. As a result, instead of a narrow attack on the termination rights of musicians by reclassifying their works as “works-for-hire,” the text here could eliminate termination rights for everyone. It is an open question whether QQ.G.9 would actually mandate such a significant change in U.S. law, but it is worth noting that the provision specifically targets “phonograms”—legal jargon for sound recordings. Furthermore, an addition proposed by Chile seems to have been designed to mitigate the possibility of broad scale legal changes, leaving us concerned about the ramifications of the current language.

It is, of course, notable that one of the few industry insiders who is listed as an adviser to the USTR on the IP chapter -- one of the very small group of people who is both allowed to see the text of the document and to recommend specific language -- just happens to... work for the RIAA. Yup. The last person listed in the group of folks on the USTR's IP advisory committee is Neil Turkeweitz from the RIAA. And of course, doing away with termination rights is of utmost importance to the RIAA right now, because the timing has suddenly become quite relevant. The law went into effect in 1978 -- and 35 years after 1978 is... 2013. Termination rights are now due and the RIAA has been freaking out about them.

Would the RIAA slip some language into the TPP to destroy termination rights? It might seem like a conspiracy theory, but after all, they did exactly the same thing in US law 14 years ago, and only had it repealed when artists noticed what they'd done to screw them over.

While the RIAA and MPAA have been strongly supportive of the TPP, perhaps the artists who think that those groups are looking out for their interests should think again about what a terrible deal the TPP would be for their own interests.

Filed Under: copyright, mitch glazier, neil turkeweitz, termination rights, ustr
Companies: riaa

Digital Exports Dwarf Other Industries, So Why Is The USTR Ignoring Them?

from the just-clueless dept

We've talked a few times about how the USTR seems to have an antiquated view of the American economy these days, which is driving it to make some really bad and dangerous assumptions about what sorts of things should be in the Trans Pacific Partnership (TPP) agreement -- things that benefit a few older legacy industries, which totally ignore the reality of where innovation is happening today. In fact, the current policies that the USTR is pushing in the TPP agreement seem designed to actually hold back the most innovative industries of today, pushing them to other countries instead, and massively harming the US economy. We've detailed, for example, how the main committee of industry folks who are the "advisers" on the "intellectual property" chapter come from legacy industries, rather than anything involving the internet. The "IP" Industry Trade Advisory Committee (ITAC 15) includes a bunch of lumbering giants, more focused on protecting their positions, than on innovating.

Senator Ron Wyden's office recently asked the Congressional Research Service (known for the high-quality, non-partisanship of their reports) to look at how much "digitally enabled services" were exported out of the US today, and to compare that with other "large" exporters, which the USTR generally thinks it's protecting. The results are somewhat astounding. Digital exports are massive compared to all of those other industries. And yet, the USTR seems focused on helping out all those other guys at the expense of the digital services that make up such an important part of our economy. Why? At this point, it seems that there's just a massive level of ignorance within the USTR about which part of our economy is actually driving so much growth -- and their plans to protect old line industries create real problems for the internet, and they just don't seem to care.

At least some in Congress are finding this situation quite troubling. Reps. Jared Polis and Thomas Massie have teamed up to ask USTR Michael Froman to finally commit to actual transparency, and that includes both releasing the text of the IP chapter and finally letting people who are actually knowledgeable about the internet and its impact on the economy into the discussions.

While we recognize the need to maintain a degree of confidentiality in negotiating our trade agreements, we remain disappointed that important stakeholders including civil society groups, businesses, and academics have not been able to meaningfully participate in the treaty process. The Industry Trade Advisory Committee on Intellectual Property (ITAC-15) has a limited membership, precluding a more diverse set of stakeholders from being able to review and provide input on the negotiating texts or regularly meet with United States Trade Representative (USTR) negotiators.

In particular, we are concerned that the TPP Intellectual Property Rights chapter leaked in November 2013 would place undue restrictions on our copyright laws, harming our innovation, our economy, and an open and free Internet. These standards are troubling given their ability to potentially restrict the legislative branch, particularly when Congress has indicated it is beginning to evaluate the merits of revising these laws. For example, as sponsors of H.R. 1892, the Unlocking Technology Act, we are particularly troubled by draft proposals concerning prohibitions on the circumvention of technical protection measures or Digital Rights Management. The leaked treaty draft includes language that would seemingly make any permanent fix to unlocking cellphones illegal. Intellectual property is a dynamic policy area in which preserving Congress’ ability to adapt to the changing nature of technology is absolutely critical for the United States and our trading partners.

