BY TIMOTHY B. LEE
MAY 13, 2015, 9:29A
What is the Trans-Pacific Partnership?
The Trans-Pacific Partnership is a trade agreement being negotiated among countries bordering the Pacific Ocean, including the United States, Japan, Vietnam, Australia, and Chile.
This map from the Congressional Research Service shows the countries that are expected to join the TPP and the volume of US trade with each of them. The TPP is expected to reduce trade barriers among these countries, lowering tariffs on goods such as trucks, rice, and textiles.
But it will do a lot of other things, too. The agreement could require countries to adopt stricter labor and environmental rules, provide stronger legal protections to drug companies, lengthen the term of copyright protection, give foreign investors a new way to challenge countries' laws and regulations, and much more.
In short, modern trade deals like the TPP are about a lot more than just trade. They've become one of the major ways the world hashes out the rules of the global economy. And that's a big reason the deal has become controversial (có thể tranh cãi). For example, digital rights groups and global health advocates who are not normally focused on trade issues have warned that the deal could negatively impact digital innovation and the global effort to combat AIDS, among other things.
Critics also say the process of drafting the TPP is deeply flawed. Negotiations over the TPP's terms are conducted in secret, with well-connected interest groups having access to more information — and more opportunities to influence the process — than members of the general public.
President Obama is struggling to convince Congress to grant him "fast track" authority, which would guarantee the TPP a prompt up-or-down vote in Congress. He faces particular skepticism from members of his own party in part because of lobbying from labor groups and the opposition of liberal icon Sen. Elizabeth Warren (D-MA).
Why is the TPP so complicated?
Traditionally, trade deals focused on reducing trade barriers such as tariffs and quotas. But modern trade deals do a lot more than that.
A turning point came with the creation of the World Trade Organization in 1994. It included a new, more robust process for settling trade disputes. If one country believes another country has failed to fulfill its trade commitments, it can seek arbitration before a WTO dispute settlement panel. If the panel agrees with the country that brought the complaint, that can trigger targeted trade sanctions designed to pressure the offending country to come into compliance.
Soon people realized that this same enforcement mechanism could be used for things that had little connection to trade. Pharmaceutical companies, for example, have pushed for trade deals to include rules increasing patent protection for drugs. In other words, interest groups can use WTO dispute resolution processes to enforce provisions favorable to them.
The TPP will have a WTO-style dispute settlement process, so a variety of interest groups are pushing to have their pet issues addressed in the treaty. It's expected to cover a wide range of issues: pharmaceutical regulations, state-owned industries, foreign investment, labor rights, environmental protections, copyright law, government procurement, e-commerce, and more. Many of these issues have been addressed before in standalone agreements. But tying them to a trade deal makes it more likely that countries will actually keep their commitments.
The TPP would lower some trade barriers. How big would the economic benefits be?
The countries negotiating the TPP have already committed to freer trade with one another under the last big global trade agreement, known as the Uruguay Round, in 1994. Most TPP countries also participate in regional trade agreements such as NAFTA. As a result, tariffs among TPP countries are already fairly low.
Yet the TPP could bring about significant reductions in trade barriers for certain products. For example, the United States currently imposes a 25 percent tariff on Japanese trucks; the TPP may reduce or eliminate that tariff, saving American truck buyers a lot of money. There's also room for significant liberalization in agricultural products such as rice and sugar.
How big are these effects? A widely cited estimate for the Peterson Institute found that the TPP could increase US incomes by $77 billion by 2025. That's an increase of less than 1 percent, but $77 billion is still a significant amount of money. And advocates hope the TPP could set a precedent for broader trade deals with other parts of the world, such as China and Europe, which could have larger economic benefits.
Trade liberalization could also have significant benefits for American trading partners such as Vietnam.
Of course, much depends on the details of the agreement. For example, one of the biggest open questions is how the deal will handle services such as banking, insurance, and education. Significant liberalization — and economic benefit — is possible in these areas. But the trade barriers in these industries tend to be regulations rather than tariffs, making liberalization more complex and controversial.
What's ISDS, and why is Elizabeth Warren so upset about it?
