Why sup­port the TPP?

Financial Mirror (Cyprus) - - FRONT PAGE -

Agree­ment among ne­go­tia­tors from 12 Pa­cific Rim coun­tries on the Trans-Pa­cific Part­ner­ship (TPP) rep­re­sents a tri­umph over long odds. Tremen­dous po­lit­i­cal ob­sta­cles, both do­mes­tic and in­ter­na­tional, had to be over­come to con­clude the deal. And now crit­ics of the TPP’s rat­i­fi­ca­tion, par­tic­u­larly in the United States, should read the agree­ment with an open mind.

Many of the is­sues sur­round­ing the TPP have been framed, at least in US po­lit­i­cal terms, as left ver­sus right. The left’s un­remit­ting hos­til­ity to the deal – of­ten on the grounds that the US Congress was kept in the dark about its con­tent dur­ing ne­go­ti­a­tions – car­ried two dan­gers. A worth­while ef­fort could have been blocked, or Pres­i­dent Barack Obama’s Demo­cratic ad­min­is­tra­tion could have been com­pelled to be more gen­er­ous to Amer­i­can cor­po­ra­tions, in or­der to pick up needed votes from Repub­li­cans. In fact, those con­cerned about la­bor rights and the en­vi­ron­ment risked hurt­ing their own cause. By seem­ing to say that they would not sup­port the TPP un­der any con­di­tions, Obama had lit­tle in­cen­tive to pur­sue their de­mands.

Seen in this light, the TPP that has emerged is a pleas­ant sur­prise. The agree­ment gives phar­ma­ceu­ti­cal firms, to­bacco com­pa­nies, and other cor­po­ra­tions sub­stan­tially less than they had asked for – so much so that US Sen­a­tor Or­rin Hatch and some other Repub­li­cans now threaten to op­pose rat­i­fi­ca­tion. Like­wise, the deal gives en­vi­ron­men­tal­ists more than they had both­ered to ask for.

Per­haps some of these out­comes were the re­sult of hard bar­gain­ing by other trad­ing part­ners (such as Aus­tralia). Re­gard­less, the TPP’s crit­ics should now read the specifics that they have so long said they wanted to see and re­con­sider their op­po­si­tion to the deal.

The most con­tro­ver­sial is­sues in the US are those that are some­times clas­si­fied as “deep in­te­gra­tion,” be­cause they go be­yond the tra­di­tional eas­ing of trade tar­iffs and quo­tas. The left’s con­cerns about la­bor and the en­vi­ron­ment were ac­com­pa­nied by fears about ex­ces­sive ben­e­fits for cor­po­ra­tions: pro­tec­tion of the in­tel­lec­tual prop­erty of phar­ma­ceu­ti­cal and other com­pa­nies, and the mech­a­nisms used to set­tle dis­putes be­tween in­vestors and states.

So what, ex­actly, is in the fin­ished TPP? Among the en­vi­ron­men­tal fea­tures, two stand out. The agree­ment in­cludes sub­stan­tial steps to en­force the pro­hi­bi­tions con­tained in the Con­ven­tion on In­ter­na­tional Trade in En­dan­gered Species (CITES). It also takes sub­stan­tial steps to limit sub­si­dies for fish­ing fleets – which in many coun­tries waste tax­payer money and ac­cel­er­ate the de­ple­tion of marine life. For the first time, ap­par­ently, these en­vi­ron­men­tal mea­sures will be backed up by trade sanc­tions.

I wish that cer­tain en­vi­ron­men­tal groups had de­voted half as much time and energy as­cer­tain­ing the po­ten­tial for such good out­comes as they did to sweep­ing con­dem­na­tions of the ne­go­ti­at­ing process. The crit­ics ap­par­ently were too busy to no­tice when the agree­ment on fish­ing sub­si­dies was reached in Maui in July. But it is not too late for en­vi­ron­men­tal­ists to get on board. Sim­i­larly, var­i­ous pro­vi­sions in the area of la­bor prac­tices, par­tic­u­larly in South­east Asia, are pro­gres­sive. These in­clude mea­sures to pro­mote union rights in Viet­nam and steps to crack down on hu­man traf­fick­ing in Malaysia.

Per­haps the great­est un­cer­tainty con­cerned the ex­tent to which big US cor­po­ra­tions would get what they wanted in the ar­eas of in­vestor-gov­ern­ment dis­pute set­tle­ment and in­tel­lec­tual prop­erty pro­tec­tion. The TPP’s crit­ics of­ten ne­glected to ac­knowl­edge that in­ter­na­tional dis­pute­set­tle­ment mech­a­nisms could ever serve a valid pur­pose, or that some de­gree of patent pro­tec­tion is needed if phar­ma­ceu­ti­cal com­pa­nies are to have suf­fi­cient in­cen­tive to in­vest in re­search and de­vel­op­ment.

There was, of course, a dan­ger that such pro­tec­tions for cor­po­ra­tions could go too far. The dis­pute-set­tle­ment pro­vi­sions might have in­ter­fered un­rea­son­ably with mem­ber coun­tries’ anti-smok­ing cam­paigns, for ex­am­ple. But, in the end, the to­bacco com­pa­nies did not get what they had been de­mand­ing; Aus­tralia is now free to ban brand-name lo­gos on cig­a­rette packs. The TPP also sets other new safe­guards against the mis­use of the dis­pute-set­tle­ment mech­a­nism.

Like­wise, the in­tel­lec­tual prop­erty pro­tec­tions might have es­tab­lished a 12-year mo­nop­oly on the data that US phar­ma­ceu­ti­cal and biotech­nol­ogy com­pa­nies com­pile on new drugs (par­tic­u­larly bi­o­log­ics), thereby im­ped­ing com­pe­ti­tion from lower-cost generic ver­sions. In the end, these com­pa­nies did not get all they wanted; while the TPP in some ways gives their in­tel­lec­tual prop­erty more pro­tec­tion than they had be­fore, it as­sures pro­tec­tion of their data for only 5-8 years.

The fo­cus on new ar­eas of deep in­te­gra­tion should not ob­scure the old­fash­ioned free-trade ben­e­fits that are also part of the TPP: re­duc­ing thou­sands of ex­ist­ing tar­iff and non-tar­iff bar­ri­ers.

Lib­er­al­i­sa­tion will af­fect man­u­fac­tur­ing sec­tors such as the automotive in­dus­try, as well as ser­vices, in­clud­ing the In­ter­net. Lib­er­al­i­sa­tion of agri­cul­ture – long a stub­born hold­out in in­ter­na­tional trade ne­go­ti­a­tions – is note­wor­thy. Coun­tries like Ja­pan have agreed to let in more dairy prod­ucts, sugar, beef, and rice from more ef­fi­cient pro­duc­ers in coun­tries like New Zealand and Aus­tralia. In all these ar­eas and more, tra­di­tional text­book ar­gu­ments about the gains from trade ap­ply: new ex­port op­por­tu­ni­ties lead to higher wages and a lower cost of liv­ing.

Many cit­i­zens and politi­cians made up their minds about TPP long ago, based on seem­ingly dev­as­tat­ing cri­tiques of what might emerge from the ne­go­ti­a­tions. They should now look at the out­come with an open mind. They just might find that their worst night­time fears have van­ished by the light of day.

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