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A pig in a poke

March 2nd, 2015

I’m doing some work on the proposed Trans Pacific Partnership Agreement, currently being negotiated in secret by diplomats and business representatives from 12 countries. Two facts of interest
(a) Australia’s Trade Minister Andrew Robb is claiming that a final agreement might be reached by mid-March. While this looks over-optimistic, it implies there is a near-final text
(b) Obama has sought “fast-track” negotiating authority, but there is no sign that this is going to happen soon, given that quite a few Democrats oppose the deal outright, and many Republicans are hostile to anything that would give Obama more authority.

The idea of “fast track” is that the Administration cuts a deal and Congress is bound (by having agreed to the fast-track rules) to give it a Yes/No vote, with no amendments. The assumption (I think) is that, if amendments were permitted, they would proliferate to the point where the legislation would fail to implement the agreement with other parties, who might then back out. Of course, the result is that Congress is, in effect, buying a pig in a poke. Given the unlikelihood of an outright rejection of such a massive deal, they have to accept whatever Obama puts before them. The flip-side is can no individual Congressperson has to explain why they didn’t seek protection for whatever local ox might be gored by the deal: they can respond that they had no choice.

My question is: Suppose that the final text is agreed and made public before fast-track authority is granted. What would be the chances of Congress agreeing to a Yes/No vote, and what difference would it make? There are a lot of issues to be raised here about international relations, trade agreements and US politics, none of which I have a clear feel for. So, I’d be interested to hear what others think.

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  1. Jim Rose
    March 2nd, 2015 at 16:24 | #1

    Preferential trading agreements, the correct name for free trade agreements, were always dubious endeavours as Javob Viner showed in the early 1950s because the risks of trade diversion outweighing any trade creation.

    The inclusion of pharmaceuticals procurement by government, intellectual property and investor disputes settlement procedures make these ventures even more dubious.

    It is unfortunate that the opponents of TPP focus on the more conspiratorial arguments about investor disputes protection rather than focusing on the fiscal risks from pharmaceutical procurement, of having US intellectual property laws apply to us and simply that some trade deals are a bad deal.

    The trouble is saying that some deals are trade deals are a bad deal requires the same group of far left activists to admit some trade deals are a good deal. A Bridge too far.

    But if they are willing to simply say that some trade deals are not a good deal, while others are good deals, they would step up to the main stage of political debate to be much more effective.

  2. Megan
    March 2nd, 2015 at 16:25 | #2

    Do they make the text of the deal public?

    I had the idea that it remained secret until after the event.

  3. Ernestine Gross
    March 2nd, 2015 at 16:38 | #3

    For what its worth, in addition to the points made by Prof Krugman, (foreign) investment (return) protection (other than IP) clauses are something to watch out for.

    Investment protection clauses are a major discussion points in the EU regarding the Transatlantic Trade and Investment Partnership proposal. http://en.wikipedia.org/wiki/Transatlantic_Trade_and_Investment_Partnership

    There is a question which is not treated well in international trade theory. It concerns who get the gains from international trade, assuming there are such gains.

  4. bjb
    March 2nd, 2015 at 16:51 | #4

    Elizabeth Warren has an opinion piece last week in the Washington Post: http://www.washingtonpost.com/opinions/kill-the-dispute-settlement-language-in-the-trans-pacific-partnership/2015/02/25/ec7705a2-bd1e-11e4-b274-e5209a3bc9a9_story.html

    It’ll be a good test of corporate power vs citizen power.

  5. Megan
    March 2nd, 2015 at 17:18 | #5

    I had a look (about when we’ll see the text) on the DFAT site and it says:

    Once the parties agree on the final text of the TPP Agreement, the Government will make the agreement available publicly and open to scrutiny before the Parliament considers passing it into law. After Ministers table the final TPP text in the Parliament, the Parliament’s Joint Standing Committee on Treaties will coordinate a public review of the agreement. The Committee can then invite submissions and evidence at public hearings, to help determine whether it should recommend to Parliament that the TPP be ratified.

