Alongside TPP And TAFTA/TTIP, US Now Thinking Of NAFTA 2.0

from the living-agreement dept

Last year, we noted that despite repeated promises to the contrary, both the North American Free Trade Agreement (NAFTA) and the South Korea-US Free Trade Agreement (KORUS) have turned out disastrously for the US. Unperturbed by this minor detail, the US government is already starting to prepare the ground for NAFTA 2.0, as thestar.com reports:

Twenty years after free trade began remapping the North American economy, the U.S. insists it is open to a sequel aimed at improving job prospects across the continent.

Given the sweeping nature of NAFTA, that raises the question: what would be in such an agreement? Here's a hint, in the words of a senior US official:

What's the second act? The other part of the challenge is . . . sound bytes. You've got to figure out a way to make people understand what we're trying to do. So when we're talking about trying to improve regulatory co-operation, that's great. Now tell me what that actually means?

In fact, we have a pretty good idea thanks to TAFTA/TTIP. According to the European Commission's own predictions (pdf), four-fifths of the (wildly-optimistic) GDP boost that is supposed to flow from an "ambitious" transatlantic agreement comes from removing "non-tariff barriers" through just this kind of "regulatory co-operation." What that means is actually deregulation: removing "barriers" like health, safety, environmental and financial regulations that all get in the way of boosting corporate profits.

We even know how that strategy could be implemented. Last month, Corporate European Observatory published a leaked European Commission position paper (pdf) that spells out how TAFTA/TTIP would be turned into a "living agreement" through the creation of a "Regulatory Council", which would have wide-ranging powers to shape the regulatory environment on a continuing basis. Expect something similar from NAFTA 2.0.

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Filed Under: free trade, international trade, nafta, nafta 2.0, tafta, tpp, ttip

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

Where Is The 'Free Trade' In The TPP IP Chapter?

from the still-searching... dept

People have pointed out how KORUS -- the "free trade" agreement that the US signed with South Korea a few years ago, which included draconian intellectual property rules, is "the model" for "modern free trade agreements." It was used as the basis for ACTA, and now it's often pointed to as the model for the TPP as well. When KORUS was first being debated, we wondered why a "free trade" agreement would include rules for stricter monopolies, as that seemed like the exact opposite of free trade. Free trade is about knocking down the walls to protectionism, not building more monopoly power. And yet, that's exactly what it did -- creating tremendous problems to the point that South Korea is now looking for ways to get out of the intellectual property requirements of the agreement.

And yet, defenders of the TPP still point to KORUS as the "model" for TPP and talk it up as if it's been a wonderful and successful agreement. However, it seems that others are noticing that there doesn't appear to be any "free trade" in this "free trade agreement." Instead, it's purely mercantilist cronyism, designed to limit economic growth and public welfare, to benefit a few large legacy companies.

Exhibit A was released by WikiLeaks last week: the latest draft of the "intellectual property" chapter of the agreement, one of 24 (out of 29) chapters that do not have to do with trade. This chapter has provisions that will make it easier for pharmaceutical companies to get patents, including in developing countries; have these patents for more years; and extend the ability of these companies to limit access to the scientific data that is necessary for other researchers to develop new medicines. And the United States is even pushing for provisions that would allow surgical procedures to be patented – provisions that may be currently against US law.

All of these measures will help raise the price of medicines and health care, which will strain public health systems and price some people out of the market for important medicines. It is interesting to see how much worse the TPP is than the WTO's Trips (Trade-Related Aspects of International Property Rights). This, too, was a massive rip-off of consumers and patients throughout the world, but after years of struggle by health advocates and public interest groups, some of its worst features were attenuated, and further consolidation of pharmaceutical companies' interests were blocked.

So why are we increasing protectionism and putting in greater monopoly power in a so-called "free trade" agreement? Because these legacy companies and the USTR long ago learned that if you say something on the label, but then put the exact opposite in the package, the press, the public and plenty of politicians will pretend that what you say on the label is actually in the package.

But it's time to make this clear: almost nothing in the TPP is about actual free trade. Real free trade can be quite beneficial to all trading partners, increasing efficiency and benefiting everyone. But this is not just fake free trade, it's anti-free trade, promoting protectionist, mercantilist monopolies for big political donor legacy companies, because the USTR either thinks that lining the pockets of big political donors is a good way to keep its friends in power or they know that it'll be easier to secure cushy private sector jobs after securing these "favors."

