The guts of the Trans-Pacific Partnership Agreement

Senator Bernie Sanders expressed his disagreement with President Obama’s grand trade deal. Organized labor in the United States argued, during negotiations, that the trade deal would greatly benefit corporations at the expense of workers in manufacturing and service industries. The Institute for Economic Policy and the Center for Economic and Policy Research have argued that the TPP could result in job losses and lower wages.

Obama was given fast track authority to negotiate this and other trade contracts with various countries. Obama argued that this authority was important for completing the TPP and then submitting it to Congress for a vote. The Senate will not be able to delay the TPP and lawmakers will not be able to change it. Supporters say the TPP would force China to increase standards and regulations.

The Trans-Pacific Association or TPP has also become politically combative with groups concerned about commercial contracts. The TPP is not the only one, but it is very large and the negotiations are complete.

It began with a commercial contract between Brunei, Chile, New Zealand and Singapore that came into effect in 2006. That agreement separated tariffs, intellectual property and trade policies on most of the goods traded between the countries. The TPP has grown into a gigantic free trade agreement between the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru. The TPP wants to extend economic ties between these nations, cutting tariffs on goods and services and increasing trade to boost growth. The 12 countries have a population of about 800 million and account for 40% of world GDP and 26% of world trade. The agreement is a remarkable achievement given that the very different approaches and standards within member countries mention the special protections that some countries have for certain industries. That makes it roughly the same size as the Transatlantic Trade and Investment Association, another commercial contract in use today. The contract could create a new single market like the EU.

After many years of stagnation in US foreign policy in the Middle East, the Obama administration is focusing on Asia. The TPP is the focus of America’s economic rebalancing and a stage for regional monetary integration. Some say the TPP goes further, in an effort to contain China and provide it with a monetary counterweight in the area. Many parts of the TPP are designed to exclude China. The TPP is believed to be a strategy to keep China contained.

Most of the disapproval of the TPP has been for the mysterious consultations, in which the countries planned to bring big changes for the future of the countries without the knowledge of the voters. But much of what has been exposed involves changes in intellectual property, state property, and international courts. The TPP, as well as other trade agreements, have a wide range of regulatory and legal concerns that cause the agreements to influence US foreign policy and law.

Information on the effect of the TPP on intellectual property has revealed that the United States has been imposing tighter copyright security for music and movies, as well as more comprehensive and durable patents. The TPP would also increase the difficulty of the approval process for manufacturers of generic drugs and expand protections for biological drugs, which has worried members of Congress. Public health and Internet groups have long campaigned against the TPP on these issues because it can restrict public access to knowledge.

Many TPP governments basically own large chunks of their economies. The discussions have been aimed at limiting public support for public sector companies in order to increase competition with the private sector. But some claim it gives companies the ability to sue governments that change policy to favor public services. It will also be said that the TPP will increase competition among nations’ workforces.

After World War II, investors were concerned about investing money in third world countries, where legal systems were not as reliable. They worried that one day an investment would be made in the country only to see a dictator win it back later. Enter the provision called “Investor-State Dispute Resolution” or ISDS. The ISDS was installed in previous commercial contracts, and is installed in the TPP, to incentivize foreign investment in countries with weak legal systems. ISDS could lead to huge penalties if steps are taken to have a country confiscate corporate assets. The provision of ISDS in the TPP would also further tilt the balance of power in the US in favor of large multinational corporations and weaken US autonomy.