    But of course the ALP & LNP will vote together in both houses and it will become law regardless of what the citizens say, and there won’t be a thing our cross-benchers can do to save us.

  6. Uncle Milton
    March 2nd, 2015 at 17:22 | #6

    It’s No Deal if Congress doesn’t agree.

    This might be one occasion where Republican congressional bloody mindedness is a good thing. It would be funny if their desire to get at Obama overrode the economic interests of their financial sponsors.

  7. Megan
    March 2nd, 2015 at 17:52 | #7

    There is also the question of US “certification”.

    I suggest a look at “tppnocertification.org”.

    According to a pdf from their website:

    How does certification differ from Fast Track?

    Certification is a separate process from Fast Track (or Trade Promotion Authority). Fast Track is the process whereby the US Congress grants the US President authority to negotiate, sign and enter into an agreement before Congress votes on it, and then guarantees a vote within 90 days through which Congress must accept or reject the FTA in toto. Fast Track not only forbids any amendments, but also limits the hours of congressional debate on a pact that are permitted, so as to ensure its speedy passage.

    Could Congress change a final TPPA text, even if the President had Fast Track authority?

    A majority of members of the US Congress could insist on changes to the TPPA, even with Fast Track. They did that, for example, with the Korea-US FTA, which President George W. Bush signed in 2007. When it became evident in 2011 that the deal as signed could not be passed by Congress, President Barack Obama demanded additional concessions from South Korea related to trade in auto and agriculture products. If Korea had not agreed, it could have faced renewed pressure to make those changes as a precondition for certification.

  8. paul walter
    March 2nd, 2015 at 18:09 | #8

    What are House Reviews, anyway?

    The Metadata panel has both major parties here agreeing on its terms, yet most people with above single digit !Q are critical of its undermining effects on basic democracy.

    To Prof Quiggin, thx for the update, also others for commenting.

  9. Ernestine Gross
    March 2nd, 2015 at 18:40 | #9

    The article by Elizabeth Warren, referenced by bjb, is exactly the subject matter of concern in the EU, I referred to.

  10. Dave Lisle
    March 2nd, 2015 at 18:53 | #10

    Robb and the other trade ministers have been insisting for years – at least since 2010 – that the negotiations are in their ‘final stages’. It is a rhetorical device to give the impression that all is well – that progress is being made. At any rate I would not take anything he says too seriously.
    Be that as it may, such a wide ranging and contentious deal cannot in any meaningful sense be ‘agreed’ before fast track authority (or TPA) is granted. Anyway, I don’t think that you’ll see a situation where “the final text is agreed and made public before fast-track authority is granted”. If it were tabled in congress before fast trade was granted there would be no chance that it would receive fast track because there is such public opposition. This opposition is always described by the deal’s proponents as ‘scaremongering’ but once the sections of the text that have not been released by Wikileaks are made public there will be outrage.
    The reports from Ferguson of the Congressional Research Service are helpful on TPP and fast track. In a report of Jan 23 he writes: “Technically, TPA is not necessary to begin or even conclude trade negotiations, but it is widely understood to be a key element of defining congressional authority, and of passing trade agreement implementing legislation”.
    The Jan 23 report: http://fas.org/sgp/crs/misc/RL33743.pdf

  11. Ikonoclast
    March 2nd, 2015 at 18:59 | #11

    I find the TPP terrifying. It represents one huge step towards delivering defacto global government to the boards of transnational corporations. Who votes for them? Hint: Large shareholders vote for them on the basis of one share equals one vote. Thus one billion shares equal one billion votes. Be afraid, be very afraid. It’s global corporate fascism in the making.