Either way, the next time someone (especially in the press or the government) claims that the TPP is about "free trade" ask them how. And ask them how increasing monopolies and putting up protectionist trade barriers is free trade.

Filed Under: copyright, free trade, mercantilism, monopolies, patents, protectionism, tpp

UK Government Study Tries To Gloss Over TAFTA/TTIP's Problems With Impossibly Precise Figures

from the but-does-it-make-cents? dept

As Europe gets back down to business after its traditional summer break, the second round of the negotiations for the proposed TAFTA/TTIP treaty is beginning. And so is the pro-treaty propaganda. Here, for example, is a 70-page document entitled "TTIP and the Fifty States: Jobs and Growth from Coast to Coast" (pdf). It comes from the British government, and is aimed at convincing the US states that TAFTA/TTIP will be good for their economies and citizens.

The UK has gone to this trouble because it is likely to be the main European beneficiary of any such treaty. At least, that's what a recent study commissioned by the German Bertelsmann Foundation found. The Bertelsmann Foundation is also involved with the current publication, as is the Atlantic Council. Here's the main claim:

This study estimates that all states could gain jobs and increase their exports to the EU under a comprehensive and ambitious TTIP. In the state of Virginia alone, successful implementation of a comprehensive TTIP could boost exports to the EU by more than a quarter and increase net employment by almost 21,000 jobs. The whole of the US could see a net employment gain of almost 750,000 jobs. That is equivalent to the entire working population of New Hampshire.

The report offers no details of the calculations, but refers to work done elsewhere. Instead, it gives a state-by-state breakdown of the claimed benefits from TAFTA/TTIP. For example, in California it predicts the following job growth in key sectors there:

Business Services +15,752 jobs
Financial Services +1,543 jobs
Non-Electric Machinery Mfg. +1,395 jobs
Metals and Metal Products Mfg. +1,187 jobs

And gives as the "bottom line":

Since 2006, California's pharmaceutical exports to the EU have increased by 61 percent. By reducing barriers to trade and investment, TTIP would facilitate future growth, increasing anticipated US chemical exports by a further 34.2 percent

As you can see, those claims are surprisingly exact: precisely 1,187 jobs will be generated in the metals and metal products manufacturing sector -- are they really sure it won't be 1,186 or 1,188? And the growth in chemical exports is given as 34.2%, that is, to three significant figures. Good mathematical hygiene requires you to know the fourth significant figure if you are going to round it up to three, which means the British Government's report implicitly claims to be able to predict with an accuracy of one part in a thousand the future growth in US chemical exports as a result of TAFTA/TTIP.

This is plainly absurd. In fact, the problems with the analysis run far deeper than just this question of exaggerated precision. An illuminating Public Citizen post singles out five particularly serious issues here.

1. The "new" study is not really new. It is largely a recycled version of another recycled version of a study that appeared in 2009.

That suggests our understanding of the underlying economic mechanisms of these agreements hasn't really advanced much in four years -- hardly encouraging when it comes to making predictions about them.

2. The study confirms again that TAFTA is not about trade. Since tariffs (an actual trade issue) are "already quite low" between the EU and U.S., pro-TAFTA government officials have readily stated that TAFTA's primary goal is not tariff reduction, but the "elimination, reduction, or prevention of unnecessary 'behind the border' " policies, ranging from Wall Street reforms to milk safety standards to GMO food labels.

This is a key point. There are so few tariffs between the US and EU, that very little benefit can be gained by eliminating those that remain. The only way TAFTA/TTIP will have any major impact on the respective economies is if other "barriers" are removed. Although these are called "non-tariff" in the various studies, a better name for them would be health and safety standards. Removing them will indeed allow companies to make more money, but at the expense of the public's health and welfare.

3. The study assumes zero downside of eliminating consumer and environmental safeguards.Today's study assumes that TAFTA would eliminate one out of every four "non-tariff barriers" -- from the Volcker Rule at the center of Wall Street reform to safety standards for children's toys to the ban on beef linked to mad-cow disease -- at no cost to consumers. In addition to an obvious social and environmental toll, such a degradation of safeguards would also result in quantifiable monetary costs for U.S. consumers and the broader economy.

