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High Standards? Which Way is Up?

The Trans-Pacific Partnership Agreement (TPP) is slated to be the first trade agreement negotiated by the Obama administration and, given that the President has promised to break with the NAFTA trade agreement model, the negotiators will likely strive for different standards than in the past.

When the March 2010 negotiations for the TPP were announced in December, the U.S. Trade Representative (USTR) Ron Kirk remarked

Through the Trans-Pacific Partnership, we have the opportunity to expand U.S. trade in the Asia-Pacific by negotiating and shaping a high-standard trade agreement with key Asia-Pacific economic partners. [emphasis added]

"High-standard" is quite a flexible term. Over 100 corporations, industry groups, unions, public interest organizations, and members of Congress submitted public comments on the TPP negotiations to the USTR and most of them urged that the TPP be a high-standard agreement, but they didn't have the same ideas in mind. High standards for civil society groups mean strong labor, environmental, and food safety protections plus excluding investor rights provisions and overly restrictive rules on drug patents, among other things.

The Teamsters laid out the fair trade vision:

We agree with the President; we want to support a high-standard Trans-Pacific Partnership. The Teamsters will support a TPP that: contains a democracy clause... protects workers and their right to organize... does not grant greater rights to foreign investors than to U.S. firms... protects the environment...protects food safety and family farms...allows Congress and state legislatures to enact government procurement programs in the public interest.

Corporate groups take high standards to mean something entirely different. Regarding the treatment of financial services in the agreement, the U.S. Chamber of Commerce urged that:

The agreement should set the highest standards of market opening, including rights to own 100% of any investment, full national treatment, and elimination of non-prudential regulatory barriers to achieve equal conditions of competition and enhanced terms of transparency....Such standards would ensure that American companies can compete effectively in participating countries financial services market. U.S. firms should be encouraged to develop new and innovative products to meet the needs of consumers in each of the eight participating economies. The financial services chapter of the U.S.-Korea FTA sets a gold standard in these critical areas and could serve as a departing point for further gains. [emphasis added]

Hmmm, "new and innovative financial products". Where have we heard that phrase before? Oh yeah, it was back in the fall of 2008 when CNN financial analysts were discussing how financial derivatives and credit default swaps brought the financial system to near full-scale collapse. The Chamber also wants to roll back the important (but modest) intellectual property exceptions for essential drugs that the Peru FTA contained:

It must be clear that the objective of the TPP is to raise the level of IP protection in the region to international best practices, and that wherever possible IP provisions should be lifted to the highest standards that exist among any of the parties to the agreement.

The National Association of Manufacturers (NAM) went so far as to threaten to withhold support for a TPP if the Obama administration doesn't give NAM everything on its wish list:

The NAM believes in the core importance of ensuring a gold standard agreement. The NAMs International Trade Policy Subcommittee most recently met on January 20, 2010, and among other matters agreed the NAM should testify in favor of moving forward on the TPP negotiation. There was a consensus at the meeting, however, that the NAMs support must be conditioned on the highest quality agreement.

Time is ticking away quickly for the Obama administration to define high standards in line with how a majority of Democrats in the House have defined them. Negotiations for the TPP begin in mid-March.

Global Trade Watch's comments to the USTR on the TPP are here.

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