Another Nail In the Coffin Of Corporate Sovereignty, As Massive Asian Trade Deal RCEP Nears Completion Without It

from the ISDS,-what-is-it-good-for? dept

Remember RCEP? The Regional Comprehensive Economic Partnership is a massive trade deal being negotiated by most of South-East Asia -- including China and India. Although still little-known, it has been grinding away in the background, and is drawing closer to a final agreement. Almost exactly a year ago Techdirt noted that there were some interesting rumors that corporate sovereignty -- officially known as investor-state dispute settlement (ISDS) -- might be dropped from the deal. A story in The Malaysian Reserve confirms that is the case:

After missing several deadlines, member countries of the proposed Regional Comprehensive Economic Partnership (RCEP) have agreed to exclude the investor-state dispute settlement (ISDS) mechanism, a move that might expedite conclusion of the talks by the end of the year.

[Malaysia's] Ministry of International Trade and Industry (MITI) Minister Datuk Darell Leiking … said all RCEP member states -- 10 Asean countries plus six free trade agreement (FTA) partners namely Australia, China, India, Japan, New Zealand and South Korea -- have decided to drop the ISDS, but the item could be brought up again within two years of the agreement's ratification.

So corporate sovereignty is definitely out of the initial agreement, but could, theoretically, be brought back after two years if every participating nation agrees. Despite that slight loophole, this is a significant blow against the entire concept of ISDS. It's part of a larger trend to drop corporate sovereignty that has been evident for some time now. That still leaves plenty of toxic ISDS clauses in older investment treaties and trade deals, but the tide is definitely turning.

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Filed Under: china, corporate sovereignty, dispute settlement, india, isds, rcep, trade agreements

Corporate Sovereignty On The Wane, As Governments Realize It's More Trouble Than It's Worth

from the but-not-dead-yet dept

A few years ago, corporate sovereignty -- officially known as "investor-state dispute settlement" (ISDS) -- was an indispensable and important element of trade deals. As a result, it would crop up on Techdirt quite often. But the world is finally moving on, and old-style corporate sovereignty is losing its appeal. As we reported last year, the US Trade Representative, Robert Lighthizer, hinted that the US might not support ISDS in future trade deals, but it was not clear what that might mean in practice. The Canadian Broadcasting Corporation (CBC) site has an interesting article that explores the new contours of corporate sovereignty:

The preliminary trade agreement the U.S. recently reached with Mexico may offer a glimpse of what could happen with NAFTA's Chapter 11 [governing ISDS].

A U.S. official said the two countries wanted ISDS to be "limited" to cases of expropriation, bias against foreign companies or failure to treat all trading partners equally.

The new US thinking places Canada in a tricky position because the latter is involved in several trade deals, which take different approaches to corporate sovereignty. As well as the US-dominated NAFTA, there is CETA, the trade deal with Europe. For that, Canada is acquiescing to the EU's request to replace ISDS with the new Investment Court System (ICS). In TPP, however -- still lumbering on, despite the US withdrawal -- Canada seems to be going along with the traditional corporate sovereignty approach.

A willingness to move on from traditional ISDS can be seen in the often overlooked, but important, Regional Comprehensive Economic Partnership (RCEP) trade deal. India's Business Standard reports:

Despite treading diametrically opposite paths on tariffs and market access, India and China, along with other nations, have hit it off on talks regarding investment norms in the proposed Regional Comprehensive Economic Partnership (RCEP) pact.

In a bid to fast-track the deal, most nations have agreed to ease the investor-state-dispute settlement (ISDS) clauses.

As with NAFTA and CETA, it seems that the nations involved in RCEP no longer regard corporate sovereignty as a priority, and are willing to weaken its powers in order to reach agreement on other areas. Once the principle has been established that ISDS can be watered down, there's nothing to stop nations proposing that it should be dropped altogether. Given the astonishing awards and abuses that corporate sovereignty has led to in the past, that's a welcome development.