Omitting possible costs of TAFTA/TTIP inevitably biases the calculations in favor of it, just as leaving out the negative externalities of burning coal or oil in terms of environmental damage skews calculations about the "cheapest" form of energy.

4. The study uses contested models with assumptions that can turn economic losses into gains. While ignoring costs, today's study strives to capture all theoretically plausible benefits by relying on assumptions-laden methods, such as using a computable general equilibrium (CGE) model to assess removal of "non-tariff barriers" (NTBs). A U.N. study has questioned the reliability of this inchoate approach.

In other words, never mind the accuracy of the figures, the entire theoretical model may be flawed.

5. The study assumes a massive rollback of Buy American and Buy Local policies. Another assumption of today's study is that TAFTA would eliminate one half of all "procurement barriers," a euphemism for popular policies like Buy American and Buy Local to ensure that U.S. government projects, funded by U.S. taxpayers, are used to create U.S. jobs. It is rather fanciful to think that the U.S. Congress, state legislatures, or the U.S. public would accept such a clear-cutting of policies that enjoy 90% support. Indeed, today's study assumes an even greater undercutting of Buy American and Buy Local than the EU negotiators themselves are hoping for. In a leaked EU position paper on government procurement, the EU explicitly names 13 U.S. states and 23 U.S. cities it is targeting for rollback of Buy Local policies. Today's study assumes that the U.S. will offer to eliminate Buy Local in about twice as many states as the EU itself requested.

This, of course, is the principle reason why the British government has produced this document: to try to convince US states to allow the Buy Local policies to be sacrificed for the sake of other supposed gains. But before they do so, they might like to consider a further analysis put together by Public Citizen that examines the claims about substantial economic gains for everyone in closer detail (pdf). Here are the main points:

Even under the most starry-eyed scenario that the study's authors can envision for the economic impact of tariff reduction, TAFTA would result in a mere 0.5 percent increase in U.S. gross domestic product (GDP) when fully implemented. But that "impact" is unrealistically high, given that it assumes a contentious proposition of tariff reductions causing strong "dynamic" economic growth, a theory that academics have repeatedly assailed with empirical evidence showing no such trade-growth causation. After dropping this dubious assumption, the study notes that the theoretical TAFTA-prompted increase in U.S. GDP of $182 billion shrivels to just $20.5 billion, a statistically invisible 0.06 percent blip. By comparison, economists estimate that the introduction of the fifth version of Apple's iPhone delivered a GDP increase up to eight times higher than the projected TAFTA effect.

And here's what that would mean on average for US citizens:

TAFTA's trivial trade impact shrinks even further when examining the study’s projection of what the deal would mean in terms of actual income. The pro-TAFTA study projects that total annual U.S. national income would be just $4.6 billion higher under the deal. Even this number is likely too high, given that it assumes that 100 percent of existing tariffs between the EU and the U.S. would be fully eliminated under the deal, an unlikely scenario given that the EU has already stated that sensitive products should be afforded exemptions from tariff reductions. But proceeding with this inflated figure still results in deflated "benefits." TAFTA, if ever concluded, would take years to negotiate, get past Congress and implement. After adjusting for inflation and population growth in the interim, the projected $4.6 billion boost would amount to an extra three cents per person per day.

Expect to see plenty more studies from both sides of the Atlantic trying to convince the public it's worth giving up a few old health and safety rules, and some silly Buy Local schemes, in order to enjoy those three cents extra each day.

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Filed Under: free trade, predictions, tafta, ttip, uk

Trade Agreements With Mexico And South Korea Turned Out To Be Disasters For US: So Why Pursue TPP And TAFTA/TTIP?

from the follow-the-money dept

Two massive trade agreements currently being negotiated -- TPP and TAFTA/TTIP -- could potentially affect most people on this planet, either directly or indirectly through the knock-on effects. Like all such agreements, they have been justified on the grounds that everyone wins: trade is boosted, prices drop, profits rise and jobs are created. That's why it's been hard to argue against TPP or TAFTA -- after all, who doesn't want all those things?

But given their huge impact, and the fact that trade agreements are also used to impose a range of policies on countries that are certainly not in the public interest there -- for example making it harder for generic drug manufacturers to offer low-cost medicines -- it seems reasonable to ask what the evidence is that entering into these agreements really does deliver all or even some of those promised benefits.

