The acronyms are confusing enough to outsiders. TPP is the Trans-Pacific Partnership, sponsored by the US, bringing together 12 Pacific-rim countries representing 40% of the global economy. TTIP is the Transatlantic Trade and Investment Partnership, potentially linking the US to the European Union. This is President Obama’s current obsession but Chancellor Merkel’s domestic policy nightmare. CETA, the Comprehensive Economic and Trade Agreement, is Harper’s unfinished dream from which Canada now seems to have awoken. Popular support for it in the EU seems to have cooled, dismissing a massive Canadian re-write of the draft investor safeguards that Europeans opposed.
Why are all these supposedly “no-brainer” trade deals now shunned, even sometimes by an original sponsor? In today’s politics, TPP looks unlikely to be ratified even by the US since the aspiring presidential candidates all say no to the deal.
This is largely because these are not the old-fashioned “free” trade, tariff cutting deals, but much more about geo-politics, about the current US “in” crowd, and, of course, about protection for commercial interests. Multinationals, overwhelmingly American, insist on TPP rules allowing them to sue for compensation or even to block government policies in other TPP countries that protect their citizen-consumers on issues like product safety and cigarette advertising. President Obama saw the TPP as the ultimate trade deal, bringing the world trading system firmly under the US rulebook. The special acronym here is ISDS — Investor–State Dispute Settlement, with no “C” for Citizens.
Such “no brainer” trade liberalization, however, is no economic bonanza. A recent C.D. Howe study on the TPP suggests that, over the years, trade liberalization has already yielded most of the available tariff reductions, mainly through traditional multilateral fora. Remember the World Trade Organisation? Remember GATT? The big TPP trade gains would go to the US and Japan. Canada’s gains would be modest, whilst smaller Latin American members would get just crumbs. Not to mention the likely collateral damage in Canadian sales and jobs in such sectors as auto and dairy.
Some of the TPP’s problems come from its geo-politics. At a time when we talk of global partnerships, the TPP is about an old “divide and rule” mentality. The US is in a struggle with China for global, especially Asian, economic domination. TPP is a club for friends of the US and those, like Vietnam, fearing the emergence of China as the new superpower. Following the regional tradition, those excluded, while able to join later, will first need to “kowtow” to the big powers — Japan and the US.
“Forget it” is the Chinese response. It is busy promoting its own Asian trading club, as well as its $100 billion Asian Infrastructure Investment Bank. TPP is not proving to be good geopolitics.
For many, the major flaw in the TPP — the same poison pill for CETA and the TTIP — is the US-designed investor-dispute-settlement mechanism. Such mechanisms have been popping up in many other trade deals, including NAFTA. They were a favourite in Mr. Harper’s mini-bilateral trade deals as we sought to protect our private foreign investors, often resource companies wanting to undermine impediments, such as a “partner” country’s environmental and labour rights legislation. Canada, both federally and provincially, has been burnt by US corporate lawsuits under NAFTA. The most scandalous use of ISDS rules are cases where US tobacco giants have sued small developing countries for introducing health regulations designed to reduce smoking.
The other hot topic is patent protection for international pharmaceutical giants. Despite global concern about rising drug prices, a major TPP negotiation battle was over US insistence that drugs should get an extra boost of protection — their politely termed “intellectual property rights.” These “rights” de facto block the introduction of lower-priced generics drugs. Here even other TPP partners said “enough” and united to force the US to partially back down.
These TPP setbacks expose the need for new, much more inclusive, people-centered processes for setting global rules. These tactics predate TPP. Recall the global public explosion over US attempts, defeated in the end, in the WTO back in 2002, where Big Pharma tried to propose new trade rules that would cut off access to affordable generic HIV drugs produced in countries like India? And now the same thing is being repeated in the ASEAN context.
All too often, these trade agreements are negotiated in secret over several years. These are complex battlegrounds occupied by trade bureaucrats and lawyers/lobbyists representing multinational corporations. What we know now about TPP is very incomplete and comes from such sources as WikiLeaks. Even within the governments negotiating these deals, there is secrecy and so-called Chinese walls to effectively block debate. Did our provincial health ministries agree to the implicit huge increases in drug costs they now might face? Did the trade negotiators consult their own governments’ development agencies or NGOs about the potential human and budgetary damage to the world’s poorest countries?
Where is Canada in all this? We begged our way into the almost-finished TPP deal and were told to simply “take it or leave it.” On CETA, we pleaded for years for a deal and finally the EU offered to consider one. Then we added an ISDS clause into the mix — perhaps to gain brownie points with US TPP negotiators — and the draft deal imploded, with EU parliamentarians and Commission bureaucrats all seeing Canada as a Trojan horse, trying to establish a hugely unpalatable precedent for the much more important (for Europe) TTIP.
Does Canada now need to revisit the rules of the game for our own trade negotiators? How do we bring citizens’ voices as consumers and workers into the equation? The Trump phenomenon and the populist anti-immigration surge in Europe will make politicians wary of deals seen as risking jobs. Moving forward, sounder strategy will include more multilateralism (as on climate change) and fewer big-business-friendly arrangements between powerful nations.