Global Trends by Martin Khor

Monday 18 November 2013

Two events affecting the TPP

Two events last week may have significant impact on the Trans-Pacific Partnership Agreement – opposition by United States Congress members to the “fast track authority”, and the leaking of the TPPA’s intellectual property chapter.

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The process to conclude the Trans Pacific Partnership Agreement by this year met two obstacles last week.

The chief negotiators of the 12 TPP countries will be meeting in Salt Lake City in the United States this week, aimed at ironing out outstanding differences so that the Trade Ministers can reach agreement when they meet in Singapore in December.

A quite unexpected event took place in Washington last week when an overwhelming majority of Democrats in Congress made clear they oppose fast track authority for trade deals.

Of the 201 Democrats in the House of Representatives, 166 sent letters to President Obama rejecting his push for a bill to grant him fast-track authority.

It is embarrassing that the President’s own party’s Congress members are so opposed to giving him the fast track authority.  Another 28 House Republicans have also so far  announced their opposition.  Since 218 votes (a majority of the 435 representatives) are needed in the House to get fast track authority, there appears to be little chance that the President will get his trade authority.

Congress has the power to adopt trade agreements negotiated by the Administration.  Under fast track authority, Congress must approve or reject an agreement in total, but cannot alter it, thus enhancing the chances of the agreement being approved as a whole.

The failure to obtain fast-track authority has serious implications for the TPP, especially since the US is by far the most important country.

Firstly, without fast track authority, the US Congress can make any changes they want to the final TPP text agreed to by all countries.

Thus, even if the US negotiators agree to meet the demands of other TPP countries on their sensitive issues and points, there is little certainty that the Congress will concur. Its members can be expected to seek to alter parts of the agreed text of the TPPA, otherwise they can reject the deal.  The whole TPPA could thus unravel even after it has been signed by all TPP countries.

Sensitive issues which have been tabled by other TPP countries that are contrary to the original US position include an exclusion from the TPP for tobacco control measures (a proposal championed by Malaysia), and no lengthening of the period for patents for medicines and several other demands against strengthening patents and copyright (a demand made by many countries).

Other sensitive issues that have been taken up by Malaysia include having higher thresholds for value of projects that must be opened up to foreign competition in government procurement; the investor-state dispute settlement system (whereby foreign investors from other TPP countries can sue the host governments in an international court) and new rules to govern what can and cannot be done by state-owned enterprises.

In the give and take of negotiations, the US may water down its position and bend a little to the wishes of others, to secure a deal.  Since the US is known to negotiate within the boundaries of a template, there isn’t much room for it to alter its original positions;  nevertheless there is some room.

Without fast track authority, there can be little confidence that the positions reached after difficult and painful negotiations will be upheld by the Congress, which may demand a re-opening of some agreed texts.  This has indeed happened in the case of some recent US trade agreements that were sent to Congress without fast-track authority.

Secondly, it emerged that a major reason some of the Congress members oppose fast track is their resentment of the process or contents or both of the TPP itself.  Therefore there may not be support for the TPPA in Congress, even if the US positions prevail in the final deal. 

The TPP negotiations and texts are secret.  After years of protest, Congress members can only read specific TPP chapters in their offices but they are not allowed to take detailed notes keep the text, or discuss what they saw.

In 2012, over 130 House Democrats wrote to Obama criticising the secrecy as well as that  the TPP is likely to repeat rather than improve upon the existing US trade template, including weakening the Buy America provisions, providing extraordinary investor-state privileges, and restricting access to medicines in developing nations.  Then last week, 166 House Democrats made public their objection to fast track.

A combination of many Democrats who dislike TPPA and many Republicans who dislike Obama and his presidency will probably torpedo fast track. If this happens, other TPP countries can have no confidence that the concessions they make or that the US makes will satisfy the US Congress.     

The second blow to the TPP negotiations was the leak last week of the 95-page intellectual property chapter by Wikileaks.  The chapter has many sensitive issues, as patent and data exclusivity clauses affect prices and access to medicines, while access to information and knowledge (including in the digital and internet sphere) is affected by copyright.

The leaked text has been studied by many civil society groups, which have already lodged criticisms and protests at the positions of the US, while noting the efforts by some other countries that are seeking to reject or blunt some of the US proposed texts.

This battle of different positions of various countries is revealed by the leaked August 2013 text.  It shows how far apart the Parties still are, raising doubts whether a deal can be struck by December.

The existence of the leaked text, which shows that the US is still (up to August) sticking to its old positions that had already angered health and internet freedom groups, can be expected to fuel even greater criticisms and actions by the civil society.

It is noteworthy that there are many American groups in the forefront of opposing the US positions in the IP chapter, and they have influence over Congress members’ views on the TPP.

These two significant events last week indicate it is difficult to meet the deadline of reaching final agreement to TPP by December. 

On the other hand, with opposition growing, some countries especially the US may intensify their resolve to urgently finish the negotiations before other unexpected developments further damage the chances of concluding a deal. 

Negotiators and leaders of other TPP countries should however take seriously the probably failure of US trade fast track.  Is there a point in continuing committing so much manpower and financial resources to the negotiations when there is little certainty that the sensitive issues agreed to in a deal can withstand the scrutiny and vote of the Congress?