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Issue #1716      January 27, 2016

Reject the TPP in the public interest

After nearly six years of excruciating negotiations, the 12-nation Trans-Pacific Partnership (TPP) agreement was finalised last October in Atlanta. The text of this ostensibly trade treaty, hitherto secret, has now to be approved by the national legislatures of the negotiating states. Jomo Kwame Sundaram explains why this treaty, which reflects the interests of powerful corporations from the US and other rich countries, should be rejected, especially by the developing negotiating countries.

Parliaments, including the US Congress, have a rare opportunity to protect the public interest for the present as well as future generations. For the recently concluded Trans Pacific Partnership (TPP) agreement to come into effect, it must first be ratified by national parliaments.

Contrary to its pretensions, the TPP is not mainly about “free trade”. Both the US and Malaysia, for example, are among the most open economies in the world, and there is little more to do in terms of reducing tariffs further.

The main trade constraints involve non-tariff barriers, such as the restrictions on solar panel exports from Malaysia, which the TPP will not address. Likewise, for other TPP partner countries, such non-tariff barriers will not be addressed by the TPP.

OECD countries with more competent trade negotiating capacity – such as the US, New Zealand, Canada, Australia and Japan – delayed agreement on the TPP at an earlier meeting in Honolulu in mid-year – not without good reason – before agreeing in Atlanta in October.

It is telling that the delay was due to squabbling over how best to manage trade in particular areas, reflecting influential lobbies in their respective countries. In fact, the so-called free trade agreement will actually protect and even advance interests that run contrary to free trade.

The TPP is mainly about investment and intellectual property, primarily on behalf of the most powerful business lobbies involved. It will strengthen monopolistic intellectual property rights (IPRs) well beyond the already onerous and restrictive provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement of the World Trade Organisation (WTO).

Meanwhile, contrary to conventional wisdom, there is growing evidence that IPRs hardly promote research, but may actually impede innovation. In fact, specific TPP provisions will limit competition and raise consumer prices. Thus, the TPP will slow innovation besides threatening public health and the common good.

The TPP will strengthen IPRs for big pharmaceutical, information technology, media and other companies which make their money from the monopoly status conferred by such rights. For example, the TPP would allow pharmaceutical companies to have longer monopolies on patented medicines, keep cheaper generic medicines off the market, and block the development and availability of similar new medicines.

ISDS: The best justice money can buy

The TPP will also strengthen foreign investor rights at the expense of local business and the public interest. With its provisions for an investor-state dispute settlement (ISDS) system, it obliges governments to compensate foreign investors for losses of expected profits in binding private arbitration!

ISDS will thus confer foreign corporate investors with the right to sue national governments for regulatory or policy changes that they claim diminish the expected profitability of their investments. It has been and can be applied even where the rules are non-discriminatory or when profits are made by causing public harm.

Foreign corporate interests insist that the ISDS is necessary to protect property rights where the rule of law and credible courts are lacking - which is a clear display of contempt for national courts. Yet, the US is seeking the same in the Transatlantic Trade and Investment Partnership (TTIP) deal with the European Union, even though the US has not explicitly impugned the integrity of European legal and judicial systems.

The ISDS provisions make it hard for governments to conduct their basic obligations – to protect their citizens’ health and safety, to ensure economic stability and to safeguard the environment.

Imagine what would happen if a widely used herbicide like glyphosate is found to pose a cancer risk, as decided by the World Health Organisation (WHO) and as has been suspected since the 1970s but suppressed by the US Environmental Protection Agency, according to recent revelations in the US. Under the ISDS, to ban toxic materials, the government would be liable to compensate the manufacturers not to kill its own people, instead of forcing them to compensate the victims who have already been harmed!

The taxpayer will be hit twice – first, to pay for the health damage caused by the herbicide, and then to compensate the toxic herbicide manufacturer for its “lost profits” if and when the government steps in to ban a dangerous product. This will deter governments from banning such substances, putting the public, both workers and consumers, at risk.

TPP versus Doha Development Round

Like many other recent bilateral and plurilateral international trade agreements, the TPP has little to do with free trade, but instead reflects the interests of the powerful corporations behind the other OECD national trade negotiators involved.

The rush to conclude the TPP before mid-December’s Nairobi WTO ministerial conference further undermined the likelihood of early conclusion of the WTO’s Doha “Development” Round of trade negotiations, which began with expectations of rectifying the anti-developmental outcomes of the previous Uruguay Round.

By undermining WTO multilateral trade negotiations, bilateral and plurilateral trade agreements are the antitheses of what they purport to do, namely trade liberalisation. But joining the TPP also undermines existing commitments, eg, to the ASEAN Free Trade Area (AFTA). Perhaps more seriously, such alignment abandons the ASEAN commitment to a “zone of peace, freedom and neutrality” (ZOPFAN).

TPP politically driven

It is no secret that the main motivation for the TPP for the US is to exclude China. The broad support for the China-mooted Asian Infrastructure Investment Bank (AIIB), even from traditional US allies, was a major embarrassment which the White House is desperate to overcome.

Within the US, the TPP has more support from Republicans than Democrats. Criticisms of the TPP are growing among US politicians, not only among the leading Democratic presidential contenders, including Hillary Clinton, but also from leading Republican presidential aspirant Donald Trump.

Considering the paltry economic benefits as well as great risks involved, developing-country governments joining the TPP are probably doing so for non-economic reasons. In light of this, members of parliament in the TPP partner countries have an opportunity to reject this threat to the public interest. They are our last defence against a TPP “own-goal”.

Third World Resurgence

Next article – The Calais evictions

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