Tag Archive | "Trans-Pacific Partnership"

The Trans-Pacific Partnership: Where Do You Stand?

Photo Credit: Saigoneer

On February 4, 2016, the Trans-Pacific Partnership, or “TPP”, was signed by the United States and eleven other countries as one of the most ambitious international trade deals in world history. Through its seven years of grueling negotiations, the criticism of this deal has been, for the lack of a better term, loud.  The TPP is a gargantuan, multi-national trade agreement with a lot of complicated international trade jargon; and as such, there have been a lot of choice words tossed around relating to it, not all of which is credible. Thus, what I am going to try to do is break down the pros and cons of the agreement:

 

Pro:

It will create jobs in the United States and improve the economy.

Economists forecast that the TPP will increase exports by 5 billion dollars, money that will be used to both create business, jobs, and wealth in the United States. It will accomplish this by removing roughly 18,000 tariffs in the Pacific, reducing costs and allowing American businesses to generate higher returns on their sales. While this may seem like a benefit we cannot afford, consider the fact that roughly 80% of tariffs with these 12 countries have been withdrawn prior to the implementation of the TPP. This will prove fairer to American business and make it easier for them to compete. US workers are expected to see a raise in income of about 77 billion dollars.It will help the American automotive industry by reducing the protective tariffs on automobiles in countries like Japan, making it easier to sell American cars to them and further aiding the American automobile industry.

It has strategic value against China.

If you haven’t notice, China is the elephant in the room of this deal. More specifically, they are the elephant outside of the room, as they were purposefully left out of the deal. This economic push has been a part of the Obama administration’s pivot to the Pacific, finding that China’s leverage over the United States has been increasing every day. This deal forms a unified front to compete against China economically in the region, led by the United States. It will create allies, and it will isolate China, preventing them from throwing their weight around during negotiations, and making it more likely that they will be careful not to rock any boats in the foreseeable future. China’s strength comes from its economic girth, and the threat of replacing the Chinese market with others will force it to negotiate from a weaker position in the international arena. These benefits are almost unknown, but it is agreed that it will mostly be positive for the United States.

It helps poor people in poor countries.

State-owned enterprises must comply with trade standards that mandate protecting their workers. Effectively, many countries that did not observe or allow unions to form before, must allow unionization now in order to comply with the TPP. Furthermore, most of these countries will observe benefits to poorest people, allowing them to find suitable, better paying jobs than before the TPP’s implementation. While NAFTA did hurt a considerable amount of people in Mexico, it paled in comparison to the kind of employment requirements the TPP will mandate of its parties. The truth is, measuring NAFTA’s effects on Mexico as an example of what the TPP will do won’t do the ambitious agreement justice. This is truly a whole other animal. For more information on human rights under the TPP, click here for another article written by one of our staffers, Jeremy Goldstein.

It is environmentally friendly.

All countries have agreed to cut down on wildlife trafficking, both marine and on land. It prevents environmental abuses. If a country does not comply with its duties under the TPP, they will be subject to “trade retaliation”, which is fancy word for voiding the parties’ trade responsibilities to the injuring country until they comply with the TPP. So effectively, countries that aren’t doing their fair share to save the Earth among the TPP will be subject to losing their privileges under the agreement. While it might be hard to imagine countries bring claims against others for these environmental violations, it would allow the party to implement trade barriers against the violating country, scoring points with local interest groups. There are reasons to do it, and rest assured it will happen. The frequency is the only real question on everybody’s minds, let alone how often violations will even occur.

Con:

It will kill jobs in the United States, and most of the benefits will be felt by the richest.

While there will be gains for workers across the board in the United States, most of that gain will go to workers making more than 88,000 dollars a year. This is partly because of the stronger international protections being offered to intangible property rights, making it even easier for the owners of that property to reap larger gains. Moreover, just like with NAFTA, there will be US jobs that will ship overseas, it is a major sacrifice of any trade deal. Particularly, manufacturing and textiles will feel the brunt of the move, but no industry will be free either. Even the service industry will send some jobs overseas. Overall, trickle-down economics is the major argument in favor of the TPP, but its application in reality has been brought to question by major economists including Robert Reich and Jeffery Sachs.