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Filed Under: ceta, corporate sovereignty, isds, nafta, rcep, trade agreements, ustr

Despite Trump's Pledge To Kill It, Some Still Hope TPP Will Live Again, As Rival RCEP Stumbles Too

from the idea-whose-time-has-passed dept

As Techdirt wrote last month, there's little prospect of Donald Trump being able to re-negotiate the Trans-Pacific Partnership deal, for reasons to do with the political realities in other countries. That hasn't stopped the true believers from continuing to clutch at straws in the hope that TPP might somehow come back from the dead. For example, here's the view from New Zealand:

It remains to be seen whether the United States will pull out of the Trans Pacific Partnership (TPP), Prime Minister Bill English says.

Here's Australia:

Australia has declared the Trans-Pacific Partnership (TPP) not dead ahead of key trade talks with Japanese Prime Minister Shinzo Abe in Sydney on Saturday, despite opposition to the trade pact from U.S. President-elect Donald Trump.

Even in the US, people are still hoping against hope because of things like this:

Donald Trump's choice for secretary of state Rex Tillerson said Wednesday (Jan 11) he is not against the recently negotiated Asia-Pacific free-trade deal, putting him at odds with the president-elect who has vowed to scrap it.

However, it's worth noting that the very next day, a "Trump transition policy adviser" stated categorically:

"TPP is dead. I cannot stress that more strongly," said the adviser, who requested anonymity because he was not authorized to speak publicly for the administration that takes office on Jan. 20.

"TPP, or a multilateral agreement that looks like TPP but is called something else, is emphatically dead."

Supporters of the trade deal are trying to paint that decision as a defeat for the US and an opportunity for China, as the New York Times reports:

walking away from TPP may be seen by future generations as the moment America chose to cede leadership to others in this part of the world and accept a diminished role. Such an outcome would be cause for celebration among those who favor "Asia for the Asians" and state capitalism. It would be disastrous for supporters of inclusive politics, rule of law, and market economics -- and for U.S. national interests.

China is part of a rival to TPP, the Regional Comprehensive Economic Partnership (RCEP), which manages to be even worse than TPP. The assumption has been that RCEP negotiations will grind on until they reach a successful conclusion. But there are some interesting first signs that may not happen, analyzed here on the CNBC site:

the contrasting priorities of the RCEP players are proving to be the biggest obstacle to success. Members are floundering to bring RCEP to conclusion and they have postponed the deadline from Dec. 2016 until the end of 2017, pointed out Meredith Miller, vice president at Albright Stonebridge Group.

One of the most contentious areas regards affordable access to generic drugs:

Japan and South Korea are suggesting IP policies that may increase medical treatment costs and restrict access to affordable generic medicines for people in several countries, prompting vocal backlash from New Delhi ministers as well as international health organizations. India is often dubbed as the 'pharmacy of the developing world' for its massive production of generic medicines that treat communicable and non-communicable diseases.

TPP foundered on the fact that it offered precious few benefits to the general public, and plenty of downsides. It looks like RCEP is hitting the same problems. The "other" Pacific deal's difficulties may be a further sign that the era of massive global trade deals like TPP, TTIP and TISA, all negotiated in secret, and all now in doubt, may finally be over. We can probably expect smaller-scale, bilateral deals to become the norm instead.

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Filed Under: asia, donald trump, rcep, tpp, trade agreements, trade deals

Study Shows Risks Of Including Corporate Sovereignty In The 'Other' Huge Asian Trade Deal, RCEP

from the watch-out-US dept

As we've noted, TPP is unlikely to come back from the dead, despite what some seem to think or hope. For example, the Japanese government has decided to go ahead and ratify TPP anyway. That seems foolish, since it has just thrown away most of its bargaining counters for other trade negotiations, in what amounts to an act of political seppuku. As Sean Flynn points out, Japan has form here, since it also ratified the infamous Anti-Counterfeiting Trade Agreement (ACTA), just as pointlessly.

