It’s been about a month since the Obama administration publicly announced that the negotiations on the Trans-Pacific Partnership (TPP) were completed, and just last week the full text of the agreement was released to the public. It will be the largest free-trade agreement in history, including 12 counties and roughly 40 percent of the global economy.

The umbrella agreement writes universal rules and standards for trade markets around the Pacific. Although all the countries involved still need to ratify the agreement, the release is an important step in that direction. In the United States, President Obama is now in the midst of securing Congressional consent, despite heavy criticism. This will likely be an uphill battle that comes down to one basic question: will the TPP benefit the U.S. economy and global markets? While the text of the 30-chapter deal was only recently made public, trade groups and labor unions are already entrenched in their support or opposition for the deal, which will become even more contentious in the coming months.

An Overview of the TPP

Who is involved?

In total, there are 12 countries involved in the Trans-Pacific Partnership, namely the United States, Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore, and New Zealand. Indonesia may also join in the future.

Why does the United States support the TPP?

According to the White House, the TPP will establish American leadership and influence in the Pacific. President Obama strongly supports the deal because he believes that it will strengthen the U.S. economy and national security. According to the U.S. Trade Representative, the deal is meant further U.S. interests and create an equal playing field for everyone “by requiring other countries to play by fair wage, safe workplace, and strong environmental rules that we help set.” The TPP will also cut over 18,000 taxes that countries have on American goods and services, which may help American companies gain additional access to global markets.

The Trans-Pacific Partnership is intended to make the United States highly competitive in the Pacific while prioritizing American interests and values. According to the White House, the TPP does this by eliminating preferential treatment of state-owned enterprises over American businesses, protecting trade secrets, ensuring open internet access, and creating fair markets between the United States and foreign countries.

What’s Covered by the TPP?

In short, almost everything. The pact will affect 12 countries and over 40 percent of the world’s economy and a massive amount of goods and services. For example, tariffs will be removed on textiles and clothing and potentially eliminated for carmakers. Tariffs on American cars are as high as 70 percent in Vietnam, making their removal a major win for the U.S. auto industry. Currently, American poultry is taxed up to 40 percent in some countries and soybeans are taxed as highly as 35 percent. Other foods that may be affected include dairy, sugar, wine, rice, and seafood. Major food-exporting countries like New Zealand and Australia stand to benefit from the removal of these barriers.

Removing tariffs is not the only potential consequence of the TPP; there are also notable, but controversial, patent protection provisions. The TPP would allow pharmaceutical companies eight years of protection on new biotech drugs. Doing so ensures that pharmaceutical companies can profit from new groundbreaking drugs, but may also keep prices high as competitors have to wait longer to make generic versions. The TPP intends to removal global internet barriers as well. For example, Google will be able to sell products in foreign markets that are currently restricted. The intended reduction of global roaming charges could cause an increase in competition among Telecom heavyweights. For more information on the intellectual property implications of the TPP check out Sam Whitsell’s issues brief explainer.

The TPP also creates new labor standards for all countries involved. Each country must adhere to the International Labor Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work. The TPP protects unions, prohibits child labor and forced labor, and standardizes minimum wage and work hours, along with a variety of other protections. The agreement also strengthens international environmental standards with new resource protections. The White House argues that these provisions will “level the playing field” between the United States and the other countries and President Obama has also called it the “most progressive trade deal in history.”

Where is China?

It’s called the Trans-Pacific Partnership, right? One could reasonably think that China’s massive economy would be involved–China is the largest exporter and second largest importer in the world. But China has, so far, not played a role in the negotiations and has no plans to join the agreement.

In fact, the White House argues that, “with the TPP, we can rewrite the rules of trade to benefit America’s middle class. Because if we don’t, competitors who don’t share our values, like China, will step in to fill that void.” The TPP specifically attempts to work around what some perceive to be obstructionism from China. Despite being part of the World Trade Organization (WTO), China has made free trade agreements more challenging to develop. The TPP ultimately allows for Chinese inclusion, but isn’t designed to “Chinese specifications” and cannot be vetoed by China. The agreement seeks to spread Western values to many of China’s important trading partners.