To that end, we encourage the Administration to work with the negotiating parties to publicly release the current official text of the TPP intellectual property and related chapters—or at least summaries of these proposals—and invite public comments on such provisions before the agreement is concluded. A strong precedent already exists for such a process; for instance, the Anti-Counterfeiting Trade Agreement official text was made public an entire year before the agreement was finalized. Additionally, in the future we urge you to develop a more open model of trade agreement negotiation.

Personally, I think this language could and should be much, much stronger, given just how out of touch with reality the USTR seems to be. With the Congressional Research Service itself noting how much more important digital services exports are to the economy, why is the USTR still ignoring them, and looking at them as if the internet is a second- or third-class citizen in the US economy?

Meanwhile, over on the Senate side, Senators Ron Wyden and John Thune have introduced a bill directly seeking to promote an open internet when it comes to trade agreements:

The Digital Trade Act of 2013 would establish negotiating principles to address several key digital trade matters in future bilateral and multilateral agreements and in multistakeholder settings. Those principles include: preventing or eliminating restrictions on cross-border data flows, prohibiting localization requirements for data and computing infrastructure, ensuring that provisions affecting platform Internet sites are consistent with U.S. law, and recommitting the United States to the multistakeholder model of Internet governance. The bill requires the president to prioritize digital trade and ensure it benefits from robust and enforceable rules.

Again, it might be nice if this was even stronger, but recognizing that it's difficult to get anything through Congress these days, perhaps you need to start with things that seem simple and obvious, like having the USTR recognize that "digital" is actually a big business these days.

Filed Under: digital exports, innovcation, jared polis, john thune, ron wyden, thomas massie, tpp, ustr

TPP Negotiators Completely Ignored Public Interest Groups At Last Negotiations

from the they-don't-care dept

We've noted in the past how little the USTR and other country negotiators wanted to hear from various "civil society" or public interest groups during the various negotiating rounds. However, at least they made some attempt to set up "stakeholder engagement" periods, in which concerned organizations could present their arguments. However, it appears that all that went completely out the window at the last negotiations in Singapore. According to a report from Deborah Gleeson, who was there, this time around, those groups were basically shunned entirely:

While civil society stakeholders have always had a rather marginal role in the negotiations, at most previous rounds there have been opportunities for academics and NGO representatives to participate formally in the process.

But the meeting in Singapore had a very different feel. This time stakeholders had no role as participants and no avenues for interacting with negotiators except through personal contacts.

It was clear that ministers were getting down to business. And it was even more difficult than usual to get any information about what was happening.

Basically, the negotiators confirmed what many people knew was going on all along. Negotiators have never shown any actual interest in taking the concerns of these groups seriously. The meetings have always been for show, and now that it's time to "get down to business" apparently those groups can be ignored entirely.

Filed Under: civil society, negotiations, public interest, tpp, ustr

Paul Krugman's Ignorant Assessment Of TPP Shows What A Nefarious Proposal It Is

from the this-is-the-problem dept

Let me start this post off by saying that I know that Paul Krugman seems to inspire... a certain kind of extreme reaction from some people, whether they support him or not. I don't fully know why this is. I think he's got some interesting insights some of the time, and I think he gets some stuff right and some stuff woefully wrong. But that's kind of true of a lot of people. Either way, I'm hoping that the discussion following this post can focus on the specifics of his discussion about the TPP (Trans Pacific Partnership) agreement, rather than tossing around ad hominems directed at Krugman and/or the reverse of that.

Anyway, it appears that Krugman has decided to discuss the TPP agreement after many of his readers asked him to weigh in. And his response is basically to dismiss the entire agreement as not really being a big deal one way or the other. The entire crux of his analysis can be summed up as: trade between most of the countries in the negotiations are already quite liberalized, so removing a few more trade barriers is unlikely to have much of a consequence. Therefore, the agreement is no big deal and he doesn't get why people are so up in arms over it.

On his basic reasoning, he's correct. There's little trade benefit to be gained here. In fact, some countries have already realized this. But that's why the TPP is so nefarious. It's being pitched as a sort of "free trade deal," and Krugman analyzes it solely on that basis. That's exactly what the USTR would like people to think, and it's part of the reason why they've refused to be even the slightest bit transparent about what's actually in the agreement.

