TPP: A vic­tory for Obama, but what about for trade?


U.S. Pres­i­dent Barack Obama scored a ma­jor pol­icy vic­tory with the deal agreed Sun­day to es­tab­lish the Trans-Pa­cific Part­ner­ship, billed as the first trade pact for the 21st cen­tury.

The agree­ment signs on coun­tries rep­re­sent­ing 40 per­cent of the global econ­omy, in­clud­ing the United States, Ja­pan, Aus­tralia and Canada, to a broad set of rules to en­hance free trade and in­vest­ment, to gov­ern dig­i­tal trade and pro­tect in­tel­lec­tual prop­erty.

The TPP is a corner­stone of Obama’s slow-to-gel “Pivot To­ward Asia,” with its key goal of pre­vent­ing China, the world’s num­ber two econ­omy, from fill­ing a void with its own less-free and open stan­dards for trade and in­vest­ment gov­er­nance.

“We can’t let coun­tries like China write the rules of the global econ­omy. We should write those rules, open­ing new mar­kets to Amer­i­can prod­ucts while set­ting high stan­dards for pro­tect­ing work­ers and pre­serv­ing our en­vi­ron­ment,” Obama said in a state­ment Mon­day.

The White House high­lighted the thou­sands of taxes and tar­iffs be­ing elim­i­nated on trade across the 12 coun­tries, but equally im­por­tant are the ef­forts to har­mo­nize stan­dards, re­move un­fair com­pe­ti­tion, and cut bu­reau­cratic bar­ri­ers to trade and in­vest­ment in the TPP.

It has a long time­frame for im­ple­men­ta­tion, and many hedges and ex­cep­tions for var­i­ous coun­tries that will mod­er­ate some of the gains.

To re­ally prove its mus­cle, the TPP will have to draw in other ma­jor coun­tries, both eco­nomic pow­ers such as South Korea and large emerg­ing mar­kets like In­dia and In­done­sia. South Korea has al­ready said it wants to join.

Still, it was ap­plauded for po­ten­tially boost­ing the sag­ging global econ­omy. And it could add fuel to Obama’s push for an even more am­bi­tious free-trade pact deal with the Euro­pean Union, the Transat­lantic Trade and In­vest­ment Part­ner­ship (TTIP) cur­rently un­der ne­go­ti­a­tion.

Trail-blaz­ing Deal?

“The agree­ment is not only im­por­tant be­cause of the size ... it also pushes the fron­tier of trade and in­vest­ment in goods and ser­vices to new ar­eas where gains can be sig­nif­i­cant,” said In­ter­na­tional Mon­e­tary Fund Man­ag­ing Di­rec­tor Chris­tine La­garde. “I ex­pect that the TPP can pave the way to a new gen­er­a­tion of deep trade in­te­gra­tion ef­forts.”

EU Com­mis­sioner Ce­cilia Malm­strom said the talks were good not just for world trade, but also “good news for the trade ne­go­ti­a­tions be­tween the U.S. and the EU, be­cause with TPP done, we will be able to ap­proach our TTIP ne­go­ti­a­tions with an even greater fo­cus from both sides.”

The deal is not com­plete un­til all the 12 coun­tries rat­ify it, and the big­gest chal­lenge will be the White House per­suad­ing Congress to back it. Mem­bers of Congress have al­ready at­tacked the deal as var­i­ously selling out U.S. busi­ness and, on the other hand, help­ing global busi­ness at the likely cost of U.S. jobs.

“While the de­tails are still emerg­ing, un­for­tu­nately I am afraid this deal ap­pears to fall woe­fully short,” said Se­nate Fi­nance Com­mit­tee Chair­man Or­rin Hatch, a cru­cial Repub­li­can voice on in­ter­na­tional trade.

La­bor and other so­cial groups have warned it could turn out like the North Amer­i­can Free trade Agree­ment of 1994, which they say sent thou­sands of U.S. jobs to Mexico and Canada.

More broadly, crit­ics say the TPP is not re­ally about free trade but about man­aged trade, with the main ben­e­fi­cia­ries se­lect com­pa­nies and in­dus­tries.

Crit­ics Up-in-arms

Public Citizen, a Washington group, bashed the deal for length­en­ing pro­tec­tions for drug patents, es­pe­cially for a cut­ting-edge cat­e­gory of drugs called bi­o­log­ics.

“Peo­ple ev­ery­where try­ing to un­der­stand why medicine prices are so high find a dis­heart­en­ing an­swer in the TPP ne­go­ti­a­tions: The phar­ma­ceu­ti­cal in­dus­try has pur­chased tremen­dous in­flu­ence with po­lit­i­cal lead­ers,” said Peter May­bar­duk, di­rec­tor of the group’s pro­gram on medicines.

TPP critic Adam Hersh of the Roo­sevelt In­sti­tute says that pro­jec­tions of TPP ben­e­fits show very lit­tle over­all to U. S. eco­nomic growth, while agree­ments on auto parts and textile im­ports will ben­e­fit non-TPP mem­bers in­clud­ing China.

And he said one of the more con­tro­ver­sial chap­ters of the treaty which al­lows for­eign in­vestors to try to set­tle dis­putes with gov­ern­ments in an in­de­pen­dent tri­bunal gives in­vestors great lever­age against na­tional laws and poli­cies.

“Most of what the agree­ment is about is chang­ing the rules on how in­vestors re­late to gov­ern­ments,” Hersh told AFP.

“It’s been pretty clear that what’s go­ing on here is not about free trade, but which spe­cial in­ter­ests get ac­cess to these things.”

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