Foreign businesses will be able to sue the United States outside American courts.

It might surprise many to learn that this particular provision was implemented by American companies specifically. The primary reason behind investor-state arbitration provisions in trade agreements is to circumvent corruption. Corrupt governments make lawsuits practically impossible to sustain, forcing foreign companies trying to enter those markets to incur immeasurable costs. These provisions allow businesses to circumvent corrupt government practices and try laws under fairer arbitration tribunals. The arbitration award is granted to the business if the country was found to be in violation of the TPP, and the award is enforced by allowing all signatories of the treaty to implement trade restrictions as “trade retaliation” for not paying damages, along with measures under the New York Convention. This may seem like a huge win for big business, but it makes it easier for smaller businesses to enter foreign markets as well by reducing the costs of potential litigation in a corrupt country. While the United States will be suable by foreign businesses, it is worth noting that under NAFTA, the United States has never lost an investor-arbitration claimIf anything, the bigger potential for abuse will be against foreign governments who attempt to implement good policy in the name of public welfare, but they get attacked because of the heightened costs to foreign businesses. While that abuse remains, exceptions to investor-state arbitration were put into the TPP, such as in the tobacco industry. Foreign businesses will be allowed to use investor-state arbitration to challenge American laws that have damaged their businesses.

With that said, the only way to implement such a provision is to accept the standard ourselves. While the United States will be suable by foreign businesses, it is worth noting that under NAFTA, the United States has never lost an investor-arbitration claim. If anything, the bigger potential for abuse will be against foreign governments who attempt to implement good policy in the name of public welfare, but they get attacked because of the heightened costs to foreign businesses.

Intellectual property enforcement will prevent the poorer countries in the TPP from getting the drugs they need.

It should be noted however that this was a major obstacle that the US had to overcome with some of the poorer countries in the TPP. In order to surmount it, the US had to agree to shorter patent protection time periods, reducing the typically 12 year period to five to seven, depending on the patent. But that period could still prove to be too long, and many foreign governments simply cannot afford to pay for the exorbitant prices of some of these pharmaceutical drugs, even at discounted rates. While businesses under the TPP have agreed to continue to allow some creation or marketing of generic medicines using their patents, the intellectual property section of the TPP is one of the heftiest chapters and it remains to be seen how the interactions between all of these intellectual property rules will play out.

The deal will not protect the environment in practice.

Perhaps the most significant drawback to the TPP will be the environmental effects in practice. While each and every country will be required to comply with the environmental provisions of Chapter 20, the countries themselves will have to bring violations of the TPP’s provisions to a dispute resolution body. In fear of retaliatory or cross-claims, countries may be hesitant to actually bring violations of some of the provisions if the cost of adjudicating is simply too high in the short-run relative to the long-term damaging effects of environmental pollution. Essentially, this will also mean that businesses will find more pressure to compete internationally, forcing them to lower their costs. Environmental regulation can be costly to comply with, and many businesses will likely try to skirt around the rules as much as possible to lower costs.

To read the entire text of the TPP in full, click here. For a summary of each chapter, click here. Now that you have all the information, decide which side of the debate you stand on and feel free to comment below.

 

 

 

James Harmoush is a 2L at the Sturm College of Law and the Online Managing Editor of the Denver Journal for International Law and Policy.

