tag:theconversation.com,2011:/fr/topics/trans-pacific-partnership-3304/articlesTrans Pacific Partnership – The Conversation2021-05-12T12:48:00Ztag:theconversation.com,2011:article/1521482021-05-12T12:48:00Z2021-05-12T12:48:00ZWhat American farmers could gain by rejoining the Asia-Pacific trade deal that Trump spurned<figure><img src="https://images.theconversation.com/files/375184/original/file-20201215-18-1w95l1w.jpg?ixlib=rb-1.1.0&rect=53%2C44%2C6000%2C3853&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Trans-Pacific Partnership agreement covers a broad range of goods and services, including food safety standards. </span> <span class="attribution"><a class="source" href="https://unsplash.com/photos/6_ee0s7d0Ck">Simon Fanger/Unsplash</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>The Biden administration has an opportunity to recalibrate American global trade by rejoining the influential Trans-Pacific Partnership trade agreement. Signing on to this partnership has the potential to deliver <a href="https://asia.nikkei.com/Politics/International-relations/Biden-s-Asia-policy/Biden-s-trade-chief-pick-dodges-question-on-rejoining-TPP">powerful diplomatic and economic gains</a> yet politically, the odds appear slim that there will be political consensus to agree to this partnership. </p>
<p>The U.S. began <a href="https://crsreports.congress.gov/product/pdf/R/R44489">Trans-Pacific Partnership</a> negotiations in 2008 during the Bush administration, efforts that were intensified during Barack Obama’s presidency. Hammered out between the <a href="https://www.cambridge.org/core/journals/agricultural-and-resource-economics-review/article/effects-of-tariff-concessions-on-japanese-beef-imports-by-product-and-source/2263506BF6AF507C928F4D1A78A216DB">U.S. and 11 Pacific Rim countries</a>, the intention of joining the partnership was to set trade policy and greatly expand U.S. trade and investment in the Asia-Pacific region. President Obama signed the agreement in 2016 and less than a year later, immediately after Donald Trump’s inauguration, the U.S. <a href="https://theconversation.com/can-the-trans-pacific-partnership-survive-after-trump-71821">withdrew from the agreement</a>. </p>
<p>Rejoining the partnership, renamed the <a href="https://crsreports.congress.gov/product/pdf/IF/IF10000">Comprehensive and Progressive Agreement for Trans-Pacific Partnership</a> in 2018, could signal to the world that the U.S. is back in the global engagement arena. It would also strike a stark contrast to the <a href="https://www.brookings.edu/blog/future-development/2017/02/08/what-will-trumps-embrace-of-bilateralism-mean-for-americas-trade-partners/">previous adminstration’s bilateral</a> and nationalistic approach, <a href="https://cepr.org/content/new-ebook-trade-war-clash-economic-systems-threatening-global-prosperity">which has resulted in tensions with major U.S. trading partners</a>. Aside from improved trade relations, rejoining the this agreement would counter <a href="https://www.wsj.com/articles/obamas-tpp-wouldve-helped-limit-china-11553454969">China’s economic and geopolitical influence</a> in the Asia-Pacific region.</p>
<p><a href="https://scholar.google.com/citations?user=e0WqEuoAAAAJ&hl=en">Both</a> of <a href="https://scholar.google.com/citations?user=3UKxaEcAAAAJ&hl=en">us</a> have worked extensively with the U.S. Department of Agriculture on trade policy issues. As economists specializing in international agricultural trade, our research demonstrates that the U.S. would benefit from rejoining the <a href="https://www.ers.usda.gov/publications/pub-details/">trade accord</a> and, in particular, American agriculture.</p>
<h2>Pathway to a Southeast Asia trade agreement</h2>
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<a href="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Large shipping containers stacked closely together." src="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/384155/original/file-20210215-15-hmmi3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">International trade agreements can reduce uncertainty for trading partners in the marketplace.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/SPPUHSsaT-8">Marco Pregnolato/Unsplash</a></span>
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<p><a href="https://doi.org/10.1111/1746-692X.12293">Regional trade agreements</a> like the Trans-Pacific Partnership can go far beyond tariffs to tackle deeper trade and domestic issues such as investment, labor, migration, competition, intellectual property and, in some cases, key regulatory issues governing food safety standards.</p>
<p>Although agriculture comprises only about 10% of <a href="https://www.usitc.gov/research_and_analysis/trade_shifts_2019/us.htm">total U.S. exports</a>, the agricultural sector in the U.S. and other countries account for a large share of trade policy considerations. Rejoining the accord has the potential to <a href="https://www.piie.com/blogs/trade-and-investment-policy-watch/rebuild-trans-pacific-partnership-back-better">establish economic ties with emerging economies</a> like Vietnam and Malaysia and embrace the need for improved trade relations in Southeast Asia overall. </p>