An article in US News provides statistics that show that two major trade agreements -- the North American Free Trade Agreement (NAFTA) and the South Korea-US Free Trade Agreement (KORUS) -- have not only failed to deliver, but have been disastrous for the US. As regards NAFTA, for example, here are figures from a Reuters column it cites:

The United States ran a $1.6 billion trade surplus ($2.6 billion in today's dollars) with Mexico in 1993, the year before NAFTA. Last year [2011], the United States ran a $64.5 billion deficit.

That might have been a one-off, were it not for the following facts about KORUS, reported here by the Economic Policy Insitute (EPI)

In the year after the agreement took effect (April 2012 to March 2013), U.S. domestic exports to South Korea (of goods made in the United States) fell $3.5 billion, compared with the same period in the previous year, a decline of 8.3 percent. In the same 12-month period, imports from South Korea (which the administration consistently declines to discuss) increased $2.3 billion, an increase of 4.0 percent, and the bilateral U.S. trade deficit with South Korea increased $5.8 billion, a whopping 39.8 percent.

But maybe the trade agreements are generating jobs at least. Nope. Here's what happened with NAFTA:

Bill Clinton (1993) and his supporters claimed in the early 1990s that the North American Free Trade Agreement would create 200,000 new jobs through increased exports to Mexico. In fact, by 2010, growing trade deficits with Mexico had eliminated 682,900 U.S. jobs

Well, what about KORUS?

When the U.S.-Korea Free Trade Agreement was completed in 2010, President Obama said that it would increase U.S. goods exports by "$10 billion to $11 billion," supporting "70,000 American jobs from increased goods exports alone"

Here's what actually happened:

Using the president's own formula relating changes in trade to jobs, the growth in the trade deficit with South Korea in the first year since KORUS took effect likely cost more than 40,000 U.S. jobs

So where does this leave TAFTA/TTIP? Well, the European Commission's FAQ on the subject refers to some research it commissioned:

One of the studies on which the Commission's impact assessment was based was an independent report commissioned by the EU from the London-based Centre for Economic Policy Research. The study, entitled 'Reducing barriers to Transatlantic Trade', outlines the economic effects of a for both the EU and the US.

It suggests the EU's economy could benefit by €119 billion a year -- equivalent to an extra €545 for a family of four in the EU. According to the study, the US economy could gain an extra €95 billion a year or €655 per American family.

But the EPI is doubtful:

A much more likely outcome, based on North American experience under NAFTA, is that production workers in all the member countries will suffer falling wages and job losses (Scott et al. 2006), while U.S. and EU investors will profit handsomely, reinforcing the rapidly rising share of profits in corporate and national income that has taken place over the last decade in the United States (Mishel 2013).

That also provides an explanation as to why the US government is so keen to push ahead with TPP and TAFTA/TTIP when all the available evidence suggests that both are likely to be harmful for the US economy overall. Despite that fact, certain influential groups still stand to profit "handsomely", and therefore have lobbied the politicians hard to engage in such talks anyway.

Unfortunately, much of those profits will be paid for by losses incurred by ordinary members of the public through lower wages and unemployment caused by a new "race to the bottom" and increased outsourcing. These are precisely the people who, by an interesting coincidence, are never allowed to comment on or even see what is being negotiated when these agreements are being drawn up in their name. Strange that.

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Filed Under: crony capitalism, europe, free trade, korus, nafta, north america, south korea, tafta, tpp, ttip

EU Free Trade Agreements With India And Canada Grind To A Halt

from the biting-off-more-than-you-can-chew dept

Techdirt has been covering the free trade agreement being negotiated between India and the EU for a while now -- that is, as well as anyone can report on something that is being conducted behind closed doors. Despite or maybe even because of that secrecy, one issue in particular has raised concerns: that India's crucial role as supplier of low-cost generics to the world's poor might be under threat. Against that background, this report on the Live Mint site comes as something of a surprise:

European commissioner for health and consumer policy Antonio Borg on Friday said the proposed trade agreement with India won't impose data exclusivity, patent extensions or linkages, in a bid to deflect criticism over the purported stance of the European Union.

Patient groups and other organizations have protested against the planned free trade agreement (FTA) between India and the EU on the grounds that it will lead to stricter patent laws, delaying the entry of generic drugs into the market and raising prices.