Sen. Elizabeth Warren (D-MA) is one of the TPP's most prominent critics, and her campaign against the deal has focused on an otherwise obscure provision called investor-state dispute settlement (ISDS). The goal — to mediate disputes between a government and foreign investors — might sound innocuous. But Warren warns that ISDS poses a threat to American sovereignty and could inhibit robust regulation of industries such as banking.
ISDS rules are designed to address a real problem. Suppose an investor from one country spends money building a factory in another country. Then a new government comes to power there and nationalizes the factory. That's unfair to the investor, and in the long run it's likely to be bad for the country with the factory, as well. ISDS is an arbitration process that uses trade sanctions to pressure governments to compensate investors whose property is seized.
Obviously, the United States has a robust legal system that doesn't allow this kind of naked expropriation. Nevertheless, the TPP is expected to allow foreign investors to make ISDS complaints against the United States. And Warren argues that could "tilt the playing field in the United States further in favor of big multinational corporations" in a way that would "undermine US sovereignty."
TPP opponents worry that foreign companies could argue that the way America regulates banks, the minimum wage, or the environment constitutes an unjust taking of their property. If an ISDS panel agrees, the United States could be on the hook for millions of dollars in damages.
There are two aspects of ISDS that have raised particular concern. One is the fact that, as with most trade dispute settlement panels, the process is overseen by arbitrators rather than independent judges. Warren worries these arbitrators, who may also represent corporate clients in other cases, will cause panels to be biased toward big companies.
Second, while the ordinary WTO dispute-settlement process only allows complaints by governments, ISDS allows any foreign investor to complain. Critics say that removes an important check on misuse of the dispute-settlement process.
Defenders of ISDS say Warren's concerns are overblown. The White House notes that there are about 3,000 trade deals around the world with ISDS provisions, including about 50 that involve the United States. According to the Obama administration, the US has only faced 13 ISDS cases under those treaties, and has never lost a case. The White House also says the ISDS provisions in the TPP will have stronger safeguards against abuse than those in previous treaties.
And it's important to note that ISDS can't actually force countries to change their laws or regulations. The most an ISDS panel can do is impose a financial penalty. So it seems unlikely that ISDS could force the United States to change its laws.
Why are some public health groups opposing the TPP?
Public health groups such as Doctors Without Borders and the AIDS research group amfAR have warned that the TPP could delay the introduction of generic drugs, boosting drug prices and ultimately costing lives. Here's how that could happen.
Laws in the US and around the world grant patents and other legal privileges to the first company to invent a new drug — a reward to encourage research and development. After these legal protections expire, other companies can make cheap generic versions of the drugs.
Of course, big pharmaceutical companies hate this competition. And so they've lobbied for the TPP to include rules delaying the introduction of generic drugs into the market.
For example, one proposal would expand the types of inventions that are eligible for patent protection to include modifications of existing drugs. Critics say this would make it easier for drug companies to engage in "evergreening," a process where drug companies make minor modifications to their products in order to extend the effective length of patent protection.
Another provision concerns complex drugs called biologics. Before these drugs can be introduced to the market, the Food and Drug administration requires drugmakers to prove they are safe and effective. Often, data from one drug's clinical trials is useful to other companies wanting to introduce competing, biologically similar drugs. But a controversial US law requires competing drug manufacturers to wait 12 years before they can use this data in their own applications. That makes it harder for generic drugmakers to get into the market, raising prices.
The Obama administration is reportedly pushing for language requiring that all countries adopt a similar 12-year requirement. That's surprising because Obama's own 2016 budget suggested reducing the exclusivity period to seven years.
In short, the TPP can be expected to reduce competition, and therefore raise the prices of drugs in some TPP countries. In the United States, we already have these anti-competition laws, but signing the TPP would make it harder to reform them in the future. For example, if the TPP requires 12 years of exclusivity for biologic drugs, it would be hard for the US to later reduce the exclusivity period to seven years, as the Obama administration has suggested.
Negotiators are also considering language exempting low-income countries from some of these requirements. That could reduce the TPP's negative effect on patients in these countries but wouldn't do anything to lower drug prices in wealthy countries like the United States.
How would the TPP affect copyright law?
Trade agreements have proven a powerful way for Hollywood to export those parts of US copyright law that it likes to other countries. The Trans-Pacific Partnership is no exception.