One of the most important trade deals still under active discussion is the Regional Comprehensive Economic Partnership (RCEP). Techdirt first wrote about this 18 months ago, while recently we noted that many of its provisions are even worse than those in TPP. One aspect of RCEP that has received little attention so far is the corporate sovereignty chapter. The Transnational Institute (TNI) has put together a useful document looking at what it calls the "hidden costs" of including investor-state dispute settlement (ISDS) in RCEP. It provides an excellent summary of corporate sovereignty activity in Asia that complements a 2014 study from Friends of the Earth Europe, which looked at the same "hidden costs" of ISDS in Europe. Here are a few of the main findings for RCEP nations (pdf):

50 investment arbitration cases already filed against 11 RCEP (Regional Comprehensive Economic Partnership) countries since 1994, over 50% of which have been filed after 2010.

India alone has been the target of 40% of the cases filed against RCEP countries.

Foreign investors have claimed at least 31 billion USD from RCEP countries. Given the secrecy surrounding investor-state dispute settlement (ISDS) proceedings, this could be much more. This amount is 7 billion USD less than India's entire health budget for 2015.

Of the 31 billion USD claimed by investors, 81% has been claimed from just four countries, India, South Korea, Australia and Vietnam.

The largest known amount paid to a foreign Investor by an RCEP country is 337 million USD as part of the settlement in the Cemex versus Indonesia case.

36% of cases against RCEP countries concern environmentally relevant sectors.

RCEP countries have been sued for measures taken to protect public health, adjust corporate taxes, promote industrialisation, and review contracts acquired through allegations of corruption, among others.

The study brings together much-needed data on corporate sovereignty cases in Asia. It also points outs why RCEP countries would be very unwise to sign up to an ISDS chapter in the deal:

Including the harmful ISDS clause in the RCEP trade agreement under negotiation contributes to cementing investors' rights and expanding the scope of private arbitrators' power. RCEP will lock in place this system of privatised justice. Governments will find it much more difficult to withdraw their commitments to the rights accorded to foreign investors in RCEP than in Bilateral Investment Treaties, because they would need to put an end to the whole agreement and not just the sections on investors' rights.

It's a general problem with ISDS provisions in trade deals: they are almost impossible to cancel, however much harm they end up causing. The bigger the deal, the greater the lock-in. This aspect underlines once more how corporate sovereignty comes at the expense of national sovereignty.

Finally, there's one other interesting nugget that Techdirt readers may find of note. According to the RCEP report, over two-thirds of all ISDS cases against RCEP nations have come from Europe. At the moment, there are only a few minor trade deals that allow European companies to sue the US in ISDS tribunals, in theory at least. But if some kind of post-Trump TTIP 2.0 were agreed -- always a possibility despite the anti-trade deal rhetoric -- and it included a corporate sovereignty chapter, the US might find itself on the receiving end of a similar barrage of costly lawsuits that will reduce its sovereignty at both a national and local level.

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Filed Under: asia, china, corporate sovereignty, isds, rcep, trade deals

Latest Version Of Anti-TPP, RCEP, Shows That Its Intellectual Property Provisions Are Even Worse

from the from-bad-to-worse dept

Last summer, we wrote a bit about the Regional Comprehensive Economic Partnership (RCEP), a trade agreement that is being worked on by a bunch of Asian countries, and which is often described as an "anti-TPP" or, at the very least, a competitor to the TPP. It's being driven by China and India -- two countries who were not in the TPP process. Given how concerned we were with the TPP, we had hoped, at the very least, that RCEP would be better on things like intellectual property. Unfortunately, some early leaks suggested it was even worse. And while the TPP is still grinding through the ratification process in various countries, RCEP has continued to move forward, and the bad ideas have stuck around.