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<span class="caption">Shipping cranes at the Port of Seattle.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/CpsTAUPoScw">Andy Li/Unsplash</a></span>
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<p>The Comprehensive and Progressive Agreement for Trans-Pacific Partnership could be the easiest path forward if the U.S. wanted to improve trade relations with Southeast Asia. Joining this partnership could be especially beneficial based on the volume of agricultural trade and expected growth in these markets. At an approximate US$14.3 billion annually, Southeast Asia accounts for a significant amount of U.S. agricultural exports, making it the <a href="https://apps.fas.usda.gov/gats/default.aspx">fourth-leading destination</a> behind China, Canada and Mexico.</p>
<p><iframe id="jNqwz" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/jNqwz/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>A return to global engagement</h2>
<p>The Trans-Pacific Partnership was seen as an opportunity for the U.S. <a href="https://www.piie.com/commentary/speeches-papers/tpp-origins-and-outcomes">to shape regional and global trade rules</a>, potentially influencing economic policies and practices in China. However, there are concerns that need to be addressed if the U.S. were to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. </p>
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<span class="caption">Colorful Japanese wine barrels in Tokyo.</span>
<span class="attribution"><a class="source" href="https://unsplash.com/photos/9cYtFg2_N5I">Manuel Velasquez/Unsplash</a></span>
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<p>There are important differences between the agreement signed under Obama in 2016 and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Provisions important to the U.S. were changed <a href="https://www.csis.org/analysis/tpp-cptpp">in the subsequent agreement</a>, such as <a href="https://www.csis.org/analysis/tpp-cptpp">the investment and intellectual property provisions</a> that offered improved standards on intellectual property relative to past trade agreements. The provisions fall short of the more <a href="https://crsreports.congress.gov/product/pdf/IN/IN10822">stringent requirements</a> in the earlier Trans-Pacific Partnership. </p>
<h2>What are the odds?</h2>
<p>Like all trade agreements, joining the partnership would require congressional approval. Historically, Republicans have been more supportive of <a href="https://www.piie.com/research/piie-charts/nearly-all-us-trade-deals-were-negotiated-signed-and-implemented-republicans">trade agreements</a>. But President Trump’s rhetoric, that past trade agreements <a href="https://theconversation.com/trumps-anti-trade-tirades-recall-gops-protectionist-past-54631">have been “disastrous” for the U.S. economy</a>, may have lessened Republican support for an agreement like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.</p>
<p>President Joe Biden quickly rejoined the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/paris-climate-agreement/">Paris Climate Agreement</a> and reversed President Trump’s decision to withdraw from the <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/21/readout-of-vice-president-harriss-call-with-world-health-organization-director-general-dr-tedros-adhanom-ghebreyesus/">World Health Organization</a>, showing that the U.S. is back in the global engagement area. </p>
<p>Mega-regional trade agreements offer more than a forum for negotiating trade barriers. They establish procedures that reduce uncertainty in international transactions, make rules that are clear to members and provide an institutional framework to remedy trade concerns or disputes. If the Biden administration wants to signal to the world that the U.S. is pivoting to a more expansive global engagement, joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership could be an initial step.</p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklysmart">You can get our highlights each weekend</a>.]</p><img src="https://counter.theconversation.com/content/152148/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Muhammad and Jason Grant receive grant funding from the U.S. Department of Agriculture to work on international agricultural trade and trade policy issues. </span></em></p><p class="fine-print"><em><span>Jason Grant receives funding from the United States Department of Agriculture. </span></em></p>Rejoining the Trans-Pacific Partnership would boost trade in Southeast Asia, counter China and help show the world the US is back.Andrew Muhammad, Professor of Agriculture and Resource Economics, University of TennesseeJason Grant, Associate Professor of Agricultural and Applied Economics, Virginia TechLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/906192018-01-24T05:37:26Z2018-01-24T05:37:26ZFarmers and services industry the winners under the revised Trans-Pacific Partnership trade deal<p>The revived trade agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has finally made it across the line. It’s a considerable win for Australian farmers and service providers, in a trading area <a href="http://dfat.gov.au/trade/resources/trade-statistics/pages/trade-statistics.aspx">worth about</a> A$90 billion.</p>