One provision expected to be part of the TPP would require every country to adopt the same long copyright terms that prevail in the United States: the life of the author plus 70 years. That will mean people have to wait two extra decades before classic works from the 20th century are free for anyone to use.
Another requires countries to adopt laws prohibiting people from tampering with copy-protection schemes that protect movies, music, and other copyrighted works. Notably, the American version of this law recently created headaches for people wanting to unlock their cellphones so they could switch carriers.
US negotiators are also reportedly seeking harsher criminal penalties for copyright infringement on a "commercial scale."
These provisions wouldn't require the US to change our laws, since we've already adopted these changes. However, the treaty could become an obstacle if Congress wanted to repeal them in the future.
US negotiators are also pushing to export at least one provision of US copyright law that doesn't favor Hollywood: legal immunity for internet service providers if their users infringe copyright, something US law already does.
How would the TPP affect agriculture?
Agriculture is one of the most sensitive markets for TPP member countries, including the United States and Japan. The United States has high trade barriers for sugar, and Japan protects products such as pork, beef, and rice. If the TPP reduces these barriers — which is likely but far from certain — it would mean lower prices for American consumers on sugar and products with sugar in them, as well as expanded export opportunities for American producers of beef and pork.
Naturally, different American industries have different views on what should be liberalized. American beef, pork, and dairy producers would like Japan to open its market for these commodities. That will almost certainly require the US to reciprocate by opening access to US markets.
But the heavily protected sugar industry naturally opposes opening the US sugar market. On the other hand, groups that manufacture candy and other products containing sugar would benefit from lower sugar prices, so they favor liberalization.
Which markets are liberalized in which countries will ultimately be hammered out in closed-door negotiations. The public probably won't find out many details about this horse-trading process until the very end, when the negotiators present the finished treaty to the world.
Will the TPP protect labor rights?
American labor groups, while critical of the TPP overall, also see the treaty as an opportunity to pressure US trading partners to adopt stronger protections for workers' rights. Labor groups say that trade liberalization without strong labor standards puts American workers at a competitive disadvantage.
And while previous US trade agreements have included language on workers' rights, labor groups contend that these deals lack robust enforcement mechanisms. Celeste Drake of the AFL-CIO points to the 2005 CAFTA-DR agreement with Central American countries as an example. The United States used this treaty to file a complaint about labor rights violations in Guatemala in 2008, but the case still hasn't been resolved seven years later.
The White House has courted labor groups, touting the TPP's stronger protection for workers' rights and calling the agreement the "most progressive trade agreement in history." The White House insists that TPP will end child labor, protect the right to bargain collectively, and ensure workplace safety standards.
Of course, we won't know exactly how strong these protections are until the final version of the TPP is released to the public. But the White House's overtures to Big Labor have done little to blunt labor's opposition to the agreement. Indeed, the AFL-CIO has made opposing the TPP one of its top priorities for 2015.
What is Trade Promotion Authority, and why is it important for the TPP?
Trade agreements generally require approval from Congress to go into effect, but this creates a potential problem: countries could be reluctant to bargain with the United States knowing that Congress might try to change the terms of an agreement after it was negotiated.
So Obama's predecessors have sought and received trade promotion authority, also known as "fast track." This legislation commits Congress to giving trade deals a prompt up-or-down vote with no amendments. Presidents Bill Clinton and George W. Bush both used fast track authority to pass important trade deals, and fast track is seen as an important precondition for concluding the TPP.
But so far Obama hasn't been able to convince Congress to grant him fast track authority. Requests for the authority earlier in his presidency were ignored. Now, in the final two years of his presidency and with TPP negotiations nearing completion, Obama is making the issue a priority.
The fight over TPA is really a proxy fight over ultimate approval of the TPP. TPP opponents want to either use the TPA legislation to force Obama to change the terms of the TPP, or else defeat TPA altogether. Defeat of fast track would be seen as a signal of a lack of support in Congress for Obama's trade agenda.
Interestingly, the president has found more support among Republicans in Congress than among his fellow Democrats. This is partly because important Democratic allies — especially labor unions — have been lobbying against granting Obama fast track authority.
Source: http://www.vox.com/cards/trans-pacific-partnership