Also, maybe of interest, this piece on the recently announced (but still secret) Trans-Pacific Partnership Agreement.
by John Q on October 6, 2015
Also, maybe of interest, this piece on the recently announced (but still secret) Trans-Pacific Partnership Agreement.
{ 28 comments }
Tim Worstall 10.06.15 at 8:46 am
Yup:
“Deals of this kind are, quite simply, the wrong way to manage our international trade and investment. As we did with tariffs and quotas, we should unilaterally scrap any restrictions we judge to be not in our national interest, and leave it to others to do the same.”
Although I take that to the extreme of free trade being in that national interest so let’s unilaterally scrap all and any tariffs and quotas.
Weaver 10.06.15 at 12:34 pm
A worthwhile restatement of the obvious, but I can’t help thinking constantly decrying the subversion of democracy and attack on the rights and interests of everyone except corporations as “bad policy” does a lot of our leaders’ work for them in maintaining their pretence that these aren’t precisely the objects of the exercise, rather than unfortunate necessities for achieving paltry gains for the agricultural sector.
jake the antisoshul soshulist 10.06.15 at 1:41 pm
At least the TPP does not call itself a “free trade agreement.” Though truth in advertising would have it called the Trans-Pacific Mercantilist Partnership. Just another reason to see that the Neo-liberals are full of shit.
Seems like a lot of BS to get the various actors in agreement to squeeze China.
ifthethunderdontgetya™³²®© 10.06.15 at 2:51 pm
Seems like a lot of BS to get the various actors in agreement to squeeze
Chinaall but the 1%.That’s what is going on here, Jake. It’s not just the TPP, it’s also the TTIP and worst of all, TISA that our plutocrats and their servants want approved.
China is the reddest of herrings.
~
A H 10.06.15 at 4:00 pm
“Until and unless the TPP comes into effect, there is no ISDS clause in trade agreements between Australia and the United States. But this was no problem for Phillip Morris: they reincorporated themselves in Hong Kong, which does have such a clause in its agreement with Australia. ”
This is basically why I am ambivalent about the TPP. The realistic counterfactual to the TPP is a mess of bilateral trade deals that will likely be even less transparent than the TPP.
Lyle 10.06.15 at 8:06 pm
“China is the reddest of herrings.”
And that taint of commie redness makes it all that much easier to demonize, don’t it.
ifthethunderdontgetya™³²®© 10.07.15 at 4:33 pm
It is true. Which is why no one should be ambivalent about these treaties.
If they were good for us, why are they secret from all but the corporate lobbyists and their lackeys in government?
~
Brett Dunbar 10.07.15 at 5:52 pm
The article in off guardian is a hit piece and manages to seriously misunderstand the text it quotes. The four year confidentiality applies to the negotiating documents only. Not the final text. That will be published before ratification.
It is both incorrect and rather misleading to state that investors cannot be sued under ICSID (the arbitrator proposed under TPP). Incorrect as two states (Gabon and Romania) have sued investors there. And misleading as states can and usually do sue under domestic law.
It isn’t possible to appeal a ruling from ICSID but that’s not surprising as ICSID acts as a final court of appeal, any legal system has a point at which all appeals have been exhausted.
Bruce Wilder 10.07.15 at 7:41 pm
any legal system has a point at which all appeals have been exhausted
An actual legal system is subordinate to a legislature and dependent on a superior executive, both of which are institutionalized creators of the state.
Brett Dunbar 10.07.15 at 8:03 pm
In this case the legal framework is established by the multi state treaty and can be amended in a similar manner. The states by signing up to an arbitration process have made a credible commitment to keep to the treaty.
Keeping the drafts confidential can avoid political problems with trade offs that are unpopular with some special interests. Individual businesses often want to keep specific bits of protectionism which favour them even though they are harmful overall.
Matt 10.07.15 at 8:42 pm
Keeping the drafts confidential can avoid political problems with trade offs that are unpopular with some special interests. Individual businesses often want to keep specific bits of protectionism which favour them even though they are harmful overall.
