Deficit of Trade Information (updated)

A while back, I chastised U.S. Trade Representative Michael Froman for not meaning a word he said about trade policy. Now, in the wake of the latest WikiLeaks release of a chapter of the proposed Trans-Pacific Partnership free trade agreement, I realize why he also doesn’t want the American public to know a word about ...


A while back, I chastised U.S. Trade Representative Michael Froman for not meaning a word he said about trade policy. Now, in the wake of the latest WikiLeaks release of a chapter of the proposed Trans-Pacific Partnership free trade agreement, I realize why he also doesn’t want the American public to know a word about that or any trade deal.

In recent testimony before Congress, Froman emphasized that he would use "every available tool" to level the global trade playing field and reduce the U.S. trade deficit. That was laughable because Froman had already demonstrated that he was not going to touch issues like currency manipulation, indirect export subsidies, or mandatory investment and transfer of technology as a condition of market entry. This did not make him unusual. All of his predecessors had also promised to use every possible tool and none had.

All of them had also called on Congress to grant so called "Fast Track" authority to the President to negotiate free trade agreements that would then be submitted to the Congress for an up or down vote without possibility of amendment. The argument for this had always been that other countries’ negotiators would never make their best, bottom line offers as long as they thought any deal might be subject to further amendment after it was submitted to the U.S. Congress. While it had a certain logic, this argument always suffered from the weakness of not being true. Because Fast Track ( now euphemistically called Trade Promotion Authority- TPA) attempted to handcuff Congress, it responded in kind by putting so many conditions on the granting of Frast Track authority that foreign negotiators were reluctant even to enter into negotiations and often found themselves negotiating with leading members of Congress more than with the official U.S. negotiators. In fact, Fast Track (TPA) did not grease the wheels of trade talks. If anything, judging by the recent history of World Trade Organization and U.S.-Korea Free Trade Area negotiations, it threw sand in the gears.

What the WikiLeaks leak revealed was that Fast Track combined with the TPP was not so much a mechanism for getting things through the Congress quickly and efficiently as it was a mechanism for getting around the Congress. The leaked TPP chapter was the one on Intellectual Property. Although it is actually about setting rules to restrain certain kinds of trade, intellectual property protection has in recent years become a mainstay of global free trade negotiations. That this is so is a manifestation of the fact that the negotiations have largely been captured by large, multi-national corporations whose patent and copyright portfolios convey a degree of monopoly rights that they would like to extend and strengthen.

After all, something can only be leaked if it is supposed to be unknown to all but a few authorized insiders. That is certainly the situation with the TPP. The global public, including the U.S. Congress and the legislatures of the other countries involved in the negotiations, has been kept in the dark about what is actually being discussed and what trade-offs are being made. But this is not the case for more than 700 "cleared" advisers to the U.S. negotiators. Mostly from major corporations, these advisers are privy to the negotiating texts and, at least in the case of the United States, provide the bulk of the information and proposals on which the negotiations are based. Having little analytical capability in the area of international trade and investment, the U.S. government must rely heavily on the affected traders and producers to develop and negotiate its agenda. While there is nothing wrong in principle with industry-government cooperation and collaboration, the present structure creates an imbalance of information and influence that favors a few industries while disadvantaging the general public.

The extent of this unbalanced influence and how it works can be seen in the contents of the leaks. The deal being proposed apparently includes measures like those contained in the Stop OnLine Piracy Act (SOPA) and the Protect Intellectual Property Act that have already failed once to achieve passage in Congress. It also includes demands by the United States for separate patents for different forms of the same drug. Thus, for example, a patent would be issued for drug Z in pill form. Then when the drug is produced in liquid form, a new patent would be issued, and when it was produced in gel form, yet another patent would be issued. This is something very unlikely to survive open debate in the U.S. Congress. Clearly what is afoot is that the non-transparent TPP talks are being used to make an end run around the Congress and the parliaments and publics of many countries to achieve far reaching special rights in the guise of free trade.

This should not be fast tracked in the guise of a request for TPA. It ought to be subject to normal debate and amendment so that the public can actually achieve the benefits of free trade.

Update: I need to correct some misunderstandings in this post. While I did not say that SOPA or PIPI or ACTA are in the TPP agreement, I did mention that similar things are in the draft deal. Strictly speaking, this is not the case. To be very clear, I should also say that nothing so far made public about the deal indicates that it might contain elements contrary to U.S. law regarding intellectual property. Having said all that, I believe my larger point that the intellectual property provisions of the TPP as well as the TPP itself would not survive open debate in the U.S. Congress or public remains correct.

Clyde Prestowitz is the founder and president of the Economic Strategy Institute, a former counselor to the secretary of commerce in the Reagan administration, and the author of The World Turned Upside Down: America, China, and the Struggle for Global Leadership. Twitter: @clydeprestowitz

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