Of course, given the secrecy, we still don't know what exactly the EU is now asking for, or what India is offering here. But what is significant is that the European Commissioner has tacitly acknowledged the impact of criticism from groups concerned about the supply of generics. That's an important signal for the future, since it will doubtless encourage more groups to speak up. As to why this major concession is being made at this stage, another story in Live Mint gives us a clue:

India and European Union (EU) will hold a crucial meeting on the proposed free trade agreement (FTA) on Monday in Brussels to iron out the impediments in concluding of the bilateral pact.

The meeting which is also seen as a last ditch effort to resolve the differences before India gets into the election mode where the manoeuvring of decisions regarding the pact will become difficult.

Perhaps the EU has dropped its demands on strengthening drug patents in an attempt to conclude the deal quickly. But that second story was published on 14 April, and since then there has been no word of any breakthroughs in the talks, which suggests that there weren't any. As the Live Mint article notes, that means that India is starting to enter "election mode", when FTA negotiations will take a back seat as politicians concentrate their time and energy on local matters.

Meanwhile, signals are emerging that another major EU free trade deal, the one with Canada, is also going nowhere:

Talks to wrap up a multi-billion-dollar free trade deal between Canada and Europe have stalled, diplomats said, raising concerns the agreement could be put on hold as Brussels switches its attention to a much bigger pact with the United States.

As that notes, the problem here is the imminent TAFTA/TTIP negotiations, which are starting to occupy people's attention in Europe. Clearly, there are just too many free trade agreements trying to do too much. Which one will be the next to fail?

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Filed Under: canada, eu, free trade, india

Cambodian Activists Explain Why The EU-India FTA Is A Matter Of Life And Death

from the transparency-is-two-way-street dept

One of the many problems with the secretive nature of trade agreements is that it insulates negotiators from the real-world consequences of their actions. That's particularly true for the FTA talks between the EU and India, currently taking place behind closed doors. One of the key issues for the EU side is India's role as a supplier of generic medicines to the world, and India's tough stance on issues like the evergreening of pharma patents. From the various leaks that we have, it seems that the EU is demanding that India toe the line on drug patents, and cut back its supply of low-cost generics to emerging countries.

That might seem a reasonable request, since there is no doubt that India's production of generics reduces the profits of the pharma companies in Europe, which could charge far higher prices were there no competition from generics. But what that overlooks -- and what secret negotiations allow those involved to overlook -- is the impact such a move would have on millions of people around the world.

A letter from a group of Cambodian activists that struggle to supply much-needed medicines to those too poor to buy them, published on the infojustice.org site, provides us with a rare insight into what the EU's demands would mean for the world's poor:

We are saddened that behind the rhetoric of democracy, human rights and freedom the EU is in fact prioritising corporate interests to the lives of millions of people. It is needless to say that those affordable generic drugs are absolutely vital for the lives of millions who otherwise cannot afford expensive treatment of life threatening diseases such as tuberculosis, malaria and HIV-AIDS. Many suffering from such serious diseases would not be able to survive without these generic drugs produced in India.

…

Having seen the importance of made-in-India generic drugs for the lives of millions, we in no ways can express our frustration about the attempt of EU and European pharmaceutical giants to control the production of these cheap medicines. This must stop right now. It is a true example of putting profits before people's lives and take advantage of people's illness for corporate profits. Our lives should not be regarded as a business opportunity. We urge the EU to reconsider its pursuit of intellectual property rights for medicines and to realise that blindly protecting the interests of large European pharmaceutical corporations will lead to nothing but a subtle form of genocide of the poor, their families and children in developing countries across the world.

It's hard to believe the EU negotiators personally wish to kill thousands of the poor; but the secretive nature of the talks means that they can close their eyes to the fact that if they succeed in forcing India to cut back its production of generics, large numbers of people will certainly die as a direct result. That's another reason why these kind of talks must be held openly: not just so that we know what is happening and can give our input, but also so that those conducting the talks realize that what they are doing is not some abstract game, but a matter of life and death for millions around the world.

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Filed Under: cambodia, eu, free trade, fta, india, medicine, patents

Japan Wonders Whether It Is Worth Joining TPP Negotiations After All

from the as-everyone-should dept

The Trans-Pacific Partnership (TPP) agreement began as a cosy treaty between just three nations: Chile, New Zealand and Singapore. But once the US joined in 2010, this small-scale partnership suddenly became something much more significant. As USTR Ron Kirk put it in a press release at the time:

The development of our negotiating positions will be a collaborative effort with elected leaders and stakeholders here at home, in order to shape an eventual Trans-Pacific Partnership Agreement that is a new kind of trade agreement for the 21st century, bringing home the jobs and economic opportunity we want all our trade deals to deliver.