$100 says that “standing up to special interests in favor of the common good” will not be the most controversial thing revealed when/if all the negotiating documents are finally public.
Bruce Wilder 10.07.15 at 8:49 pm
In this case . . .
Yes, in this case, the legislature is to be disabled for all but ceremonial purposes, the supremacy of the constitutionally established judiciary disregarded, and the national executive rendered a supplicant. But, hey, what could go wrong, right? The agreement can be modified by the same secret, special-interest-dominated process that created it, in a multi-year process that may never be initiated.
One would think Greece’s experience with the Euro would educate, but I suppose that would require paying attention.
Individual businesses often want to keep specific bits of protectionism which favour them even though they are harmful overall.
I suspect that the TPP consists of very little else. If there is a case for a general benefit of any significant and unambiguous magnitude, to any of the nations involved, it is yet to be demonstrated.
Billikin 10.07.15 at 10:11 pm
Brett Dunbar: “In this case the legal framework is established by the multi state treaty and can be amended in a similar manner.”
It’s not a treaty, under US law. In the US a treaty requires ratification by 2/3 of the Senate. Treaties have such a high requirement because they become the law of the land, amounting to a relinquishment of sovereignty to some degree. IMO, unappealable arbitration which favors foreign businesses or investors over domestic ones, not by result but by design, would be unlikely to be ratified by the Senate.
Brett Dunbar 10.07.15 at 10:21 pm
The evidence is that you get significantly more trade when a treaty with some kind of dispute resolution is in force than you do otherwise.
http://blogs.worldbank.org/trade/bit-far-geography-investment-agreements-and-fdi
Basically the mere existence of an enforcement mechanism gives investors confidence to invest in unfamiliar markets. The treaties establish a set of ground rules and the enforcement mechanism gives reassurance that the states will actually abide by them.
The history of these bilateral and multilateral trade treaties is that they have reduced and eliminated trade barriers. Tariff barriers on most products are now very low. The non-tariff barriers are more of a problem.
Brett Dunbar 10.07.15 at 10:34 pm
The US is a party to numerous treaties which have ISDS procedures such as NAFTA. That passed the senate 61-38.
Bruce Wilder 10.07.15 at 11:21 pm
“Trade barriers”? That’s not what NAFTA’s ISDS provisions are about — NAFTA is about protecting investment opportunities and the profits that accrue to the investors. It is not about securing economic benefits to any other class. And controversial NAFTA ISDS cases are usually about a business claiming that a state or local government has “expropriated” its investment opportunity in the course of exercising its regulatory discretion in protecting public safety and the environment.
The rhetoric of “free trade” is wholly misapplied to TPP, which is all about protecting investors and business profits, at the expense of the public and the ordinary public purposes of government.
John Quiggin 10.07.15 at 11:24 pm
ISDS isn’t much of a concern for the US. The tribunals are politically smart enough to know that ruling against the US would put them out of business, which is why they have never done so. That in turn imposes some constraints on how far they can go against other First World countries, particularly with a non-US plaintiff.
Cian 10.08.15 at 12:15 am
#17 – I’d hardly call that evidence. They asked some people some questions that we’re not privy to. Apparently it proves the thing that they already believed.
Maybe there’s hard evidence that they do make a difference, but I’ve yet to see it.
Brett Dunbar 10.08.15 at 1:59 am
@ 21 It makes a general reference to the literature and observes that there is more trade between distant and dissimilar states which have trade agreements than those that don’t.
@19 Political risk is in itself a significant trade barrier. The investors are the people actually doing the trade. It somewhat incidentally benefits the rest of the community.
Cian 10.08.15 at 2:07 am
@22 – yes, but your point was about enforcement mechanisms. This paper suggests that the evidence is not really there:
https://mpra.ub.uni-muenchen.de/2255/1/MPRA_paper_2255.pdf
And while an argument can be made (even if it’s hard to support with actual evidence) that it matters for investment flows to developing countries, it’s hard to be see how it can be made about developed countries. The US has a pretty robust legal system. Certainly more robust than some fly by night arbitration process.
Layman 10.08.15 at 3:11 am
“The investors are the people actually doing the trade.”
