After eight years and 19 rounds of negotiations that began in Melbourne in 2010, the Trans-Pacific Partnership Agreement has been concluded in Atlanta, US.
The agreement will create a free trade zone among 12 nations, including Australia, the US, Japan and New Zealand. Together, the TPP nations account for 40% of global GDP and 26% of the world’s trade in services. This will be a ‘high standards’ agreement setting higher level minimum standards on issues ranging from workers’ rights to environmental protection. The multilateral trade deal will eliminate 98% of all tariffs levied by signatory countries, on all products including agricultural and allied products, manufactured goods, resources and energy, and services. Its provisions range across a wide range of areas as diverse as trade, investment, government procurement, telecommunication, labour rights, environmental protection and financial services.
The TPP boosts exports and economic growth, creating more jobs and prosperity for the 12 countries involved. It does this leveling out tariffs, removing trade restrictions and barriers and setting higher standards. At the same time, the deal is criticized of favouring big businesses by setting higher threshold standards, of pushing restrictive IPR laws of US to the rest of the world as well as increasing inequality as restrictive IPR means benefitting those working in white collar intellectual fields.
Negotiating a text for the TPP was only half the political challenge – governments now have to implement the agreement through a process known as “ratification”.
Some of the important features in public discussion are discussed below. The agreement is not yet made public, so the discussion is mainly around the ‘leaks’ about the agreement.
1) Wither WTO – TPP accounts for 40% of world GDP and 24% of services. Trans-Atlantic Trade and Investment Partnership is another and bigger FTA under negotiation (TTIP) between the United States and the European Union. Also, the Regional Comprehensive Economic Partnership (RCEP) between ASEAN and China is under negotiation.
These deals, if ratified, effectively sideline the WTO. Against these bigger FTAs, the WTO now seems a lesser evil, perhaps a favourable evil. WTO, working on ‘one country, one vote’ principle and its unique dispute settlement process, at least provided developing countries a platform to protect their own interests against stronger developed nations.
Thus, these modern trade agreements — including the Transatlantic deal, RCEP, as well as the TPP — encompass a broad range of environmental, labour policy, agricultural, regulatory and legal issues, making them a much more central part of foreign policy and even domestic lawmaking.
2) The Investor State Dispute Settlement (ISDS) clause in the agreement is one of the most contentious clauses in the agreement.
ISDS processes were introduced into trade agreements decades ago to protect investors and their investments in countries lacking a strong system of law. For example, if investments were expropriated or nationalised by a rogue state or dictatorship, the ISDS authorised foreign state investors to bypass domestic legal systems and have their case heard by an external party. The external arbitrators could order the upholding of investor rights and state duties contained in an international trade agreement.
But over the past ten years the number of disputes taken to international arbitration has risen dramatically, and disputes have been lodged by corporations against countries with robust domestic legal systems.
A case study – When the Australian government introduced plain packaging laws in Australia “to improve public health”, Philip Morris tobacco and others launched a challenge to the laws in the Australian High Court. When they were unsuccessful there, they lodged a claim at an international arbitration via an ISDS clause contained in a trade agreement with Hong Kong. This claim was made despite the fact that this law was made by a democratically elected Parliament and had been deemed legitimate by the nation’s highest court.
Thus, under ISDS even private companies can sue the governments for violations of treaty clauses. ISDS clauses can promote “regulatory chill” by disinclining governments from regulating in the public interest, lest they be subject to action by foreign firms. Also, ISDS clauses are also inherently discriminatory, in that they grant arbitration privileges to foreign but not local companies.
The Democracy Centre has called such international arbitration “a privatised justice system for global corporations”.
4) IPR – U.S. has been pushing stronger copyright protections for music and film, as well as broader and longer-lasting applicability of patents. It would also make the approval process more difficult for generic drug makers and extend protections for biologic medicines. US pushes for data exclusivity, patent term extension and patent linkage. E.g. The United States had sought 12 years of protection to encourage pharmaceutical companies to invest in expensive biological treatments like Genentech’s cancer treatment Avastin. Australia, New Zealand and public health groups had sought a period of five years to bring down drug costs and the burden on state-subsidized medical programs. Finally data exclusivity tenure on biologic drugs may range between 5 to 8 years.
5) Secrecy of negotiations – Trade negotiations are usually conducted in private, on the theory that parties won’t be able to have a meaningful dialogue if their positions are disclosed to the public. The difference in this case is the scale and scope of the agreement, and the reasons advocates have had to be concerned about its contents.
5) Blow for internet freedom – One of the most controversial aspects of the deal is that it makes revealing corporate wrongdoing “through a computer system” a crime. And although the wording in this section of the TPP is vague, some experts worry it could have ramifications for whistleblowers or journalists who expose illicit company activities online. “The TPP is likely to export some of the worst features of US copyright law to Pacific Rim countries: a broad ban on breaking digital locks on devices and creative works (even for legal purposes), a minimum copyright term of the lifetime of the creator plus seventy years, privatization of enforcement for copyright infringement, ruinous statutory damages with no proof of actual harm, and government seizures of computers and equipment involved in alleged infringement” as per Electronic Frontier Foundation.