Trade Agreement Trends

Three expansive and controversial trade agreements – the Trans Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Comprehensive Economic and Trade Agreement – are currently in the negotiation or ratification stages. These three (with some overlap with the EU, US and Canada) involve some of the world’s biggest economies and, if successful, will implement rules that critics claim go far beyond traditional trade agreements. However, the fate of all three agreements remains uncertain. CETA still needs to be ratified by the EU parliament as well as 28 member states, while TTP and TTIP are bogged down in negotiations.

All these acronyms can get confusing, so, who is involved in these agreements and what are the points of contention?

Trans Pacific Partnership

The TTP began as a proposed agreement between Chile, New Zealand, Singapore and Brunei. In January 2008 the US joined negotiations, followed by Australia, Vietnam, Peru (2009) and Malaysia (2010) and Canada and Mexico (2012). In 2013 Japan entered negotiations and Taiwan, South Korea and even China have expressed interest. All told, these countries make up 40% of the world’s GDP.

Transatlantic Trade and Investment Partnership

The TTIP is a free trade agreement between the EU and the US. Negotiations began in 2013 and were ongoing as of last week. The two markets together represent 60% of the world’s economy and are already the world’s biggest investment partners; however numerous points of contention, especially related to agriculture, remain.

Comprehensive Economic and Trade Agreement

The CETA is a free trade agreement between Canada and the EU. While an agreement has been signed “in principle” between Canada and the EU, much work remains before the agreement could be ratified, and there is significant resistance to aspects of the agreement among national governments in Europe (especially Germany), as well as trans-Atlantic resistance by Canadian and European civil society organisations

What’s at stake?

Intellectual Property rights are, not surprisingly, some of the biggest points of contention. With regards to the TPP, a number of countries are resisting US pressure to expand patent protection for pharmaceuticals, while Japanese artists are worried about the effect the agreement would have on derivative works of anime and cosplay

Cultural and political differences between the EU and US are also complicating negotiations over agriculture standards – Europeans are worried about GMOs and beef hormones, while Americans seem particularly scared of Mad Cow disease and fancy cheeses.

The secrecy of negotiations of all three agreements has also caused consternation, not only among civil society groups but US lawmakers as well. As Ron Wyden (D-OR) argued in front of Congress in 2012,

“The majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations, like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America – are being consulted and made privy to details of the agreement… We hear that the process by which TPP is being negotiated has been a model of transparency. I disagree with that statement.”

Both the secrecy of the negotiations and the pandering to corporate interests has also alarmed Joseph Stiglitz, who claims that

“There is a real risk that it will benefit the wealthiest sliver of the American and global elite at the expense of everyone else. The fact that such a plan is under consideration at all is testament to how deeply inequality reverberates through our economic policies.”

The aforementioned concerns are nothing new in terms of resistance to FTAs – similar concerns were voiced during NAFTA negotiations. However, one concern that applies to the TPP, TIPP and CETA is the fear of Investor-State Dispute Settlement (ISDS) – a key aspect of this “new generation” of trade agreements.

ISDS, Regulatory Standards and FTAs

The ISDS clauses in these new trade agreements will (as I’ve written about before) allow investors to sue their host government for breaches of investment protection (which can include the “legitimate expectations” of investors). ISDS was first included in NAFTA and can now be found in CAFTA and a number of bilateral trade agreements, as well as TPP, TIPP and CETA. While North American governments are pushing for its inclusion, civil society and even some partner governments are pushing back. Germany has recently announced its opposition to the inclusion of ISDS and since 2011 Australia will no longer include ISDS in any of its FTAs.

The fear is that ISDS detracts from the ability of local and national governments to set their own regulatory priorities. For European environmental groups, perhaps the greatest fear is the impact these agreements may have on the ability of governments to uphold bans on fracking. These fears our not unfounded – we need only to look to the recent NAFTA lawsuit filed against Canada in response to Quebec’s fracking ban.

Free Trade in the Future?

Beyond the specifics, the rise of bilateral and multilateral (but by no means global) trade and investment agreements raises questions about the future of international trade. As Stiglitz argues, the agreements mentioned here (as well as recent FTAs with South Korea) reach beyond the traditional goals of lowering tariffs and abolishing quotas – the WTO has done a pretty good job of this already. Instead, they focus on “non-tariff barriers” – a nice euphemism for regulatory frameworks – and go some way towards elevating the positions of corporations relative to national governments. The contentiousness of these developments may also explain the focus on these less universal agreements at the expense of the WTO. While the TPP, the TIPP and CETA are by no means a fait accompli, these agreements require less in the way of universal consensus than the MAI or Doha Round negotiations. It remains to be seen what the impact of these agreements will be on more inclusive multilateral efforts in trade and investment.

3 thoughts on “Trade Agreement Trends

  1. To call the differences over “GMO and beef hormones” a cultural difference probably sums up the problem better than intended. At least science seems not to matter much on both sides unless it offers a convenient argument.

Leave a Reply

Your email address will not be published. Required fields are marked *