  12. alfred venison
    March 2nd, 2015 at 19:45 | #12

    during the recent trip to south america chaperoning julie bishop didn’t robb say (i paraphrase) “science is fine & dandy, but when you finally enter the room to negotiate a treaty you’ve got to leave the science outside.” maybe this holds for democratic oversight as well as that science thang in robb’s view. -a.v.

  13. Dave Lisle
    March 2nd, 2015 at 20:38 | #13

    A.V. – Robb has a scientific view on democratic oversight in trade negotiations. He said that detailing to the public what was being negotiated would “‘make sure we get done in the eye”. I guess this is neoliberal mercantilism.

  14. March 2nd, 2015 at 21:02 | #14

    Free trade agreements just scare me. I’ve no idea what we are giving away, and my representatives in government won’t tell me.

  15. David Allen
    March 3rd, 2015 at 07:02 | #15

    The metadata bill is primarily to facilitate the enforcement of the TPP’s intellectual property provisions. I wonder how long before the first Australian is rendered to the USA for downloading a movie once the TPP is signed.

    And good luck maintaining the Pharmaceutical Benefit Scheme. The only question is what form of words the spin doctors give to its death; reformed, recast, reimagined, improved, expanded, shinier, etc.

  16. derrida derider
    March 3rd, 2015 at 12:39 | #16

    There are 12 countries at the negotiating table here; at any given time you can bet that it will be in the interest of at least one of them to leak a draft. I don’t think we will have to wait until the negotiations are concluded before we learn what’s proposed. This “negotiated in secret” meme is overblown.

    Some of the commenters have hit on the real issue with this, which is NOT whether one country wins or loses from the TPP. Viewed solely in terms of aggregate GDP proponents are probably correct that it is win-win all around (with the quibble that some countries may be grossly underestimating the GDP-reducing effects on them of adopting US IP laws). But it is which TRANS-NATIONAL groups win and lose here that our gaze is being directed away from; it does start to give you sympathy with the old Marxist nostrum that “the proletariat have no country”.

  17. March 3rd, 2015 at 14:48 | #17

    If you haven’t seen it, you might like to consider signing this petition http://choice.good.do/tpp/save-our-health-laws-release-the-text/

  18. Ikonoclast
    March 3rd, 2015 at 17:14 | #18

    @derrida derider

    Yes, we can be certain that transnational corporations, their major owners and boards will be heavily favoured but the poor of each country (who depend on their democratic governments having adequate budgets) will be made even poorer.

    Nothing honest was ever hatched in secret.

    The TPP will be like the EU on steroids with not even the figleaf of a multi-national parliament. Smaller countries in particular will get totally (rude word deleted) erm plundered and end up like… Greece.

  19. James
    March 3rd, 2015 at 18:32 | #19

    I think, @David Allen that the correct term is a ‘price signal’, which in new-speak is equivalent to being gouged for something that holds social benefit but has leeway for enhanced rent-seeking.

  20. Tim Macknay
    March 3rd, 2015 at 18:54 | #20

    @James
    Nope, that’s obsolete. Now it’s “value signal”. 😉

  21. James Wimberley
    March 3rd, 2015 at 20:15 | #21

    It’s not just Senator Warren up in arms over the dispute settlement stuff. George Monbiot, the Guardian columnist, has been agitating over this for a while. Now a German law professor, Siegfried Bross, has written an article suggesting that the dispute settlement provisions in the Atlantic treaty breach the German constitution. Bross is a former judge on the German Constitutional Court in Karslruhe, so this is heavy-duty criticism – possibly a warning shot from the current judges.

    The Karlsruhe court is one of the very few national courts to put up a fight against EU legal imperialism. However, we can be pretty sure that other top judges in many countries are beginning to notice. One thing all judges agree on is fighting threats to their jurisdiction.

