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With Fast-Track Authority Granted, What Are The Real Controversies With TPP?

September 03, 2015

On June 24, the Senate voted 60-38 to grant Trade Promotion Authority (TPA), otherwise known as fast-track authority, to President Obama, allowing him to directly negotiate the Trans-Pacific Partnership (TPP). As another PPI blog points out, TPA does not give the President final say over the agreement, but rather grants him the ability to present a negotiated deal to Congress for a straight up-or-down vote. In other words, Congress can still reject a final deal.

By Patrick Romano, C’16

With fast-track authority granted, the real debate over the TPP can begin. There has been much controversy over the deal, with liberals and unions staunchly opposed and pro-trade conservatives and big business strongly in favor. Amidst so much political drama, let us break down the key controversies at the heart of the TPP.

What Is The TPP?

The Trans-Pacific Partnership is an enormous trade deal between the United States, Canada, Mexico, Japan and eight other Asia-Pacific countries that intends to create more open markets by eliminating tariffs and non-tariff barriers to goods and services and by harmonizing regulations. How ‘enormous’ is enormous? When all is said and done, an agreement with these eleven countries, some of the United States’ largest commercial partners, will govern trade over 40% of the global GDP.

The Five Biggest Controversies of the TPP

1. Intellectual Property

According to the Office of the U.S. Trade Representative (USTR), the TPP seeks protections for patents and trademarks, more pharmaceutical IP provisions, stronger rules against trademark and copyright violations, and “safe harbor” provisions for Internet service providers. However, some critics say these harsher intellectual property protections will make it harder for many industries, from drug makers to music producers, to innovate, while other activists say the provisions will restrict Internet freedoms.

2. Labor Rights

The USTR claims that the TPP will ensure workers’ rights in all TPP countries by including requirements that signatory countries respect rights of collective bargaining and discourage unlawful practices such as forced labor and child labor. Opponents, including former U.S. Secretary of Labor Robert Reich, claim that is impossible enforce such provisions because it is difficult both to verify violations and to punish rule breakers.

3. Investor-State Dispute Settlement

According to the USTR, the TPP will establish a mechanism to adjudicate disputes over agreement violations in a fair and timely fashion. More specifically, if countries cannot settle their disputes through dialogue, an independent tribunal will determine if violations occurred and the proper sanctions to impose. Since this gives foreign investors the ability to directly sue governments, many groups worry that the result of this mechanism will be regulatory chill, meaning legislators will avoid passing regulations (over environmental or health standards, for example) because it may lead a foreign investor to sue for damages. One immediate area of concern is tobacco, as some say the TPP will make it easier for tobacco companies to circumvent regulations.

4. Open Markets

The biggest selling point of the TPP is that it will eliminate tariffs and non-tariff barriers to the trade of goods and services. For the United States, this means the elimination of duties on U.S. products, such as the 40-percent tariff on poultry exports to Malaysia and the 27-percent tax on some U.S. auto parts entering Vietnam. Some critics counter that the United States will not see an increase in exports due to other countries’ currency manipulation. Others state that even if there is expanded trade, large corporations will be the only ones to see the benefits, while most American workers will experience wage losses as jobs are moved to poorer and more labor-abundant countries. This threat is part of the larger fear that the TPP, while possibly beneficial for the overall national income, will actually worsen income inequality.

5. State-Owned Enterprises

Since many of the governments in TPP countries, such as Vietnam and Singapore, own large sectors of their economies through state-owned enterprises (SOEs), the United States wants the TPP to create rules to ensure that private sector businesses can compete fairly with SOEs. Skeptics, however, question what such procedural fairness will look like, if exemptions will be granted, and how exactly disputes about unfair trade practices will be adjudicated.

Secrecy

By far the biggest controversy in the entire TPP process, however, has been the shroud of secrecy in which the Obama administration has enveloped the agreement. The President and his team have not released the full text of the deal to the public, deemed classified by the government, and updates from the USTR have been intermittent and lacked detail. In fact, the whistleblower group WikiLeaks has made the most detailed content available to the public. Even advisers to the Obama administration are not allowed to share their criticisms of the agreement publicly. Such an unusual lack of transparency has made the skeptics in the media and Washington distrust the TPP even more, as they see the secrecy (aided by fast track authority) as a ploy to push through a deal that may not benefit true national interests. While such malevolence may be far-fetched populism, the fact that most people sitting on the USTR’s Industry Trade Advisory Committee—who have access to negotiation materials—represent powerful corporate and industry interests does not help the Obama administration to dismiss such concerns. This gives the impression, which many on the left have latched onto, that the TPP does not represent the interests of most Americans, but just a privileged few.

What’s Next?

As negotiations unfold, the Obama administration, now with fast track authority, will need to address the various concerns surrounding the TPP. While the agreement will never satisfy all groups, the President would be wrong to write off critics simply as protectionists and populists. Many Americans have become skeptical of free trade agreements as wages have stagnated and jobs have gone overseas, and the President owes the American people a fair chance to judge the merits of the deal. He should start building consensus by ending the secrecy. 

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  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

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RESOURCE SPOTLIGHT:

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