Posted in 1TVFA Posts, 2Featured Articles, DJILP Staff, James HarmoushComments (0)

Critical Analysis: Economic Espionage and International Law

Economic espionage involves a state’s attempts to covertly acquire trade secrets held by foreign private enterprises. Many countries have long considered economic espionage important to national security and economic development. Several economic trends have escalated the risk and prevalence of trade secret theft, including the globalization of trade and interconnected supply chains, the growing important of innovation and information technology to competitiveness, and the rise of overseas markets as a critical source of production and economic opportunity. Advancements in technology, increased mobility, rapid globalization, and the anonymous or pseudonymous nature of the Internet create growing challenges in protecting trade secrets. This is a cause for concern in countries worldwide, and is increasingly a point of contention in diplomatic and trade relations between countries. General Keith Alexander has said that the bleeding of industrial information and intellectual property via cyber espionage represents the “greatest transfer of wealth in history.”

Firms feel that China poses one of the highest threats of IP theft

Firms feel that China poses one of the highest threats of IP theft

Worldwide, cyber espionage cost an estimated $1 trillion in expenses last year alone. On average, trade secrets are worth two-thirds of a company’s information portfolio. For knowledge-intensive industries, trade secrets are worth even more—up to 70 to 80 percent more, on average. Intellectual property theft costs American companies $250 billion annually, while cyber crime rings in at more than $338 billion total. That means, on a yearly basis the annual theft of intellectual property from U.S. businesses is worth nearly the same amount as the current value of exports to Asia. A European Commission study shows that over the past ten years, approximately twenty percent of responding European companies has experienced at least one attempted or successful theft, and nearly forty percent of responding companies believe that they are more at risk in the past ten years than ever before. In 2007, Japan’s Ministry of Economy, Trade, and Industry conducted a survey of 625 manufacturing firms and found that more than thirty five percent of those responding reported some form of technology loss. South Korea approximates economic espionage damage has more than tripled from 2004 to 2008. Sixty percent of these victims are reported to be small- and medium-sized businesses. Germany’s Federal Office for the Protection of the Constitution appraises the value lost by German companies to be between $28 billion-$71 billion annually due to foreign economic espionage. Economic espionage also costs Germany between 30,000 and 70,000 jobs per year. A Canadian report claimed in 2010 that eighty six percent of large Canadian corporations had been victimized, and that cyber espionage against the private sector had doubled in the past two years. The United Kingdom estimates that attacks on computer systems, including industrial espionage and theft of company trade secrets, cost the private sector $34 billion annually, of which more than forty percent represents theft of intellectual property such as designs, formulas, and company secrets.

There is no international treaty specifically governing economic espionage. The desire to combat economic cyber espionage confronts a lack of international law on espionage and economic espionage. Although a victim country could assert that spying violates the principles of sovereignty and non-intervention, state practice has accepted state-sponsored espionage such that these appeals are not serious claims. International trade law, however, does provide a minimum for protection of trade secrets as an intellectual property right. In particular, trade negotiations and dialogues can offer effective means to elevating the importance of trade secrets protection, raising global standards, and promoting more effective deterrence. Under the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), WTO members are required to protect intellectual property rights, which include trade secrets. TRIPS Article 39 requires WTO members to protect undisclosed information that is secret, is commercially valuable because it is secret, and has been subject to reasonable steps to be kept secret. The TRIPS Agreement also requires that members make available civil judicial procedures concerning the enforcement of any intellectual property right covered by the Agreement. Also, TRIPS allows  “criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed willfully and on a commercial scale.” Aside from failing to enforce its own laws, a government may be pursuing an “indigenous innovation policy,” in which tech handovers are a prerequisite to market entry. For example, the Chinese government has measures and policies that condition market access or investment in China on the transfer of intellectual property from foreign to domestic entities.

Global firms feel that the threat of cyber espionage and trade secret theft are higher coming from China, Pakistan, Russia, and India than from the rest of the world because of corruption and inadequate protections for intellectual property. According to a survey by the U.S. International Trade Commission (ITC), only 0.6 percent of U.S. firms that reported material losses due to trade secret theft between 2007 and 2009 in China pursued any trade secret misappropriation proceedings in China due to imprecise standards, a lack of deterrent penalties, and a host of procedural difficulties. Only an average of thirty percent of trade secret cases brought in Shanghai Higher People’s Court reach conclusions and fewer than half of those result in findings of infringement. The most troubling form of economic espionage is state-sponsored espionage that obtains information from private-sector companies located outside their territories.