Instead, the TPP has always been a trade liberalization agreement in name only. Sure, there's some of that in there, but it's always been about pushing for regulatory change in other countries around the globe, using trade as the club to get countries to pass laws that US companies like. That's why there's an "IP chapter" that is entirely about building up barriers to trade in a so-called "free trade" agreement. It's why a key component of the bill is the corporate sovereignty provisions, frequently called "investor state dispute settlement" (in order to lull you to sleep, rather than get you angry), which allow companies to sue countries if they pass laws that those companies feel undermine their profits (e.g., if they improve patent laws to reject obvious patents -- leading angry pharmaceutical companies to demand half a billion dollars in lost "expected profits.")

Krugman judging the TPP solely on its net impact on trade is exactly what TPP supporters are hoping will happen, so it's disappointing that he would fall into that trap. Thankfully, economist Dean Baker, who does understand what's really in TPP, was quick to write up a powerful and detailed response to Krugman that is worth reading.

However it is a misunderstanding to see the TPP as being about trade. This is a deal that focuses on changes in regulatory structures to lock in pro-corporate rules. Using a "trade" agreement provides a mechanism to lock in rules that it would be difficult, if not impossible, to get through the normal political process.

To take a couple of examples, our drug patent policy (that's patent protection, as in protectionism) is a seething cesspool of corruption. It increases the amount that we pay for drugs by an order of magnitude and leads to endless tales of corruption. Economic theory predicts that when you raise the price of a product 1000 percent or more above the free market price you will get all forms of illegal and unethical activity from companies pursuing patent rents.

Anyhow, the U.S. and European drug companies face a serious threat in the developing world. If these countries don't enforce patents in the same way as we do, then the drugs that sell for hundreds or thousands of dollars per prescription in the U.S. may sell for $5 or $10 per prescription in the developing world. With drug prices going ever higher, it will be hard to maintain this sort of segmented market. Either people in the U.S. will go to the cheap drugs or the cheap drugs will come here. 

For this reason, trade deals like the TPP, in which they hope to eventually incorporate India and other major suppliers of low cost generics, can be very important. The drug companies would like to bring these producers into line and impose high prices everywhere. (Yes, we need to pay for research. And yes, there are far more efficient mechanisms for financing research than government granted patent monopolies.)  

Hopefully Krugman can be convinced to rethink his initial analysis after investigating more of what's actually going on with the TPP agreement, and will no longer be fooled into thinking it's actually about trade. Of course, this is part of why the USTR is so secretive. The more they can get people thinking it's about trade, the less they'll realize it's actually about exporting bad regulations to favor a few crony-connected industries.

Filed Under: dean baker, free trade, paul krugman, tpp, trade, transparency, ustr

As Yet Another Free Trade Agreement Fails To Deliver, Why Should People Believe USTR's Claims About TPP's Huge Benefits?

from the learning-from-history dept

As the US applies more and more pressure to the other nations taking part in the secret TPP negotiations in an attempt to get them to accept its demands, one issue that is starting to be raised is the central one of benefits. Given the sacrifices the USTR is demanding from other countries in order to strike a deal, people in affected countries are rightly questioning what exactly they will get in return. The growing doubts about the value of TPP are presumably why at this late stage the USTR has just released a document touting its "economic benefits". There are two things worth noting about this.

First, that no evidence is offered to back up the big numbers being thrown around there, so we know nothing about the assumptions and methodology behind the figures. And secondly, as Burcu Kilic rightly points out, if the USTR wants people to consider the economic benefits, it should also produce a similar report on the economic damage that could result from TPP so that they can see whether on balance it is worth proceeding with the deal. Needless to say, such analyses are never conducted -- at least, not by governments.

Of course, predicting the economic effects of complex trade agreements that haven't even been concluded is nigh on impossible. But as an alternative, instead of trying to squint into the future, we can perhaps look back at what actually happened with previous free trade agreements. Techdirt has already written about two major deals, NAFTA and KORUS, both of which turned out to be disastrous for the US, but what about the others?