Some believe sidelining China is a mistake, even if the United States is trying to limit China’s control. Felipe Caro and Christopher Tang, business professors at UCLA, argue that the idea that China can be locked out of the agreement is naive, as China is the world’s leading trading nation. China has loaned money to and indebted a variety of countries, in an effort to spread its influence abroad. As of the end of 2014, China gave Bangladesh $3.8 billion and Pakistan $17.8 billion, which illustrates the power and influence that China has in many developing nations. Furthermore, China is aiming to create the Asian Infrastructure Investment Bank, an international bank that according to Caro and Tang “would help finance infrastructure projects across the Asia Pacific.” They further note that the bank has the support of “47 regional and 20 non­regional members, including TPP nations, such as Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam.”

China also has pre-established trade agreements with a number of TPP members. This could severely hinder the efficiency of the TPP in practice. China has a lot of leverage at its disposal and leaving China out of the negotiations may have unforeseen consequences.

TPP Lingo

While Congress has not yet decided on the Trans-Partnership itself, there have been a number of votes on related issues. Before we get into those, let’s go over some of the acronyms that get thrown around in discussions of the TPP.

The Transatlantic Trade Investment Partnership (TTIP): A separate trade deal that the United States is negotiating with the European Union. According to the U.S. Trade Representative:

T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U.S. international competitiveness, jobs and growth.

This agreement is related to the Trans-Pacific Partnership in that it will also utilize the Trade Promotion Authority that was recently passed by Congress–which brings us to our next definition.

Trade Promotion Authority (TPA): This simply means that Congress cannot amend or filibuster the TPP or TTIP. Congress must vote on each trade deal exactly as it is–yes or no. Trade Promotion Authority is what many refer to as the “fast track” method. It authorizes the president to formalize trade agreements with countries abroad, limiting Congress to simply voting to approve an agreement. In terms of Congressional oversite, TPA will give members of Congress access to read the negotiating text, receive briefings on negotiations, have time to review the deal, and outline objectives for the U.S. Trade Representative.

Trade Adjustment Assistance (TAA): Initially created in the Trade Act of 1974, it offers compensation to workers and companies hurt by trade agreements, along with job search and training assistance. According to GovTrack, the current TAA would give states more control over job assistance and reduce healthcare costs to workers affected by the TPP. Historically, trade assistance has always been associated with Trade Promotion Authority because it appeases Democrats, who worry about the effect of trade agreements on blue collar workers. Although TAA initially failed in Congress after it was separated from TPA, it was eventually included in the Trade Preferences Extension Act, which passed several days later.

Criticism of the TPP

There are many TPP supporters who believe that the agreement will stimulate economic growth in all countries involved. President Obama wrote in a press release that “if we can get this agreement to my desk, then we can help our businesses sell more Made in America goods and services around the world, and we can help more American workers compete and win.” However, there are many loud critics of the partnership in the United States.

A major fear is that American jobs will be shipped overseas to developing countries. The 1994 North American Free Trade Agreement (NAFTA), the TPP’s predecessor, remains controversial in the United States. Although some claim NAFTA boosted small to medium sized American businesses, others argued that the agreement resulted in the loss of thousands of domestic jobs to foreign countries. Free trade agreements inspire competition between international labor forces, which can cause jobs to move to where businesses can save money. For example, with increased integration under the TPP, the American labor force could be forced to compete with workers in Vietnam where the hourly wage is $2.75 and labor laws are less strict.

Others also argue that the politics of other nations involved are equally delicate. For example, Australia has a major problem with the TPP’s potential consequences for the pharmaceutical industry, as it will extend the length of patents for drug companies. Critics claim that these extensions will result in decreased competition, leading to inflated prices for name brand drugs. Poorer countries could have even less access to life-saving medicines due to the influence of intellectual property protections on drug prices.