That "new kind of trade agreement" began to take shape as other major Pacific rim countries signed up: first Australia, Peru, and Vietnam, then Malaysia. More recently, Canada and Mexico have joined, albeit as junior partners with diminished negotiating powers. Another important player in the region that has expressed an interest in participating is Japan. But it seems that domestic politics may well scupper that plan:

Prime Minister Shinzo Abe is facing challenges in handling the issue of Japan's participation in the talks for the Trans-Pacific Partnership free trade framework.

While Abe hopes to express willingness to take part in the talks during a summit with U.S. President Barack Obama set for late this month, he is still wavering on the issue due to strong opposition from within his own Liberal Democratic Party [LDP].

Here's where the problem lies:

A strong backlash, however, is expected from some LDP members who are concerned the party will lose votes from agriculture-related sectors if Abe announces Japan's bid to join the talks.

That's not really surprising; after all, in the same press release quoted above Kirk states quite bluntly:

USTR will now intensify consultations with Congress and with American stakeholders to develop objectives for the Trans-Pacific Partnership agreement negotiations, in order to enter already-scheduled talks in March with a robust U.S. view that seeks the highest economic benefit for America's workers, farmers, ranchers, manufacturers, and service providers, and that reflects our shared values on labor, the environment, and other key issues

But if US farmers and ranchers gain "the highest economic benefit", it's quite likely that those in the agricultural sector in the other TPP countries will lose out -- precisely what Japan's LDP members fear. Of course, the standard line is that free trade agreements are great because everyone gains, but the reality is not so rosy. Indeed, even the US has been suffering overall in the case of the recent FTA with South Korea, which is being held up as a model for future treaties:

In the first eight months of the U.S. Free Trade Agreement (FTA) with Korea, implemented in March 2012, U.S. goods exports to Korea fell by nine percent (a decrease of more than $2.5 billion) in comparison to 2011 levels for the same months. Ironically, some of the biggest downfalls in U.S. exports occurred in the automotive and meat industries -- the two sectors that the Obama administration had promised would experience export growth under the deal. The decline in U.S. exports under the FTA brought a 21 percent increase in the U.S. trade deficit with Korea, in comparison to the same period in 2011. Using the same ratio employed by the Obama administration, this trade deficit expansion implies the net loss of over 16,000 U.S. jobs under just the first several months of the Korea FTA.

Given the fact that the US economy has already been damaged by this recent FTA, the fears in Japan that its agricultural industry will be hit, the many concerns about TPP's investor-state dispute mechanism, plus its negative impact on online freedom and access to medicines, the question has to be: why bother with an overly-complicated, secretive treaty whose risks are many and real, while the gains seem few and uncertain?

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Filed Under: free trade, japan, tpp, us

Colombia Rushes Through Its Own SOPA In An 'Emergency Procedure' To Appease US Ahead Of Obama Visit

from the not-cool dept

Last fall, we wrote about how the Obama administration celebrated the signing of what they incorrectly called "free trade agreements" with Colombia, Panama and South Korea. These agreements had been the subject of significant controversy, but they did eventually get signed. Of course, the Obama administration -- via the USTR -- has long been a proponent of putting in ridiculous protectionism policies into free trade agreements. To this day, we still can't understand what copyright laws have to do with free trade. They're the opposite of free trade: they're government granted monopolies. We had warned about the excessive language in these agreements when it comes to copyright, and now we're starting to see the impact of that.

President Obama is heading to Colombia this weekend for a summit, and we'd been hearing stories that US officials had been putting tremendous pressure on Colombian officials to pass new, ridiculously draconian copyright laws ahead of that visit. So that's exactly what the Colombian government did -- using an "emergency procedure" to rush through a bad bill that is quite extreme.

Earlier this year, Colombia tried to pass basically the same bill, which was called LesLleras, after Interior Minister German Vargas Lleras (who proposed it). That bill was so extreme that it resulted in SOPA-like protests, following significant concerns raised by the public as well as copyright and free speech experts. So, this time around, the government just claimed it was an emergency and rushed the bill through, despite all of its problems. They seemed to think that the public wouldn't notice -- but they're wrong.

