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Top secret – Australia and the TPP trade deal

Top secret – Australia and the TPP trade deal

It could spell the end of cheap medicine and the end of downloading Game of Thrones for free; so what is the TPP & why all the secrecy?

The Trans-Pacific Partnership (TPP) agreement is a trade deal between 12 countries and if agreed will cover 40 per cent of the world’s GDP, so it’s a big deal. It’s a legally binding trade treaty between pacific nations and it’s due to be signed within weeks – well we don’t actually know when it’ll be signed, the whole thing is being negotiated behind closed doors.

Australia’s Trade Minister Andrew Robb says it “has the potential to help drive growth, jobs and higher living standards.”

Fear of the deal is being stoked by suggestions the price of medicines may rise if big pharmaceutical companies are allowed to extend the life of their drug patents, as well as the threat of broader legal powers for Hollywood studios to chase illegal downloaders.

Now we shouldn’t get ahead of ourselves, no-one knows much, we’ve got only documents leaked by Wikileaks which should be taken with a grain of salt.

Trade Minister Robb wasted no time condemning the claims. In a press release he rejected, in no uncertain terms, what he termed scaremongering.

“As I have made clear repeatedly, the government will not support outcomes that would increase the prices of medicines for Australians or adversely affect our health system more generally; end of story,” he said. “Nor would we accept outcomes that undermine our ability to regulate or legislate in the public interest in areas such as health,” Mr Robb said.

It was a strong and timely rebuke and it led me to wonder why this issue elicits such varied opinions?

Paul Krugman won a Nobel prize for his examination of international trade and he’s not convinced that the TPP is in fact a “big deal” at all. In 2014 he said the countries covered by the deal already have low trade barriers. He suggests that in the end the TPP is about niche issues that pander to big US multinationals.

More recently Stiglitz lambasted Gregory Mankiw for his lazy defence of the TPP that relied on the simplistic notion that all-economists –support-free-trade. This deal is not about free-trade Krugman repeated, “It’s about intellectual property and dispute settlement; the big beneficiaries are likely to be pharmaceutical companies and firms that want to sue governments.” he said.

Niche interests

Pharmaceutical companies have perfected the art of driving trade deals to protect their patents. Since the 80’s they’ve used the World Trade Organisation’s (WTO) intellectual property agreements to enforce sanctions on countries dodging patent laws.

Big pharma would love to protect and extend the life of its patents. Other players like the big Hollywood studios would love to extend the reach of their copyright lawyers. These companies have every right to defend their business interest and pursue profit, but let’s not kid ourselves that this deal is about free-trade – this a rule setting process.

At the same time, however, there might be also be an opportunity for environmental and labour standards to gain greater enforcement capabilities in this process. Trade deals have, since their inception, been plagued by an inability to enforce their rules and the TPP may make some progress here.

But then, we won’t know the details until the deal’s been signed.

ISDS

We can’t discuss the TPP without mentioning that most infamous of acronyms, ISDS or Investor State Dispute Settlement. This unassuming little acronym relates to a system of dispute resolution, of courts and judges, that were designed to operate in less developed countries that lack legal institutions of their own. It aims to ensure foreign companies aren’t at a disadvantage to local companies but in the process it makes big companies more powerful than the governments themselves.

Australia realized the gravity of these courts when tobacco companies, unimpressed by our pioneering plain-packaging laws, used a trade-deal with Hong Kong to sue the Australian government in a staggering abuse of legislative process.

I’d always wondered why these treaties, which are essentially contracts, couldn’t simply have some depth written into their ISDS clauses to ensure they perform the role that’s intended and that they’re not co-opted to circumvent the laws of sovereign states. Well, in an interview this week, President Obama offered assurances on just that issue.

“ISDS has come under some legitimate criticism… because they’ve been used in particular by some tobacco companies in some countries to challenge anti-tobacco regulation. That’s why we have made sure that some of the legitimate criticisms around past ISDS provisions are tightened, are strengthened, so that there is no possibility of smaller countries or weaker countries getting clobbered.”

We should note that John Howard baulked at ISDS clauses in the FTA with the US. It was a bad idea then and so far we’ve heard little about their structure getting an overhaul.

Geopolitical games

Obama is facing his own battles in garnering support for the deal with democrats fearful another push towards globalization could see more jobs shipped offshore as was suggested with the North Atlantic Free Trade Agreement (NAFTA). But the US President says this deal is different, he says its provisions on labor and environmental standard would be written into the agreement itself, not dependent on side agreements.

Now I’m all for free-trade and if this deal gives Aussie exporters greater access to foreign markets then bring it on, but so far we’re short of evidence.

This week Andrew Robb stressed that streamlined trade and investment were his priorities in the negotiation and that there would be no legally binding rules or penalties around illegal downloads – a positive step.

There’s a lot of questions still to be answered, but we must not forget that there’s 11 other government’s all vying for better trade access – Australia is one of the smaller fish in the TPP pond.

US pivot to Asia

Most telling is talk out of the Washington that this deal is as much about progressing the US pivot to Asia as it is about trade. China is noticeably absent from the table and this deal will bring the US much closer to Japan.

President Obama made his position amply clear in an interview with the Wall Street Journal, “If we don’t write the rules, China will write the rules out in that region.”

This gets to the heart of the TPP’s drivers, it’s about setting trade rules and the US are determined to ensure their interests aren’t hampered by the rise of China. Free-trade it seems, has become a quaint piece of nostalgia.

The Japanese President Shinzo Abe traveled to Washington on April 28 for a historic visit that saw Abe address a joint meeting on Congress – a first for a Japanese head of state. The two countries appear keen to mend past rifts and signing a trade deal would be a solid step forward.

The deeper you dig on the TPP the more opaque the whole edifice becomes. The only thing that’s clear is that this deal is as much about geopolitics as it is about trade.

 

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