It is also interesting to note that Presidential Candidate Hillary Clinton, a former supporter of the TPP as Secretary of State, recently came out against the deal after having supported it in the earlier stages of negotiations. When asked about her stance on the deal in the Democratic debate, Clinton responded:

It was just finally negotiated last week, and in looking at it, it didn’t meet my standards. My standards for more new, good jobs for Americans, for raising wages for Americans. And I want to make sure that I can look into the eyes of any middle-class American and say, ‘this will help raise your wages.’ And I concluded I could not.

She expanded on her position in an interview with PBS.

It seems that Democrats and Republicans alike have doubts on this agreement, despite its aggressive backing from the White House.

Conclusion

Although the text of the deal was only released recently, the fight behind it has become particularly heated over the past several months. As politicians, trade and labor groups, and the public continue to review the text it is likely that it will become even more controversial in the coming weeks. Congress will soon have to vote on the deal, which could have wide-ranging implications for the United States and other members of the protocol.

Resources

Primary

Medium: The Trans-Pacific Partnership

The White House: How the Trans-Pacific Partnership (TPP) Boosts Made in America Exports, Supports Higher-Paying American Jobs, and Protects American Workers

The White House: Statement by the President on the Trans-Pacific Partnership

The White House: The Trans-Pacific Partnership

Additional

BBC: TPP Trade Deal: Who are the Winners and Losers?

CNN Money: Why Everyone Hates Obama’s Signature Trade Deal

Fortune: Leaving China out of the TPP is a Terrible Mistake

The Atlantic: Why Americans Are Turning Against Free Trade

BBC: TPP: What is it and Why Does it matter?

Gov Track: How Congress Voted on Trade?

Politifact: What Hillary Clinton Really Said About TPP and the ‘Gold Standard’

USTR: Strategic Importance of the TPP

Jessica McLaughlin

Jessica McLaughlin is a graduate of the University of Maryland with a degree in English Literature and Spanish. She works in the publishing industry and recently moved back to the DC area after living in NYC. Contact Jessica at staff@LawStreetMedia.com.

The post What’s Going on With the Trans-Pacific Partnership? appeared first on Law Street.

Since Wikileaks released an early draft of the Trans-Pacific Partnership, a massive international free trade agreement, many groups have raised concerns about its potentially negative consequences, particularly when it comes to intellectual property. Most of the concern has focused on the potential expansion of copyright protections for pharmaceutical companies as well as the potential for stricter punishment for copyright infringement. A wide coalition of groups has since come out against the deal, including free internet groups, medical professionals, Youtubers, video game modders, and journalists.

The agreement involves 12 Pacific Rim nations (Canada, United States, Mexico, Peru, Chile, New Zealand, Australia, Japan, Vietnam, Malaysia, Brunei, and Singapore) which combine to make up about 36 percent of the global economy in terms of GDP. The objective was to lower trade barriers and access to goods in all countries involved, as well as to present a strong economic front against China.

Critics of the Intellectual Property (IP) Rights chapter see dangers to fair use of copyrighted works, corporate watchdogs, whistleblowers, and patients dependent on drug treatments. The new opponents to the TPP provide a contrast to the traditional opposition found in political and labor circles in the United States. Even Wikileaks founder Julian Assange criticized the IP chapter saying, “If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs”

Political Objections to the TPP in the United States

In the United States, presidential candidates in both the Republican and Democratic parties have come out against the TPP deal signed by President Obama. Both primary front-runners Donald Trump and Hillary Clinton have spoken publicly against the TPP in the wake of its finalization. Despite the president’s signature, the bill still needs to pass Congress with a straight up-or-down vote. Congress voted away its right to amend the bill when it passed the TPP Fast Track Bill in June. Once they receive the document, members of Congress will have 90 days to read, debate, and ratify the treaty. According to the bill, the text of the agreement is to be made public within 30 days of the president’s decision to sign it.

Notable progressive figures like Bernie Sanders and Elizabeth Warren have a long history of protesting the TPP. Skeptics on the right claim that the treaty doesn’t do enough to reign in other countries’ use of tools like currency manipulation, which can give domestic businesses an advantageous playing field. Skeptics on the left point to the perceived failure of past trade deals like the North American Free Trade Agreement (NAFTA) and their consequences for American labor. People on both sides have also criticized the shroud of secrecy that has gone along with the negotiations.