Even if there were a clear rule that a victim could show was being violated, the victim nonetheless has to establish the identity of the responsible party. WTO cases have yet to involve accusations against government-sponsored espionage, so the difficulty of doing so is untested, and therefore unpredictable. It is not clear that a WTO member could satisfy this burden by relying on evidence from private-sector entities such as The Mandiant Report and without revealing counter-intelligence means and methods. This is why the state privilege justification of “national security” can sometimes be a bigger burden than a benefit. It is invoked often, and the public has no way of determining the feasibility of the claim. The general public has no idea what their government is doing in the name of national security because it is classified. Therefore, challenging a government’s cyber espionage is particularly difficult because a government will be reluctant to hand over classified information that can be used as evidence against it, and it will claim national security as the basis for withholding such information. Additionally, a government’s participation in spying sends the message that economic espionage is acceptable and lawful in that country, which companies think means that there can be no state responsibility under international law.

The U.S. is currently negotiating two major trade agreements. The Trans-Pacific Partnership Agreement (TPP), which involves 11 other countries in the Asia-Pacific region, and The Trans-Atlantic Trade and Investment Partnership (T-TIP) with the EU both afford opportunities for cooperative advancements in the protection of trade secrets that would help to establish a stronger and more uniform standard worldwide. The U.S. has also been talking with China about a Bilateral Investment Treaty, which allows equitable standards, a better market access for investors, and a forum for dispute resolution between countries. These kinds of talks are definitely a step in the right direction, but it is going to take more than that to establish a norm workable on a widespread level. Time is not something that the economy can afford though, with the ever-increasing expenses caused by escalating cyber snooping and violations of intellectual property rights.

Katelynn Merkin is a 2L at the University of Denver and staff editor on the Denver Journal of International Law and Policy

Posted in 1TVFA Posts, 2Featured Articles, DJILP Staff, Katelynn MerkinComments (0)

Critical Analysis: Tobacco and Trans-Pacific Trade

The United States, Canada, Mexico, Japan, Australia, South Korea, Vietnam, and five other countries stand to gain a great deal from the Trans-Pacific Partnership (“TPP”), a potential lucrative regional trade agreement. The agreement would further lower tariffs and other trade barriers to commerce. However, countries have not been able to agree on how the issue of tobacco should be settled. Specifically, countries have not been able to agree on the extent to which countries should be allowed to regulate the sale of foreign tobacco products.

A majority of future tobacco related deaths will be in developing countries. Image Source: Unconventional Health

A majority of future tobacco related deaths will likely be in developing countries. Image Source: Unconventional Health

There is a clear consensus in the scientific community and public health-oriented organizations that tobacco use leads to a wide variety of health issues. According to the World Health Organization (“WHO”), there are currently more than one billion smokers in the world. Of these one billion, tobacco kills nearly six million each year, with 600,000 deaths due to second-hand smoke. This high level of tobacco use is leading countries down a dangerous path that will result in more than eight million deaths annually by 2030. Thus, the need for tobacco regulation has never been more pressing.

Because of the need for tighter tobacco controls and a disturbingly high level of illicit trade in the product, Malaysia proposed a special “carve out” exemption in the TPP for tobacco. This would allow countries that are parties to the TPP to set their own potentially stiff regulations on tobacco and exempt them from broader potential trade restrictions. This type of exemption could also mean that “health considerations could take precedence over expanded trade.” As tobacco is a uniquely dangerous agricultural product, many, particularly developing countries, have welcomed the proposed exemption.