Knowledge Ecology International just released a leaked copy of the agreement's draft intellectual property chapter, and it's basically chock full of bad ideas. As KEI's Jamie Love notes:

The RCEP will be a massive trade agreement and the content of the IP Chapter is important. It will bind India and China, two countries left out of the TPP. Japan and Korea are trying to push many of the worst ideas from ACTA, TPP and other trade agreements into the RCEP IP Chapter. Some of the issues that negotiators did not understand in the TPP, such as the damages provisions, are also lurking in this text, creating risks that negotiators will do worse than they think, because the secrecy of the negotiations insulates the negotiators from timely feedback on technically complex issues. Japan and Korea are pushing for test data monopolies, without the same safeguards available to patent monopolies. There are proposals for patent extensions, restrictive rules on exceptions to copyright, and dozens of other anti-consumer measures, illustrating the power of right-holder groups to use secret trade negotiations to limit democratic decisions that impact access to knowledge, the freedom to innovate and the right to health, in negative ways.

The TPP is not good on intellectual property (at all). But seeing RCEP apparently be just as bad, if not worse, is not exactly encouraging. As I've said in the past, I think free trade is an important ideal, but free trade agreements are increasingly about something entirely different, and it's about backdoor (and backroom) mechanisms for putting in place regulatory frameworks that favor certain legacy players.

Filed Under: asia, australia, china, india, intellectual property, japan, korea, rcep, tpp, trade agreements

As TPP Grinds To A Halt, Asian Countries Start Focusing On Rival Trade Agreement RCEP

from the more-important-in-the-short-term dept

Recently, Techdirt has written dozens of stories about the Trans-Pacific Partnership agreement (TPP). That's largely because it seemed to be coming to a conclusion, after many years of negotiations, and so it was important to capture the last-minute twists and turns -- and the dirty deals -- as they happened. But as we reported a few weeks ago, that final breakthrough and completion never happened. Instead, we had the "Maui meltdown", when a whole bunch of old and new problems raised their heads, with the result that TPP may have missed a key deadline that means it won't be happening soon, if ever. That may have seemed an extravagant claim, but it is a sentiment that is gradually beginning to spread among commentators in Asia. Here, for example, is The Diplomat, a specialist title covering that part of the world:

The Trans-Pacific Partnership is in trouble. Trade ministers failed last month to conclude the massive 12-nation trade deal by their hoped-for summer deadline, putting negotiations in danger of collapse.

The Straits Times offers a very similar view from Singapore:

The Trans-Pacific Partnership (TPP) seems to be in deep trouble. Earlier this month, negotiators in North America tried to resolve differences over auto parts which were -- along with issues on dairy and sugar -- among the key obstacles to the deal which was meant to be finalised last month in Hawaii.

But as the weeks tick by, the chances are dwindling that these obstacles can be overcome in time to get the agreement to the United States Congress for approval before the US presidential primary elections begin in earnest in February next year.

And everyone seems to agree that once the primaries begin, the TPP is off the agenda indefinitely.

Another specialist title for Asia, Nikkei Asian Review, goes further, and makes the following comment:

The truth is that the TPP is a second-best option for Asia that will create significant adjustment problems, especially for smaller countries. The priority for Asia should be the RCEP, and if the U.S. and other countries want closer trading relations with Asian countries, it should be in that context.

Techdirt introduced the Regional Comprehensive Economic Partnership (RCEP) back in June, pointing out that it could end up even worse than TPP. But while TPP is at a standstill, RCEP seems to be moving forwards, as this article in The Jakarta Post explains:

Southeast Asian countries and their trading partners will continue their talks on the Regional Comprehensive Economic Partnership (RCEP) this October as China and Japan eventually agreed on certain thresholds for import duties on Monday.

The agreement between the two countries, which do not yet have bilateral free-trade agreements, will be a milestone for the RCEP as the duties had become one of stumbling blocks for the talks, which first began in 2013.

The biggest difference between TPP and RCEP is that China is part of the latter, but not of the former, while for the US, it's the other way around. China therefore has a big incentive to make RCEP happen quickly, and seems to be grasping the opportunity opened up by TPP's latest problems. Here's what Australia's Financial Review writes in an article entitled "Asian countries shift focus to regional trade after TPP delay":

Australia has focussed more on the US-led TPP in recent months on the basis that it would set important new principles for 21st century commerce in areas including services and regulation but the government now appears to be less confident of any swift conclusion to the TPP.