Senator Sanders cited former trade agreements and the loss of American jobs as a result of the agreements. He also questioned whether any company would invest in the United States when they can freely go abroad to countries that allow for lower wages. He claims that the primary supporters of the agreement are large, multinational corporations and the primary victims of the deal will be American workers.

Those defending the TPP claim that the lowering of trade barriers will allow American companies to sell more of their products abroad, increase revenue, and provide for more jobs. President Obama argues that the deal will lead to the elimination of approximately 18,000 customs taxes from American goods.

The IP Rights chapter is designed to protect companies that invest in innovative products, treatments, and services and promote innovation. For countries like the United States and Japan, whose economies focus on technology and innovation, it is important to expand intellectual property rights internationally to maintain the competitiveness of domestic companies.

The TPP is also generally seen as President Obama’s attempt to level the playing field in the Pacific with China. While critics point out that China isn’t even involved in the deal, the TPP was intentionally left open-ended, which would allow it to join in the future.

Medical Objections to TPP

Doctors Without Borders voiced concern over the IP Rights chapter of the TPP, particularly when it comes to drug patents. The United States and numerous pharmaceutical corporations spent the negotiations attempting to export the current U.S. model, which allows for 12 years of data protection. For the most part, other signatories of the TPP resisted lengthy protections, but the most recent draft includes a five-year protection (Article QQ.E.16). Skeptics argue that this as a direct attack on the generic drug market and an attempt to limit competition, which could prevent other companies from potentially driving the cost of a drug down.

There is also debate over whether patent protection in the pharmaceutical industry actually promotes research and development or hampers it. Supporters of the trade deal say that these protections will ensure companies view such investments as less risky from a financial standpoint, as they provide a guaranteed period to make a profit on groundbreaking drugs. Critics suggest that the regulations will make it more difficult for scientists to build on the work of others and could stifle the exchange of information.

It is important to note that it often costs drug companies hundreds of millions of dollars to get a drug to the market. A controversial example of this is a hepatitis C drug that cost $500 million in private investment to get to market, in addition to publicly funded university research. That drug sells for $84,000 but only costs between $70 to $140 to produce.

Internet/Content Creator Objections to TPP

The IP Rights chapter also led to concerns among people whose internet habits are based around the United States copyright doctrine of Fair Use. In short, Fair Use is the concept that a copyrighted work may be copied and used in a transformative way for the purposes of comment, teaching, scholarship, or research without being in violation of copyright. While the TPP does encourage member nations to promote Fair Use-like protections for journalists, parody writers, and consumers, these protections are not mandated (Article QQ.C.4). Additionally, the TPP includes provisions that would criminalize the act of piracy or the divulging of trade secrets with fines and jail time.

These provisions have groups ranging from journalists to amateur manga writers concerned over the TPP. While there isn’t as much concern in the United States regarding fair use, there is the question of how violations of copyright and trade secrets would play out if an international corporation is involved. Gamers also fear that the provisions in the TPP could make game modding effectively a criminal offense, as software would fall under the category of “trade secrets.”

However, these fears seem somewhat unfounded given Australian Trade and Investment Minister Andrew Robb’s assurance that his country would only support the provisions that are consistent with the existing government. It seems unlikely that the TPP will force the wholesale change of member states’ copyright laws to the extent feared.

Views from Around the World

Canada

The recent election in Canada shed some light on where the country currently stands on the TPP. Former Prime Minister Stephen Harper viewed the deal as crucial, particularly for Canada’s auto industry. Current Prime Minister-designate Justin Trudeau’s main point of contention with the TPP is the secret nature of the negotiations. He hasn’t committed to approving or rejecting the agreement until he’s carefully evaluated the deal.

The TPP’s predicted beneficiaries in Canada are its agriculture industry and its consumers of foreign imports, particularly from Japan, as many tariffs will be removed over the next five years. Most of the deal’s partners view Japan as a major potential marketplace for agricultural products.