While the Obama administration initially led many to believe it would support such types of strong measures, the administration recently proposed its own weak measure in regards to tobacco. The United States proposal “cites tobacco within the standard public health and safety exception that appears in U.S. trade agreements, but…no longer includes other tobacco-specific protections.” This means that companies would still be able to challenge public health, safety, and environmental regulations. Although some claim that there is language included within the proposed TPP that would “reduce the likelihood of those changes prevailing,” the fact of the matter is that tobacco presents so many health and regulatory concerns that it cannot and should not be afforded the same status as other products.

The tension between the free trade and the need for control of dangerous products such as tobacco has never been clearer. While tobacco is still legal, and thus cannot be limited to the extent many would dream of, the tobacco industry has greatly expanded into developing countries’ markets. Nearly 80 percent of all future deaths caused by tobacco will likely be in these developing countries. The United States has a unique opportunity to make great strides in promoting public health and leave the tobacco industry behind in negotiating the TPP. However, the recent U.S. TPP proposal shows that big tobacco business still controls much of the world economy, and that business will continue to be able to challenge helpful and necessary tobacco regulations under the guise of free trade.

 

Bailey Woods is a 3L and Candidacy Editor on the Denver Journal of International Law and Policy.

Posted in 1TVFA Posts, 2Featured Articles, Bailey Woods, DJILP StaffComments (0)

Critical Analysis: Trans Pacific Partnership Negotiations Resume

Barack Obama speaks at the Trans-Pacific Partnership Leaders meeting at the Hale Koa Hotel during the APEC Summit in Honolulu, Hawaii, November 12, 2011. (American Enterprise Institute)

Barack Obama speaks at the Trans-Pacific Partnership Leaders meeting at the Hale Koa Hotel during the APEC Summit in Honolulu, Hawaii, November 12, 2011. (American Enterprise Institute)

The next round of negotiations on the proposed Trans-Pacific Partnership (TPP) will be held in Singapore this month. This will be the 16th round of negotiations, and they will be held from March 4 to March 13, just seven months ahead of the self-imposed deadline for a deal. The Office of the United States Trade Representative regards the potential treaty as a comprehensive, high standard, next-generation trade agreement that would create the largest free trade area in the world. The provisions reflect an aggressive free trade policy and have drawn comparable criticism.

The United States’ participation in the TPP furthers the United States’ free trade policy strategy that began with the North American Free Trade Agreement (NAFTA) in 1994 and continued through free trade agreements (FTAs) negotiated under George W. Bush.  The strategy is referred to as “competitive liberalization.” These FTAs were created contemporaneously with a number of other free trade agreements within the Asian Pacific Region.  Although the United States currently has free trade agreements with several of the negotiating countries, its involvement in negotiating the TPP began in 2009, following the stall of the Doha Round.

There are currently eleven countries negotiating the TPP, including the U.S., Canada, Singapore, and Australia. The intellectual property, investment/financial services, and dispute resolution components are the most controversial. The stated purpose of the TPP is to enhance trade and investment among partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs. Some commentators believe the agreement is intended to counter China’s role in regional integration and contain China’s economic rise.

The TPP has met with criticism one would expect of a large multilateral free trade proposal, exacerbated by the public’s limited access to the negotiations.  Negotiations are open only to stakeholders, which predominantly consists of large corporations as well as small businesses. The potentially stringent intellectual property provisions and investment protection, which go beyond standards found in other international agreements (such as TRIPS and GATS), in particular, have been cause for concern. Some countries’ negotiators are reluctant to agree to far-reaching text proposed by the United States.

The TPP has also been subject to the standard criticisms of liberalization measures, such as the undue influence of corporate interests and the unfair exploitation of labor. The familiar complaints may be explained by the dichotomy of classical versus Keynesian economics. Classical economics holds that economic resources will flow to where they are most efficiently utilized in the long run, whereas John Maynard Keynes famously remarked, “In the long run, we are all dead.” As the global economy shifts to favor higher skilled labor and long-term, capital intensive projects, nations will realize that protecting domestic labor from foreign interests is a losing proposition and will only result in a stagnant economy akin to Venezuela’s. The world should expect more of these large free trade proposals in the near future: just this February, Secretary of State John Kerry called for a free trade agreement with Europe. Meanwhile China, Japan, and Korea have been discussing a free trade agreement of their own.