  22. Dave Lisle
    March 3rd, 2015 at 21:04 | #22

    James Wemberley – Yes. The chief justice of the High Court – Justice French – last year gave a speech to the supreme and federal court judges conference. It was entitled “Investor-State Dispute Settlement — A Cut Above the Courts”. As the title suggests, he has some misgivings about ISDS in the TPP although he was careful to not sound too petulant about his declining authority within the jurisdiction, couching much of his argument in terms of sovereignty.

  23. 2 tanners
    March 4th, 2015 at 00:56 | #23

    @ Dave Lisle. I haven’t read the French speech but i would simply point to Big Tobacco’s use of this to (attempt to) get past a High Court decision.

    @ Derrida Derider: No. I think all negotiating parties know that if a copy leaks the whole thing is sunk (thereby answering the OP question). In this case it is better, in the view of the negotiators, to be handed the rough end of the pineapple with specific instructions attached than to publicly air problems with what they have invested years and status in negotiating.

  24. TN
    March 4th, 2015 at 21:31 | #24

    The Productivity Commission was fairly sceptical of the benefits often claimed for Free Trade Agreements, and warned about some of the risks – including in the areas of health, IP and ISDS. It actually called for public release of texts and debate before deals were finalised, although not surprisingly some trade negotiators said that such transparency would make it much harder if not impossible to negotiate agreements in the first place. (That, of course, could be seen as not necessarily a bad thing!)

  25. MH
    March 5th, 2015 at 10:04 | #25

    TPPs. Warren’s basic argument is that this is about trade restriction and market control for the 1%. The second argument against them is the use by multinational and international businesses and organisation’s to use the legal provisions of such agreements to either obtain compensation or change government action and or policy to avoid the loss resulting from the exercise of sovereign power in a market by a country to produce a desired policy outcome, for eg health care and stopping the use of tobacco. The secretive nature of all things contained within them is a matter for serious concern, they are therefore not democratic principled agreements. The issue of TPP is contained within both the above arguments so it is to my mind not an either or situation. TPP’s are simply market manipulation on a globalised level, the test therefore is do such agreements confer an unfettered right of entry to a market by competitors? and do they confer an unbalanced competitive advantage to established market participants, particularly in specific commmodities or services or both. They appear to fail both tests the data I thinks shows.

  26. TerjeP
    March 5th, 2015 at 10:33 | #26

    It’s hard to say if ratifying the TPP is a good thing without knowing the detail of what it says. My strong preference is for unilateral trade liberalisation rather than bilateral and multilateral agreements but that doesn’t mean I’d always oppose instances of the latter.

    In process terms most laws are drafted in relative secrecy before parliament gets a look in. I’m okay with that. However I would prefer a significant delay between proposed legislation passing a vote in the lower house and being up for a vote in the upper house. Say three months. That way public debate has a chance to get it’s boots on and identify concerns and publicise them. We make new laws with too much haste.

  27. March 6th, 2015 at 12:10 | #27

    @Dave Lisle
    Here is a link to Justice French’s speech. A valuable addition to the oppo file.

  28. Ikonoclast
    March 9th, 2015 at 08:44 | #28

    @James Wimberley

    I just finished reading Naomi Klein’s highly disappointing book “This Changes Everything”. [1] One of the few good points about her book was that it highlighted a problem also highlighted in Justice French’s speech. Namely that these international trade agreements have already seriously impeded nations in their attempts to foster changes from highly polluting fossil fuels to renewable energy.

    Note 1. I call Naomi Klein’s book highly disappointing because it is;

    (1) Journalistic and anecdotal rather than scholarly;
    (2) Poorly organised;
    (3) Lacking an analytical backbone; and
    (4) Poorly written and prolix.

    It some ways it was well researched but Klein seems not to know how to organise her material or analyse it properly. The basic thesis is correct, namely that capitalism is systemically incapable of changing in the ways needed to prevent climate change. But Klein did not develop out any analytical understanding of why capitalism is incapable of making the necessary changes. Nor did she develop any analysis of how the system needs to change except for some rather vague statements about protests and public ownership.

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