Australia

A major part of the TPP for Australians was the assurance that they wouldn’t be subject to additional penalties for online piracy. As stated above, it appears unlikely that the current Australian government will alter its piracy and copyright laws to criminalize offenses critics fear. However, the language in the IP Rights chapter still has some alarmed with the potential damages that film and television companies could seek for illegal downloads of their products.

New Zealand

Medical professionals in New Zealand responded to the leaked IP Rights chapter with concern over rising prices of pharmaceuticals and the installation of potential patent extensions. Potential cost increases could place a heavy burden on the country’s healthcare system and cost the government hundreds of millions of dollars. Currently, New Zealand has strong price protections for drugs in order to prevent high costs for consumers, but the agreement could lead to a challenge of those protections. The country’s prime minister acknowledged that under the TPP, drug prices will likely go up due to its data protections, but he argued that those costs would not significantly affect consumers.

Japan

The primary concern for Japan is how the TPP will impact the state of its agriculture industry. Prime Minister Shinzo Abe argues that the agreement will allow Japan to boost its agricultural production, despite Japan having to increase its annual imports of tariff-free goods from TPP members. Japan’s large corporations are also expected to benefit significantly from the agreement, perhaps most notably auto manufacturers who will benefit from new markets.

Conclusion

For now, the debate regarding the TPP will rage on in all 12 of the countries that hashed it out over the last five years. In the United States, the deal faces significant opposition from both parties, notably the Democratic party, as well as support from many Republicans and large corporations. Across the Pacific Rim, doctors and healthcare agents have raised concerns over the language found in the IP Rights chapter and are warning of rising costs in the drug market.

Journalists and other professionals who are dependent upon Fair Use view the punishments allowed for in the TPP for divulging trade secrets and copyright infringement as deterrents to doing their jobs. Concerns have even been raised in the gaming community, who feel threatened by the expansion of copyright protection internationally.

Given the language of the document and the assurances of political leaders across the Pacific Rim, it seems unlikely all of these fears will come to pass. However, the detractors also have reason for concern as international copyright laws will likely face some change.

Resources

Primary

Wikileaks: TPP Treaty: Intellectual Property Rights Chapter

Additional

Politico: Leaked: What’s in Obama’s Trade Deal

Electronic Frontier Foundation: Trans-Pacific Partnership Agreement

Office of the United States Trade Representative: Trans-Pacific Partnership: Summary of U.S. Objectives

Doctors Without Borders: Statement by MSF on the Conclusion of TPP Negotiations in Atlanta

NY Times: Trans-Pacific Partnership is Reached, but Faces Scrutiny in Congress

News.com.au: Wikileaks Releases TPP Agreement Which Gives More Rights to Film Studios over Copyright

The Sydney Morning Herald: No New Penalties for Australian Internet Pirates under Trans-Pacific Partnership

The Globe and Mail: The ABCs of TPP

The New Zealand Herald: Dr. Joshua Freeman: Free Trade Deal Sold us a Monopoly

The Japan Times: Too Early for TPP Cheers

Kotaku: Japanese Fan Comics Could Die Under New Trade Deal

BBC News: Trans-Pacific Partnership: What is it and What Does it Mean?

Senator Elizabeth Warren: Trade Deal Should be Public Before Congress Votes on Fast Track

Bernie Sanders: Sanders to Senate: No on TPP

UpTakeVideo: Obama Pitches Trans-Pacific Partnership to American People

Tarmack: The TPP Effect on the Video Game Industry

RT America: Sanders, Trump Lead Charge Against TPP

PBS NewsHour: Hilary Clinton says she doesn’t support Trans-Pacific Partnership

Samuel Whitesell

Samuel Whitesell is a graduate of the University of North Carolina at Chapel Hill having studied History and Peace, War, and Defense. His interests cover international policy, diplomacy, and politics, along with some entertainment/sports. He also writes fiction on the side. Contact Samuel at Staff@LawStreetMedia.com.

The post Trans-Pacific Partnership: Why is the IP Rights Chapter Receiving So Much Criticism? appeared first on Law Street.