A participant in the meeting said China appeared to be seizing the opportunity to bring the RCEP to a conclusion after it had been seen to be languishing. [Australia's trade minister] Robb supported the Chinese objective of pushing for a conclusion.

The article also notes that RCEP has a big advantage in that it is not trying to define an ambitious set of new trading rules, as TPP is, but instead is merely attempting to harmonize existing trade agreements among RCEP's 16 nations, which also include another major economy absent from TPP -- India. The Financial Review column concludes with another small but telling indicator that Asian interest may be shifting away from TPP and towards RCEP:

Thai deputy commerce minister Apiradi Tantraporn said that while Thailand might want to join the TPP in the future, the RCEP was more important in the short term.

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Filed Under: asia, rcep, tpp, trade agreements

Meet RCEP: Yet Another Big Bad Trade Agreement No One Has Heard Of

from the worse-than-TPP,-worse-than-ACTA dept

Techdirt has been writing about major trade deals like TPP, TAFTA/TTIP and -- most recently -- TISA more than most. But there's one that we've not mentioned so far: the Regional Comprehensive Economic Partnership (RCEP). As Wikipedia explains, RCEP is:

Between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand). RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.

As that makes clear, as far as participating nations are concerned, there is a big overlap between RCEP and TPP. The crucial difference is that the US is taking part in TPP, but not RCEP, while China and India are in RCEP, but not TPP. In this sense, then, they are rival free trade agreements, battling it out for economic supremacy in the Pacific region. Given the different views of the leading nations involved -- the US on the one hand, China and India on the other -- you might think the two trade agreements would be turning out to be very different, at least in certain areas. For example, as an interesting EFF analysis of a leaked South Korean RCEP document puts it:

We might then, expect that RCEP could be the "anti-TPP"; a vehicle for countries to push back against the neo-colonial ambitions of the United States, by proposing alternative, home-grown standards on the TPP's thorniest issues such as copyright, patents, and investor protection. Some members of RCEP have indeed spoken out against the TPP because of its unbalanced promotion of strict copyright and patent laws, and some commentators have characterized RCEP and the TPP as competitors.

But based on yesterday's leaks, the promise of RCEP pushing back against the TPP is being squandered. Instead, its IP chapter is turning out as a carbon copy.

Here are just a few of the proposals in the leaked South Korean document:

Prohibiting temporary copies of works in electronic form (a thoroughly misguided and anti-innovation provision that has even been erased from the TPP).

A prohibition on the Internet retransmission of broadcasts, mirroring proposals for a Broadcast Treaty that would inhibit the free use of public domain material.

Inflated awards for copyright or patent infringement, by calculating damages payable for the infringing works on the assumption that they were sold at full retail market value.

Criminal penalties for “commercial scale” copyright and trademark infringement, even where the infringer has not sought or made any profit from the activity.

Suspension of the Internet accounts of repeat infringers, and censorship of bulletin boards that are "considered to seriously damage the sound use of copyrighted works" (whatever that means).

As the EFF post rightly notes, these and the other ideas it lists are even worse than those found in TPP or ACTA, which is some achievement. So the question has to be: why has South Korea adopted this extreme position? The EFF offers an intriguing guess:

Having been pushed into accepting unfavorably strict copyright, patent, and trademark rules in the process of negotiating its 2012 free trade agreement with the United States, Korea considers that it would be at a disadvantage if other countries were not subject to the same restrictions.

If true, that would be a good demonstration of how intellectual monopolies like copyright and patents are not boons that bring benefits to those who embrace them, but banes that are imposed on others in order to hobble them. The South Korean chapter, with its revelations of just how bad things might be under RCEP, confirms once more the critical importance of leaks when negotiations with potentially far-reaching and global implications are conducted behind closed doors. Moreover:

Now that the text has been leaked and it has been revealed to be so atrocious, we can begin to build pressure for the negotiating countries to open up the process.

After all, it's hard to combat a threat if you don't even know it's there.

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Filed Under: china, copyright, india, intellectual property, rcep, tpp, trade agreements