Do you mean to say that the people who actually make the traded products aren’t ‘doing the trade’, or is it that the products make themselves?
taj 10.08.15 at 10:01 am
@13 – Looks like all the usual suspect “special interests” were already involved as industry advisors in the negotiations, so which special interests could you possibly mean?
Brett Dunbar 10.08.15 at 1:07 pm
@25 They lobby politicians anyway. They also want different things. Some want to maintain barriers (declining industries with high barriers to entry) others want to cut barriers (competitive and successful industries). Where barriers to entry are low incumbents cannot exclude new entrants and cannot therefore maintain abnormal profits. The main areas where relatively high tariffs remain are agriculture and textiles, the TPP is intended to reduce these. The USA has high tariffs on agriculture and substantial non-tariff barriers on services, these are both set to be cut. Japan will reduce barriers on cars.
@ 24 The businesses employ people as they have a market in which to sell.
@23 ICSID is hardly a fly by night arbitration process, it has been established for many years and currently has 158 members. It isn’t notably biased, there may be a slight bias in favour of governments in that all of the arbitrators are picked from an approved list nominated by governments.
The biggest beneficiary of TPP by far looks set to be Vietnam (about 10.5% additional GDP according to the Peterson Institute) due to the reduction of barriers erected against clothing. Malaysia is the second largest beneficiary (5.5%). The USA probably gains the least (0.4%).
Cian 10.08.15 at 7:50 pm
@26
ICSID is hardly a fly by night arbitration process, it has been established for many years and currently has 158 members.
Just to be clear we’re talking about an alternative legal system to the US/Australian courts. You’re saying that this is comparable in size, sophistication, robustness. Well that’s certainly AN opinion I guess.
It isn’t notably biased In your opinion. The opinion presented in one of the articles linked to in the OP is different. Of course they present actual evidence and arguments, so what do they know.
As for predictions as to who will benefit. Previous estimates for trade treaties have not been particularly accurate. And with all these things it depends upon the level of granularity. In the US it will have a distributive affect. Multinationals, and those with serious ownership stakes in them, will do well. If they do well, then by your math the rest of us will do badly. Good to know.
dax 10.09.15 at 8:32 am
As I remember other countries wanted to put into the final text a clause that said plaintiffs who sued and then lost could be penalized monetarily. The U.S. was against this, because the whole point of the U.S. system is that the wealthy can win even before a case is tried, because opponents unwilling or unable to sustain the financial burden of resistance don’t resist very well. Is this true and does anyone know what happened with the clause? Also under the present legal framework, if and when PM loses in its case against Australia, is it possible that it will be adjudged a fine for pushing a frivolous case?
John Quiggin 10.09.15 at 10:03 am
In Australia, the government produced estimates of a 6 per cent benefit from our deal with the US a decade ago. Every another analysis produced estimates too small to be detected (about evenly matched between tiny gains and tiny losses). Guess who was right?
Jason Weidner 10.09.15 at 10:31 pm
The latest on the IP provisions in the final TPP text: https://www.eff.org/deeplinks/2015/10/final-leaked-tpp-text-all-we-feared
Brett Dunbar 10.12.15 at 3:37 pm
@27 Well they slightly misstated the procedure and alleged, but didn’t actually demonstrate, bias.
Each member state nominates up to four members of the panel of arbitrators. In a dispute the complainant and the respondent nominate one arbitrator each and the president of the panel must be agreed by both. None of the arbitrators can be a national or compatriot of either party. All of the arbitrators must have been appointed by a government, businesses cannot nominate to the panel. It would be possible for an arbitrator who always sided with states to be on the panel while a person equally biased the other way would be unlikely to be nominated by their government. Given the selection method you would expect a lot of 2-1 rulings
There doesn’t seem to be much evidence of bias of the cases that have actually reached judgement.
TPP looks likely to benefit the poorer countries much more than the rich ones, as they have comparative advantage in areas where high tariffs still exist, due to lobbying by rich country agricultural and textile interests. They are also the same countries that lack a robust independent legal system.
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