Fears about TPP and how to resolve them

UPDATE AS OF 3/18/2015 WHITE HOUSE BRIEFING ON TRADE

Today, I had the opportunity to personally ask U.S. Trade Representative Michael Froman about the fears below at a White House briefing on trade.  It made me feel confident that critics' concerns are being addressed in the TPP negotiations in a thoughtful and constructive way. See below for details. Thank you, Representative Froman. On behalf of the 50 small business leaders who attended today's briefing, we are thankful to have someone as thoughtful and informed as you negotiating these historic trade agreements on our behalf.

A number of fears have been expressed about Trans-Pacific Partnership, the upcoming trade deal that would make it easier for U.S. manufactures and makers to access the 95% of consumers who live overseas in anticipation of the entire global population being online by 2020 and rising standards of living and spending power overseas. 

Congresswoman Elizabeth Warren (D-Massachusetts) and other TPP critics cite a number of legitimate concerns about TPP. However, they go too far in globalizing the concerns and engendering fear. For each of these fears, I directly ask two questions: 1) is it true? and 2) how could we work together to arrive at a win-win solution?

FEAR

Trade deals are negotiated in secret because small business owners and workers would oppose them if they knew what was in them. 

IS IT TRUE?

No.  I and many other small business owners are supportive of TPP and recognize that there is give and take in any complicated, multilateral negotiation. What is true is that some privacy is needed by negotiators to be able to work out complex logistics -- just as any creative process needs a safe zone in which to emerge without the constant scrutiny of critics.  It is also true that greater transparency would help the public get on board with these important trade agreements. 

POTENTIAL WIN-WIN SOLUTION 

Strike a balance. Release sections of the agreement that are close to being resolved and/or have the potential to be controversial to the public prior to presenting the entire TPP agreement to Congress for approval.

UPDATE AS OF 3/18/2015 WHITE HOUSE BRIEFING ON TRADE

Opportunities for public comment, testimony and feedback have been and continue to be a systematic, routine part of the TPP negotiations, according to U.S. Trade Representative Michael Froman. Members of Congress, acting on behalf of their constituents, have regular opportunities to review key parts of the in-process negotiations, and key advocates on both sides have been invited to give feedback on pieces of the agreement.  The negotiations are being conducted in a way that is as inclusive and transparent as they can realistically be without compromising our ability to get key concessions from our trading partners. For example, a foreign government may be in the process of conceding to enforcing stronger local labor laws, which might be a sensitive issue among some of their constituents. Making sensitive negotiations public would jeopardize the U.S.'s ability to help countries globally raise environmental, ethical, labor, and human rights standards.  The U.S. Trade Representative's Office posts regular updates on the negotiations at https://ustr.gov/tpp.

FEAR

Large corporations are rigging the trade deal to get special "gifts" or favors that benefit them. 

IS IT TRUE?

I don't know, but it appears that the pharmaceutical industry, in particular, is attempting to take advantage of the agreement to extend patents and that would keep drug prices high in developing countries, costing human lives.  Check out Doctors Without Border's campaign here (disclosure: I have signed their petition as I believe that these provisions do not belong in TPP).

POTENTIAL WIN-WIN SOLUTION

For the pharmaceuticals, limit patent provisions to non-essential drugs, or remove them altogether.  Pharmaceutical companies: focus on innovation, not patent protection.  Remember your mission as a business is to heal human beings, not maximize profit at the expense of the human lives. Consumers in the developed world: remember to question whether drugs are always necessary. Growing evidence shows that holistic and natural cures, combined with Western cures, are the best way to prolong healthy lives.  I am not sure what the other potential corporate provisions are in the agreement but do have faith that those at the negotiating table will not put greed over the well-being of humanity.
 

UPDATE AS OF 3/18/2015 WHITE HOUSE BRIEFING ON TRADE

U.S. Trade Representative Michael Froman is aware of the need to ensure that people in developing countries have access to generic medications. The U.S. healthcare system itself relies heavily on generics to provide affordable care to our own population; we are not going to treat anyone overseas differently from our own citizens. On the other hand, patent protection is what gives pharmaceutical companies the incentive to invest heavily in R&D for new drugs, something that has been on the decline. I am confident that Representative Froman will strike the right balance between fair global access to generic drugs and keeping incentives in place for R&D innovation.

FEAR

Due to something called ISDS (Investor-State Dispute Settlements) multinational foreign companies are going to start suing governments to protect their investments, and restrict government's ability to set domestic policy e.g.: environmental and consumer protections. In essence, foreign investor companies would receive preferential treatment over domestic companies and would potentially be exempted from domestic regulations.

IS IT TRUE?

I don't know, but judging from the key cases cited here, the threat seems manageable. In addition, the independent tribunals that arbitrate these country-company disputes are becoming more transparent and accountable. ISDS seems most relevant to developed countries investing in unstable, developing ones, and it seems to potentially be falling out of favor. In 2011, the Australian government announced that it would stop seeking investor-state dispute settlement provisions in trade agreements: 

"(Australia)...supports the principle of national treatment — that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses. "  Source

POTENTIAL WIN-WIN SOLUTION

Ensure transparency and accountability of the tribunal so that disputes are treated fairly. To prevent abuse, clarify conditions under which a foreign company can legally sue a domestic government -- and when they cannot. Investors need some protections, but foreign and domestic companies should be treated fairly and subject to the same laws.

TPP is too important to small and medium-sized businesses and to the U.S. and global economies to be sidelined by fear over resolvable issues. We all need to work together against the problem of how to navigate rapid globalization and technological change -- not against each other. We need to work from a place of clarity, compassion, and flexibility -- not fear. We need to focus on the present and future -- not the past.  And ultimately, we need to have faith in abundance and embrace change.

 

UPDATE AS OF 3/18/2015 WHITE HOUSE BRIEFING ON TRADE

ISDS is critical to ensuring that small businesses exporting overseas have recourse to appeal in the event of misconduct by local governments. Most importantly, ISDS is needed to protect the intellectual property rights overseas. IP theft is a core fear for many innovative U.S. businesses entering foreign markets, particularly those in our thriving tech sector.  ISDS helps ensure protection. The examples of abuse cited by TPP critics are few and far between, and as I note above, they can be managed and avoided.  ISDS is critical to protecting the interests of U.S. businesses abroad, need not result in abuse. Claims that ISDS poses a threat to the U.S. government's freedom to regulate are overstated and misleading to the American people.