Will Opposition in the US and Overseas Derail the Toxic TransPacific Partnership?

Given the extreme measures the Obama Administration has gone to to keep the pending trade deal known as the TransPacific Partnership under wraps, it’s hard to be certain where things stand. Public Citizen has been relentless in publicizing leaks in combination with detailed analysis that show that this pact is not about trade, but about setting up a pro-corporate regime that would strengthen intellectual property laws (including drug patents) while allowing for “investor” panels to impose fines on governments for environmental, labor, and financial regulations that might dent their profits. Weaker versions of this sort of provision has led to a claim against Australia by Philip Morris for plain cigarette packaging and one against Quebec for imposing a moratorium on fracking. Each sought multi hundred million dollar damages. So images what a Brave New World with even more opportunities for investors to challenge national laws would look like.

Even with the veil of secrecy, enough damaging information has come public to lead to a large number of House Democrats and even some House Republicans to voice concerns about the pact and threaten to deny so-called fast-track authority. As we wrote in November:

Wow, this is amazing. Word has apparently gotten out even to Congressmen who can normally be lulled to sleep with the invocation of the magic phrase “free trade” that the pending Trans Pacific Partnership is toxic. This proposed deal among 13 Pacific Rim countries (essentially, an “everybody but China” pact), is only peripherally about trade, since trade is already substantially liberalized. Its main aim is to strengthen the rights of intellectual property holders and investors, undermining US sovereignity, allowing drug companies to raise drug prices, interfering with basic operation of the Internet, and gutting labor, banking, and environmental regulations… 

This development is more significant than it might appear. “Fast track” authority limits Congress’s role in trade negotiations. The Administration presents a finished deal, and individual members have only an up or down vote. At that point, because the pending agreements have been misleadingly presented as “pro trade,” dissenters will be depicted as anti-growth Luddites. 

But the loss of fast track authority would substantially undermine America’s ability to bully the other parties in the negotiations.

Mind you, the degree of opposition in Congress is high enough to be fatal; 18 of 21 ranking full committee members are opposed.

Since then, Wikikeaks has has two rounds of substantial leaks of actual draft text from the key chapter on intellectual property, with notes as to where various countries stand on and suggested revisions. Amusingly, the supporters had embarked on a renewed effort to try to push the deal over the finish line on the eve of the opening of the last round of negotiations. But my sources on the Hill weren’t convinced. As one staffer wrote, “Hard to know what is going on, I suspect that the international agreement is falling apart and the US elements are trying to restart momentum by introducing fast track in Congress.”

Right after the new effort in Congress started, Wikileaks dumped its second set of TPP releases. While it did not change the overall bad picture of the deal (assuming you aren’t a drug company, major studio, or financial services firm), keeping public awareness up is the last thing the Administration wanted. Media coverage in countries that are generally willing to follow the US lead, like Japan, Australia, and Thailand, has been negative. Even sites like MacroBusiness, which generally don’t focus on trade, have written highly critical pieces.

So the latest development in the drip drip drip of unfavorable media coverage is yet another set of leaked documents, this time from a foreign nation to Huffington Post, which included a memo that summarizes where various countries stood on key issues right before talks due to open in Singapore this week, as well as a chart before an earlier round showing the stances of various countries. The picture that emerges is that of a bullying US that is peculiarly confident tat it can not only force the other nations to accept its terms but also agree to the artificial deadline of January 1, 2014, which evidently no one takes seriously. The memo is short and you can read it here. From the Huffington Post account:

One of the most controversial provisions in the talks includes new corporate empowerment language insisted upon by the U.S. government, which would allow foreign companies to challenge laws or regulations in a privately run international court…. 

“The United States, as in previous rounds, has shown no flexibility on its proposal, being one of the most significant barriers to closing the chapter, since under the concept of Investment Agreement nearly all significant contracts that can be made between a state and a foreign investor are included,” the memo reads. “Only the U.S. and Japan support the proposal.”… 

New standards concerning access to key medicines appear to be equally problematic for many nations. The Obama administration is insisting on mandating new intellectual property rules in the treaty that would grant pharmaceutical companies long-term monopolies on new medications. As a result, companies can charge high prices without regard to competition from generic providers. The result, public health experts have warned, would be higher prices around the world, and lack of access to life-saving drugs in poor countries. Nearly every intellectual property issue in the November chart is opposed by a broad majority of the 12 nations. The December memo describes 119 “outstanding issues” that remain unresolved between the nations on intellectual property matters. The deal would obligate nations to develop many standards similar to those in the United States, where domestic prescription drug prices are much higher than costs in other nations. 

Also according to the December memo, the U.S. has reintroduced a proposal that would hamper government health services from negotiating lower drug prices with pharmaceutical companies. The proposal appears to have been universally rejected earlier in the talks, according to the memo… 

The U.S. is also facing major resistance on bank regulation standards. The Obama administration is seeking to curtail the use of “capital controls” by foreign governments. These can include an extremely broad variety of financial tools, from restricting lending in overheated markets to denying mass international outflows of currency during a financial panic. The loss of these tools would dramatically limit the ability of governments to prevent and stem banking crises. 

“The positions are still paralyzed,” the December memo reads, referring to the Financial Services Chapter. “The United States shows zero flexibility.”

Now if this were a corporate negotiation, based on how far apart the parties are, I’d deem this to be dead on arrival. But everyone is continuing to talk. The Doha round concluded with no agreement, so trade deals failing isn’t unheard of. But here, I wonder what inducement is sufficient for these countries to prostrate themselves before US commercial interests. The one thing that may have helped the US enormously is the decision by China to extend its airspace and its threats against Japanese and Taiwanese commercial airplanes. While the US is a terrible partner, the Chinese have managed the difficult feat of making it look like the more attractive choice. And the “everybody but China” strategy of isolation may prove to be a strong enough plus so as to offset the enormous minuses.

So while the trajectory of these negotiations looks encouraging from the perspective of ordinary citizens, don’t underestimate Obama’s resourcefulness in finding ways and means to deliver us up to his corporate masters. But the inability so far to develop momentum is an encouraging sign. 

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