A small, bilateral FTA was signed between the US and Colombia just under a year ago. Recently, President Obama welcomed Colombia's President Santos to the White House, and referred to the trade deal as follows:

We also had an opportunity to talk about the success so far of the Free Trade Agreement and its implementation. There's still some details that are being worked on. Nevertheless, what we've seen is a 20 percent increase in trade between our two countries since its signing. And that creates jobs in Colombia, it creates jobs here in the United States of America.

That's the kind of upbeat assessment you'd expect during these visits, but not everyone agrees with it. For example, Oxfam has recently produced a study on the effects of the FTA on Colombian farmers, in which:

[it] warned that of products important for Colombia's small-scale producers, especially whey, rice, white corn, milk powder and pork, were at greatest risk of being undercut by an increase in US imports and a fall in import prices.

Specifically:

It turns out that during the first nine months of the trade agreement, US exports to Colombia grew at a much greater rate than Colombia's exports to the US, leading to a 40 percent drop in Colombia's balance of trade with the US. Colombia's trade deficit with the US in processed foods deteriorated dramatically, and the country also fared poorly with regard to agricultural commodities, as its exports to the US declined while its imports from the US increased.

In other words, Oxfam claims that the reality of Obama's "20 percent increase in trade between our two countries" is lop-sided, with the US selling more, and Colombia's small-scale producers suffering as a result, since they are unable to compete with the larger US agricultural and processed food companies and their cheaper products.

Cynics might say that you'd expect Oxfam to take this line, and it's certainly difficult to tell what is really happening in the country. But this BBC news story from a couple of weeks ago gives us a hint:

Several thousand Colombian farmers have marched through the streets of Bogota to demand that the government comply with agreements reached in September.

Farmers' leaders said the Colombian government had breached 72 of 88 points agreed to end the previous protest.

"Things are as bad or worse than they were before," said one of their leaders, Cesar Pachon.

In August, the farmers had said the government's agricultural policies were driving them into bankruptcy.

They said that free trade agreements with the European Union and the United States, which had recently come into force, were flooding the market with agricultural products at prices they were unable to match.

As an Oxfam post points out, undermining small-scale farmers may have a knock-on effect with serious consequences for US policy in the region:

The US has invested a lot in Colombia -- more than eight billion dollars in US aid has gone to the country since 2000 to eradicate the illicit drug trade, promote alternative agricultural development and bolster the government's war effort. With peace talks now underway, comprehensive rural reform is the first item on the agenda of negotiations between the Colombian government and the [Marxist-Leninist terrorist organization] FARC.

Yet the evidence now shows that several of the agricultural products most important to Colombia's small-scale farmers -- dairy, rice, white corn, and pork -- are at greatest risk of being undermined by imports from the US in the first year under the agreement.

In other words, not only is the US-Colombia trade agreement de-stabilizing key parts of Colombian society, but also could well start to undo a decade's worth of US efforts to combat drug production and terrorist activity there. So much for Obama's claim that the bilateral agreement was a "success". Participating nations may want to bear this in mind when considering the USTR's cheery projections about TPP's benefits.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: free trade agreement, tpp, ustr

A Look At Just How Much The US Is Isolated In Its TPP Demands

from the keep-it-that-way dept

Please share widely and repost with attribution. This content is licensed CC BY-SA 3.0. Comments, suggestions, and criticism are welcome. Originally posted at To Promote the Progress?

Early Monday morning, Wikileaks released a second set of documents pertaining to the ongoing Trans-Pacific Partnership negotiations. Unlike the previous leak, this one does not contain a draft text, and instead consists of a series of comments and analysis by an unidentified negotiating party (clearly not the U.S.), as well as a table reporting each negotiating party’s position on specific issues in each chapter. The documents come from the Salt Lake City round of negotiations, which took place from November 19 to November 24, 2013.

The comments are brief, but well worth reading, as they indicate a degree of frustration with the lack of progress during the Salt Lake City round, and explicitly charge the United States with intransigence (e.g., on the topic of agricultural export subsidies, the author writes “All TPP countries except the U.S. commit to eliminate them”; likewise, with respect to financial services, he/she writes “United States shows zero flexibility.”)

An additional round of negotiations was held from December 7 to December 10 in Singapore. We learned yesterday that contrary to previous expectations, the TPP will not be concluded by year’s end, and instead at least one additional meeting will be held in January 2014.

Following up on my previous post, which analyzed the leaked intellectual property chapter by using network graphs, in this post I analyze overall negotiating positions across the entire agreement, as well as in each individual chapter. This analysis is based on the leaked table reporting negotiating positions.