As is typical of idiotic trade agreements pushed via the USTR -- who only seems to listen to Hollywood on these issues -- the copyright bill includes all sorts of draconian enforcement techniques and expansions of existing copyright law, and removal of free speech rights. But what it does not include are any exceptions to copyright law -- the very important tools that even the US Supreme Court admits are the "safety valves" that stop copyright law from being abusive, oppressive and contrary to freedom of speech. Public interest groups in Colombia are planning a Constitutional challenge to this new law, but the process itself is sickening.

To use an "emergency procedure" to pass a highly questionable law that was put in place through equally questionable means and diplomatic pressure -- and to ignore the public at large -- is really astounding. I'm ashamed of my own government for its efforts to pressure Colombia into such undemocratic and anti-free speech actions.

Filed Under: colombia, copyright, free speech, free trade, obama, protectionism, ustr

US Trying To Force Governments To Pay Much Higher Prices For Needed Drugs Through Secretive TPP

from the the-opposite-of-free-trade dept

With ACTA now signed, and the US also pushing through a few more anti-free trade protectionist agreements with a few countries, the big focus is on the Trans Pacific Partnership (TPP) agreement, which Hollywood and the USTR are betting will allow them to sneak through everything they couldn't get into ACTA. That's why the negotiators for the TPP are trying to keep it even more secretive than ACTA. Of course, as with ACTA, you can expect some leaks.

And... one of the recent leaks was the section concerning pharmaceutical pricing, which pretty clearly demonstrates why this is an anti-free trade bill, rather than a free trade bill. That's because it not only looks to prop up monopolies (such as patents), but it even argues for blatant price fixing to avoid market pricing when governments are buying. That is, this section -- which is being pushed by the USTR -- basically takes the big pharmaceutical's position that foreign governments should not be allowed to bargain for discounts on drugs to keep their own citizens healthy. It mandates, instead, that governments have to buy at a much higher fixed prices, and actually is even more pro-big pharma than the previous administration, which sought to make it easier for developing nations to access necessary drugs.

Sean Flynn from American University has a detailed and useful critique showing how this plan, pitched by the Obama administration, only serves to help big pharmaceutical companies, while putting lives at risk in an extremely anti-free market way:

Although the provisions are styled as “transparency” provisions, in fact they regulate the substance of drug pricing programs. The heart of the proposal would require that countries establish new administrative and judicial appeal systems to contest whether public drug reimbursement rates “appropriately recognize the value” of pharmaceutical patents. Similar provisions have led to higher drug prices and more challenges by pharmaceutical companies in the one country to implement similar provisions – Australia.

At the core of this proposal is a false distinction between government reimbursement prices and “market” prices. Government reimbursement prices ARE market prices. Suppliers can refuse to supply to governments, just as they can with any private purchaser demanding a better deal. The fact that governments obtain better prices than atomized consumers does not make their roles as purchasers anti-market. Drug price restraint is a natural, inevitable and beneficial result of public health expenditure or any other form of pooled purchasing. Large purchasers in free markets obtain better prices; governments obtain better prices when they pool consumers and negotiate as a volume purchaser.

Furthermore, Flynn points out that this kind of backroom secret agreement, which is clearly a huge gift to the big pharmaceutical firms, should be much more open and transparent. He points out that pharmaceutical price fixing "is an inappropriate subject for closed door trade negotiations" since it's not so much a trade issue, as it is a public health policy. Furthermore, he notes that it would be contrary to current best practices within the US itself:

Ironically and ominously, US drug pricing programs do not comply with the standards that the US is proposing. In particular, the operation of preferred drug lists by the Federal Medicaid program would violate the terms of the agreement, including because they do not provide appeals for pharmaceutical companies on whether the prices achieved adequately value patents. Previous FTAs with Australia and Korea carefully exempted all U.S. programs from their coverage, including through a footnote defining the federal Medicaid program as a “regional,” rather than “central,” level government program. That footnote has been removed from the draft TPP proposal. This may indicate that the US has not decided whether to propose exempting Medicaid from the TPP requirements or to give in to demands of other countries for full reciprocity in the agreement.

No matter how you look at it, this is clearly the US government looking out for the best interests of the big pharmaceutical companies over pretty much all else. Well, perhaps not their own political careers.

Filed Under: acta, free trade, pharma, tpp