Although these free trade policies show no sign of subsiding, citizens around the world should remain vigilant in protecting issues overlooked on the international stage. Consequences from the export of subsidized commodities or the environmental impact of mining or manufacturing should continue to be vigorously exposed and publicized. Although the digital revolution has increased the pressures of globalization, it has also given average citizens the tools to unite and fight injustice.

 

 Alex Milgroom is a University of Denver 2L and staff editor of the Denver Journal of International Law and Policy. Alex is currently studying abroad at Temple University Japan.

Posted in 1TVFA Posts, 2Featured Articles, Alex Milgroom, DJILP StaffComments (0)

Critical Analysis: The Trans-Pacific Partnership and its Discontents

Not everyone likes trade agreements

President Obama is touting the Trans-Pacific Partnership (TPP) as a 21st Century trade agreement, a model for everything from industrial goods to Internet services. The principal purpose of which, like the North American Free Trade Agreement (NAFTA), is to increase trade and remove restrictions on the flow of goods and capital between member states. So far, the negotiations include the U.S., Australia, New Zealand, Malaysia, Brunei, Singapore, Chile, Peru, and Vietnam. Last week, President Obama and U.S. Trade Representative Ron Kirk announced to Congress that Canada and Mexico, the U.S.’ largest trading partner and second largest export market respectively, will join the negotiations as well.

The 13th round of talks concluded this week on July 10th in San Diego after a week of negotiations, with many officials lauding “significant progress” on issues from copyright protection, agriculture products, state-owned enterprises, and financial services. Once an agreement is reached, it is poised to become a trading bloc representing 686 million people and with a total GDP of $20.5 trillion.

The prospect of increased profits and jobs notwithstanding, 132 Congressmen wrote to U.S. Trade Representative Ron Kirk expressing their concern that the negotiations lack transparency. Congressman Darrell Issa, a Republican from the San Diego area and Chairman of the House Oversight and Government Reform Committee, sought to attend the talks in San Diego (a rare request from a Congressman) but was denied access to anything beyond generic public events. As with most trade agreements, the negotiations occur behind closed doors with very few given access to the agreement’s text until it is finished. Congress, however, believes that in such a large and unprecedented trade agreement, too much is left in the hands of negotiators and the 600 special interest lobbyists who do, in fact, have access to and influence over sensitive negotiations materials.

A “Stop TPP” demonstration was organized to bring attention to the treaty negotiations through an ambitious array of protest marches, rallies, press conferences and teach-ins. The coalition included union leaders, Occupy San Diego, Public Citizen, and Global Trade Watch. The AFL-CIO has also voiced its opposition to the TPP. Their concern? Again, that special interests and corporate lobbyists are selling America’s future (and their jobs) across the Pacific for the sake of increased profits.

Although the TPP is far from finished, it is gaining notoriety especially since Canada and Mexico became negotiating partners. At the moment, Japan and South Korea have observer status, however; it is likely these two countries will also join in the near future. The TPP may one day encompass the entire pacific-rim with the exception of – you guessed it – China. China has not been invited to join the talks, nor do the current negotiating parties plan on extending one. Many see this is an American move to contain China economically. Whatever the motive, China’s absence does give one pause. And it does make one think that profits are not the only motive involved.

 Michael Cox is a rising third-year law student at the University of Denver, a Senior Editor for the View From Above, and a Candidacy Editor for the Denver Journal of International Law and Policy.

Posted in 1TVFA Posts, 2Featured Articles, DJILP Staff, Michael CoxComments Off on Critical Analysis: The Trans-Pacific Partnership and its Discontents


University of Denver Sturm College of Law
Visit the DJILP Newsroom

Posts by Date

June 2017
M T W T F S S
« Apr    
 1234
567891011
12131415161718
19202122232425
2627282930  
Resources