Visualizing Negotiating Positions

The following graphs take the approach of plotting negotiating “distances” between countries. That is, the more dissimilarity there is between two countries’ negotiating positions, the further apart the countries will appear on a graph. Distances are derived directly from the leaked position table. The centroid is given by the origin point (0,0). In most cases, both axes used the same scale, but in a few cases (which I note) they are different. Scales are not comparable between graphs. All the graphs use “jitter,” which helps avoid overlapping labels, but makes distances slightly inexact. For technical details, see the “Nuts and Bolts” section towards the end.

This first graph represents the overall negotiating position distances between countries across all available chapters. There is a striking separation between the United States and all other TPP negotiating parties. Australia comes closest to the U.S. position, although it is not any further from the centroid than Peru. Overall, this graph serves to provide a simple visual confirmation of the leaked comments and other news reporting on TPP negotiations: the U.S. position is quite distant from the consensus point of all other countries.

Since my area of interest is intellectual property, I look at the IP chapter next. The results suggest my previous analysis was relatively accurate. The U.S. position in the intellectual property chapter is again farthest from the centroid. Australia is also quite far from the centroid, but also far from the U.S. All the other parties are clustered relatively close together, although we can still see differences within this cluster: e.g., Vietnam and Brunei are quite near one another, as are Canada and Malaysia (I had noted both these connections in the previous analysis).

In the remainder of this section, I consider each leaked chapter in alphabetical order.

The competition/state-owned enterprises graph tells a very different story than the previous two graphs. Here we immediately see two clusters on either side of the centroid: a United States/Canada/Australia/New Zealand/Mexico cluster, and a Japan/New Zealand/Singapore/Brunei/Chile cluster. Peru, Vietnam, and Malaysia fall in the middle. Note that the relative level of disagreement when compared to other chapters is low, since the data source reports positions only on a single proposal (sub-national coverage).

In the customs chapter, we see agreement amongst all parties except Japan (who has a “reserved position”) and the United States (who is the only party accepting the proposal). Again, the relative level of disagreement when compared to other chapters is low, since the data source reports positions only on a single proposal (a de minimis exception of $200).

The e-commerce chapter also provides a very different picture. There is a clear United States/Japan/Mexico cluster, which Peru also joins. Canada is nearby, but Australia is not. Brunei and Vietnam, normally close pairs, are quite far apart in this chapter.

The environment chapter also shows a distant United States position. Canada, Australia, Japan, Mexico, and Brunei cluster together quite close to the centroid, while Peru, Chile, Vietnam and Malaysia (all lower-income and middle-income countries) appear on the other periphery.

In government procurement, Mexico and Malaysia are the outliers. Both have rejected the proposal for sub-national coverage of this chapter. Relative distances are still small, given that there are only two proposals shown in the source table.

In the investment chapter, the United States appears again as the country furthest from the centroid. Japan is also relatively distant. Australia/Canada/Mexico cluster together, as do Brunei/New Zealand/Peru/Malaysia/Chile. One of the biggest debates in this chapter surrounds so-called investor-state dispute settlement, which would permit foreign firms to sue governments over alleged trade agreement violations. This type of provision is what has permitted tobacco company Philip Morris to sue the Australian government over its plain packaging legislation.

On labor issues, Australia and the United States cluster together far from the centroid. Mexico is also quite distant. Malaysia and Canada form a pair, but closer to the centroid. Mexico’s peripheral position is due to its rejection of the proposal on forced labor. The other two proposals concern sub-national coverage and dispute settlement.

The legal chapter includes a variety of topics such as the medicines “transparency” annex (i.e., the U.S. taking aim at foreign drug price controls), provisions exempting tobacco regulations from challenge, the “cultural exception” (bonjour Quebec!), and issues concerning when the agreement will enter into force, inter alia. Interestingly, we have almost a circle of positions around the centroid, with the exception of the United States, which is again farthest from the centroid.

The market access chapter is what most people typically think of when discussing trade agreements. Here, we see a wide variety of positions, representing significant disagreement. However, yet again, the United States appears farthest from the centroid. As noted above, the U.S. is the lone holdout on the proposal to eliminate agricultural subsidies. A recent Washington Post article on the U.S. sugar industry suggests that such subsidies aren’t going anywhere. I suppose that’s why the TPP is called a “partnership agreement”, rather than a “free trade agreement.”

