Trans Pacific Partnership to overtake WTO ?

A highly controversial trade agreement led by the US is being negotiated in such utter secrecy that until recently just a handful of people had any knowledge of what was being decided behind  closed doors.  The Trans-Pacific Partnership  Agreement , TPP for short, has now reached the public domain , thanks to WikiLeaks, the global watchdog that leaks ‘secret’ information that has a bearing on public interest. 

The TPP is a US led initiative of 12 member countries comprising apart from the US, Canada, Mexico, Australia, New Zealand, , Chile, Peru, Japan, Malaysia, Vietnam, Singapore  and Brunei . These countries account for approximately 40 percent of the global GDP. Russia, China, India  and Brazil have been kept out of this exclusive club.  The scope of the TPP is vast and includes subjects like  Intellectual Property Rights (IPR), Biodiversity and the Environment, State Owned Enterprise (SOE) , Agriculture, Sanitary and Phytosanitary Standards (SPS) Technical Barriers to Trade (TBT), Investment, Public Procurement , Financial Services,  E Commerce,  Trade in Information Technology Products  (TITP), Market Access for Goods, Textiles etc. , Many of these are part of the WTO.

As with the WTO, the US clearly dominates the TPP and the negotiations in its various sectors. It exercises its veto like powers  and is able to put considerable pressure even on this group of countries which have significant economies of their own.  The available TPP documents which are excerpts from internal commentaries and notes of participating countries, show, the extent to which the US dominates the agenda and the discussions  in the TPP negotiations.  Member countries are constantly on their toes to keep articulating and amending  their positions on each aspect in the fast paced, often aggressively  negotiated text  so as not to leave any room for the US to force an agreement based on an ambiguous text or one that was not updated.

So where does the WTO fit in ? The impression is gaining ground in the last years, that unhappy  with the increasingly democratic nature of the WTO, where countries are asserting themselves more and more, the US  in a sense wants to  walk away from the WTO. After the Doha Round, which the US sees as a setback, among other things, to its pharmaceutical industry, its trade representatives have made clear their displeasure over the multilateral platform where the US is facing growing resistance.  The TPP appears to be the Empire striking back to recover lost ground.

An extraordinary feature of the Trans Pacific Partnership is the status being accorded to multinational corporations . The TPP proposes to give the corporate sector powerful advantages, tilting the scales in their favor at the cost of  consumers, in almost every sector. In a path breaking move, the TPP is putting in provisions that will enable corporations to take on nation states directly.  Among the proposals is the setting up of an international tribunal to rule on legal disputes between nations as well as between corporations and national governments. .

So corporations could challenge the laws and regulations of a country before this tribunal which is empowered to overrule the country’s legal framework and  impose economic penalties.  In the WTO only nation states can act against each other before the Dispute Settlement Court. In an unprecedented paradigm shift, the TPP seeks to elevate corporations to the status of sovereign nations  and empowers them   to challenge governments. 

This proviso is a triumph for the capitalist economic model where money trumps democracy and democratic rights !All is geared to make big money happy. This is not surprising since the US leads the TPP and the US economic  and for that matter environment policies, are designed to benefit the corporations who are considered privileged  partners in the governance and policy making  process and structures.  Critics have slammed the TPP as the escalation of  the  ‘neo-liberal agenda’. Celebrated academic and author Noam Chomsky has called the TPP a ‘ neoliberal project to maximize profit and set the working people in the world in competition with one another  so as to lower wages ‘. Commentators on the IPR program of the TPP have called it a ‘Christmas wish list’  for the big corporations . 

Another American viewpoint  pushed forward by the TPP is deregulation. Never a votary of regulation which is antithetical to the interests of big money, successive US governments, starting at least from the Reagan administration have sought to keep regulation to the minimum in most economic spheres.  Giving a free hand to capital and the market, US administrations have sought to limit the activities that governments can regulate and have consistently rejected regulation as a tool of governance and international trade. The TPP takes deregulation to a new level and introduces provisions that protect only the rights of the investor  but not that of the consumer  or the citizen.

A case in point is  the area of environment where  the US has been a reluctant player on the global stage.  It has chosen to remain out of international agreements like the Kyoto Protocol, the treaty designed to reduce greenhouse gas emissions. It has also refused to be part of the  Convention on Biological Diversity (CBD) through which nations agree to conserve biological diversity, respect the knowledge of local communities and acknowledge their ownership of such knowledge.  Both these exclusions are designed to give a free hand to business. In the Kyoto Protocol,  by not requiring industry to make emission cuts and in the case of the CBD, by not restraining biopiracy by pharmaceutical companies. Pharma giants help themselves to the indigenous knowledge of communities and create patented drugs based on that.

The draft  text pays lip service to protecting the environment , dealing with such subjects like illegal logging , overfishing,  wildlife trafficking, marine pollution from ships and ozone depleting substances. But predictably, there is nothing related to climate change,  biodiversity and indigenous knowledge . Even in this limited engagement , the US insists that environmental issues be dealt with only if they affect trade and investment.  With respect to trade in biodiversity for instance , the US position is antagonistic to that proposed by the other members . Peru and Mexico are attempting to link CBD features like acknowledging the rights of holders of indigenous knowledge in biodiversity trade but the US opposes this.

Notably, there is no requirement for compliance in the Environment section, and implementation  is left to the discretion of individual countries. No penalties have been proposed for violations, unlike in other TPP chapters like Investments, where penalties are severe. The environment sector is left completely unregulated and everything is voluntary.  Not surprisingly, there is a lot of tension in the Environment negotiations with several countries resisting the US proposals to limit engagement in this field. There are at least three areas where there is clear discord among the TPP members. 

These relate to balancing the need to protect the environment with ambitious commitments on trade and investment. The current way out seems to be to make nothing binding in the environment chapter so that the parties can push their investment and trade agendas  and take only that much notice of environmental protection as they want to. Another point of disagreement relates to  handling commitments already made in other multilateral fora like the WTO and for countries other than  the US,  also the CBD and Kyoto Protocol. How are these to be brought in resonance with the far more ambitious goals of the TPP , especially in fields like Intellectual Property Rights. 

Consensus also eludes the nature of the dispute resolution mechanism the TPP should adopt . The TPP is a much more close knit group than the WTO and their interests are largely convergent, especially with respect to the unfettered deployment and use of capital. In the WTO, there is a clear division between wealthy,  industrial nations and developing countries with smaller economies. The dispute settlement process is invoked largely ( but not exclusively ) to bring the less powerful economies in line with the trade ambitions of the rich countries. It will be difficult enough to institute a structure like the Dispute Settlement Court of the WTO and  the US is pushing for a more firm dispute resolution mechanism  than the other members are willing to agree to.

After Wikileaks made available portions of the TPP negotiations, there is a growing backlash, largely  in the US,  against the clandestine, non-democratic  nature of the negotiations. In what may be a first,  the  Obama administration is treating the TPP negotiations as so classified, that information  even  to members of the US Congress is restricted.

India must take note of the TPP provisions and prepare responses in its areas of interest. For surely, once concluded, the TPP will set the benchmark for negotiations in other multilateral and bilateral forums. India must also act quickly to strengthen its partnerships and alliances to protect its trading interests.