In his first year in office, President Obama announced one of the primary goals of his international trade policy, U.S. participation in the Trans-Pacific Partnership (TPP), a trade agreement between a dozen nations along the Pacific coast. According to the Office of the U.S. Trade Representative (USTR), the TPP represents the “cornerstone of the Obama Administration’s economic policy in the Asia Pacific,” intended to “boost U.S. economic growth and support the creation and retention of high-quality American jobs by increasing exports” to nations in the Asia-Pacific Region. This agreement has major implications for the U.S., as TPP signatories constituted 44% of the total U.S. export market in 2013. Additionally, according to Brookings, the TPP’s free trade provisions could boost U.S. GDP $14 billion a year by 2025. The agreement also has the potential to stimulate job growth in the American manufacturing sector, by limiting protectionist measures in the Asia-Pacific region which have made American produced goods less competitive abroad.
Moreover, this agreement has major implications politically. China is not represented amongst the TPP’s twelve signatories, which include Japan, Mexico, and Vietnam. The absence of China within such an influential trade agreement highlights the Obama administration’s efforts to increase economic cooperation with Southeast Asian nations as a way to make allies and counterbalance China’s rise. The TPP could define the U.S.’s image in the Pacific region, yet despite significance, very little is actually known about it. While the broad goals of the agreement – increased trade, more American jobs, economic growth – have been clearly expressed, the actual terms of the Trans-Pacific Partnership are mired in secrecy, presenting serious concerns regarding its actual impacts.
For instance, though the Trans-Pacific Partnership has been marketed as a trade liberalization agreement with tangible benefits to the average American, there are concerns that the TPP will solely benefit multinational corporations. Over 600 corporate advisors, including representatives of Caterpillar and Halliburton, have contributed to the TPP, while some members of Congress have been denied access to the same information. This, in turn, has led to speculation concerning corporate influence over the agreement – and for good reason.
One of the most controversial aspects of the agreement is the Investor-State Dispute Settlement (ISDS) clause. According to Joseph Stiglitz, a Nobel Prize winning economist, ISDS would enable multinational corporations to sue states for both expropriation and legislation that poses a threat to corporate profits. An international panel of arbitrators outside of U.S. jurisdiction would then handle these lawsuits. The effects of ISDS are not theoretical: Phillip Morris, a multinational tobacco company, has sued several nations, including Uruguay, for plain packaging laws regarding cigarette labels that feature prominent warnings.
Senator Elizabeth Warren joined Stiglitz by condemning the ISDS clause, stating that if a multinational “company won, the ruling couldn’t be challenged in U.S. courts, and the arbitration panel could require American taxpayers to cough up millions — and even billions — of dollars in damages.” Both Warren and Stiglitz are concerned that the TPP would allow a multinational company to sue the U.S. government for environmental and consumer protection laws that would reduce corporate profits. After the passage of NAFTA, multinational companies began repeatedly suing the Canadian government to overturn regulations on offshore oil drilling, fracking, and drug patents which threatened profit margins. As a result, Canada has been forced to pay upwards of $170 million in damages. Though the potential losses through ISDS disputes are outweighed by much more prominent benefits from increased trade, these provisions clearly favor multinational corporations, raising concerns regarding the influence of corporate interests over consumer interests in future trade negotiations. Additionally, while the U.S. government itself has not lost an ISDS dispute under NAFTA, there are concerns that the TPP will reverse this tide.
However, the Obama Administration disagrees about the potential negative impacts of the Trans-Pacific Partnership. Instead, the USTR office claims that the ISDS will make sure that government continues to “protect legitimate public welfare objectives, such as public health, safety, the environment, and the conservation of living or non-living exhaustible natural resources” despite corporate interests. Yet while this objective is clear, the USTR has not presented any tangible solutions to resolve these issues and since the negotiations remain undisclosed, Americans have been left virtually in the dark, unable to access information about the agreement. When the Congressional Research Service released a report on the TPP to provide an overview of the agreement’s facets and goals, the researchers were unable to pinpoint tangible specifics because most documents regarding TPP negotiations remain unavailable for public consideration.
The little information that we do have concerning the Trans-Pacific Partnership is from leaked documents, which reveal other controversial aspects of the agreement in addition to ISDS clauses. The TPP’s treatment of intellectual property (IP) is of utmost concern, as the agreement “contains proposals to increase the term of patents, including medical patents, beyond 20 years, and lower global standards for patentability.” The protection of IP rights is undoubtedly important, as it is crucial to provide incentives for many companies, including those in the pharmaceutical industry, to expend capital on the research and development of new products.
However, the extension of these medical patents would prevent cheaper, generic versions of drugs from being produced, benefitting pharmaceutical companies at the direct expense of consumers, especially in developing countries in which brand name medicines are unaffordable. Ironically, these proposals seem at odds with the Obama administration’s commitment to affordable health care. According to Judit Ruis Sanjuan of Doctors Without Borders, “the leak of the secret text confirms that the US government continues to steamroll its trading partners in the face of steadfast opposition over terms that will severely restrict access to affordable medicines for millions of people.”
In response to these leaked documents, 80 prominent IP lawyers wrote to the President, Congress, and Ambassador Froman of the USTR office to express their concerns. The lawyers contended that “the role of our government, and not leakers, [is] to create public dialogue by sharing the accurate and current informational foundations required for meaningful public input.” Moreover, they criticized the USTR’s selection of advisers on the TPP agreement, since just 16 representatives were “designated to advise on intellectual property matters…all of whom are corporate advisers…none of whom represent consumers.”
The key issue here is transparency. Without opening the actual terms of the Trans-Pacific Partnership up to public debate, the sense of secrecy concerning the agreement leads critics to assume the worst-case scenario, that the agreement would enable foreign companies to influence U.S. policy through costly lawsuits while simultaneously posing a threat to intellectual property rights and valuable consumer protection laws. Similar to NAFTA, the TPP would undoubtedly prove beneficial to multinational corporations and overall U.S. trade levels, but at what cost? Considering the secrecy of the agreement, it is impossible to say.