Rules of origin are rules defining where a product is deemed to come from. Given that anything other than the simplest products will incorporate materials or parts from multiple countries, such rules are critically important in determining what products benefit from tariff reductions. We can see significant disagreement between most parties, with the United States position yet again farthest from the centroid.

With respect to trade in services, the United States and Canadian positions are identical, but farthest from the centroid. Peru and Chile are also peripheral, while all other parties cluster together near the centroid. The U.S. and Canadian positions are defined by their rejection of the “necessity test” proposal. Necessity tests require domestic regulation of services to be limited to only what is “necessary” to achieve a party’s policy objectives. Peru’s position is defined by its rejection of the open skies (air travel regulation) proposal.

SPS refers to sanitary and phytosanitary measures, which deal with food safety and plant and animal health regulations. If you’re wondering what this has to do with free trade, think of Japan or the European Union banning imports of U.S. beef: such bans may be motivated by legitimate health and safety concerns, but they may also simply provide a convenient cover for protectionism. The graph shows a significant amount of disagreement amongst most parties. In this chapter, the U.S. remains on the periphery, as does Japan, although there is no major consensus cluster amongst the other parties.

TBT stands for technical barriers to trade. Such provisions in trade agreements are designed to ensure that regulations, standards, and testing or certification requirements do not unduly burden free trade. Australia and the United States are clustered near one another, but this time it is a Peru/Chile cluster that is farthest from the centroid. All the Asian members plus New Zealand also form a cluster.

These graphs use ISO standard 2 letter country codes, but for reference, here is a legend:

US	United States
CA	Canada
JP	Japan
AU	Australia
NZ	New Zealand
MX	Mexico
PE	Peru
CL	Chile
SG	Singapore
MY	Malaysia
BN	Brunei
VN	Vietnam

Without access to the text, it’s sometimes difficult to know exactly what the various proposals mean. However, what we do know is that in the majority of chapters for which we have data, the United States appears quite far from the centroid position, and often by itself. This isn’t really news, but I think it’s interesting to systematically consider the distances between negotiating positions, and to note that the distances and clusters vary significantly by chapter and issue.

As for what it means, I think it’s fair to conclude that the TPP – unlike something like ACTA – is by no means an agreement amongst “like-minded countries.” Now, contention and disagreement isn’t always bad; on the contrary, it’s part and parcel of any negotiation. But one has to wonder about which countries are going to end up shifting positions, and in what direction, in order to make consensus and a final text possible. I suspect it won’t be the United States offering the compromises.

There are important issues at stake in the TPP negotiations, affecting access to medicines, national health policies, and national sovereignty inter alia. Yet the negotiating parties are being pushed to come to an agreement within the next two months. I won’t delve into any more detail here about the substantive issues, other than to recommend this Guardian guide to the most contentious issues in the TPP negotiations.

Nuts and Bolts

The approach I use here is called multidimensional scaling (MDS) which visualizes similarity and differences between cases as distances in N-dimensional space. I have to give a hat tip to Zhou Fang, who suggested this approach to me.

The leaked table of negotiating positions lends itself perfectly to MDS. In fact, the hardest part was probably retyping the scanned Wikileaks document. I coded an “accepted” position as 1, a rejected” position as a 0, and a “reserved position” as 0.5. Note that coding is somewhat arbitrary; e.g., I could have chosen 1, -1, and 0 instead. Different coding will affect the nominal distances, but not the relative distances (unless the coding employed unequal intervals).

The dist function creates a distance matrix. The MASS library provides the isoMDS function. isoMDS chokes when cases are identical (zero distance), so I had to add a nominal amount of distance between otherwise identical negotiating positions. Plotting is done with ggplot2, which makes adding jitter very easy. I adjust jitter on a case-by-case basis in order to avoid misleading distortions in the graphs. Most of the graphs use identical X and Y axes, but in a few cases the Y axis would have been highly compressed, so I expand it to make visual differentiation possible. Note carefully the scale changes between graphs.

Data and code available upon request. I’m currently in South Africa, so between the time difference and sporadic access to the Internet, I might not get back to you quickly, but I will do so eventually.

Filed Under: corporate sovereignty, investor state dispute settlement, isds, isolated, tpp, ustr