<p>The 11 remaining countries from the initial Trans-Pacific Partnership agreement finally <a href="http://www.abc.net.au/news/2018-01-24/tpp-resurrected-as-nations-get-set-to-sign-trade-deal/9354502">agreed to go ahead</a> with the deal without the US, at the annual meeting of the World Economic Forum in Davos, Switzerland. </p>
<p>The deal reduces the scope for controversial investor-state dispute settlements, where foreign investors can bypass national courts and sue governments for compensation for harming their investments. It introduces stronger safeguards to protect the governments’ right to regulate in the public interest and prevent unwarranted claims.</p>
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<a href="https://theconversation.com/australias-tenuous-place-in-the-new-global-economy-87346">Australia's tenuous place in the new global economy</a>
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<p>Despite earlier <a href="http://www.smh.com.au/business/workplace-relations/tpp-unions-fear-impact-on-australian-workers-20151005-gk22tj.html">union fears of the impact for Australian workers</a>, the <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/19.-Labour-Chapter.pdf">CPTPP</a> does not regulate the movement of workers. It only has minor changes to domestic labour rights and practices.</p>
<p>The new agreement is more of an umbrella framework for separate yet coordinated bilateral deals. In fact, Australia’s Trade Minister Steven Ciobo <a href="https://www.ft.com/content/7a10d70a-0031-11e8-9650-9c0ad2d7c5b5">said</a>:</p>
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<p>The agreement will deliver 18 new free trade agreements between the CPTPP parties. For Australia that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.</p>
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<p>It <a href="http://dfat.gov.au/trade/agreements/tpp/news/Pages/trans-pacific-partnership-ministerial-statement.aspx">means a speedier process</a> for reducing import barriers on key Australian products, such as beef, lamb, seafood, cheese, wine and cotton wool.</p>
<p>It also promises less competition for Australian services exports, encouraging other governments to look to use Australian services and reducing the regulations of state-owned enterprises. </p>
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Read more:
<a href="https://theconversation.com/the-trans-pacific-partnership-is-back-experts-respond-87432">The Trans-Pacific Partnership is back: experts respond</a>
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<p>Australia now also has new bilateral trade deals with Canada and Mexico as part and parcel of the new agreement. This could be worth a lot to the Australian economy if it were to <a href="https://www.aspistrategist.org.au/us-china-trade-war-pay-dividends-australia/">fill commercial gaps</a> created by potential trade battles within North America and between the US and China. </p>
<h2>What’s in and out of the new agreement</h2>
<p>The new CPTPP rose from the ashes of the old agreement because of the inclusion of a <a href="http://dfat.gov.au/trade/agreements/tpp/news/Documents/annex-2.pdf">list of 20 suspended provisions</a> on matters that were of interest for the US. These would be revived in the event of a US comeback. </p>
<p>These suspended provisions involved substantial changes in areas like investment, public procurement, intellectual property rights and transparency. With the freezing of further copyright restrictions and the provisions on investor-state dispute settlements, these suspensions appear to re-balance the agreement in favour of Australian governments and consumers.</p>
<p>In fact, the scope of investor-state dispute settlements <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/9.-Investment-Chapter.pdf">are narrower in the CPTPP</a>, because foreign private companies who enter into an investment contract with the Australian government will not be able to use it if there is a dispute about that contract. The broader safeguards in the agreement make sure that the Australian government cannot be sued for measures related to public education, health and other social services. </p>
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<a href="https://theconversation.com/why-developing-countries-are-dumping-investment-treaties-56448">Why developing countries are dumping investment treaties</a>
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<p>The one part of the agreement <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Text/12.-Temporary-Entry-for-Business-Persons.pdf">relating to the temporary entry for business people</a> is rather limited in scope and does not have the potential to impact on low-skilled or struggling categories of Australian workers. In fact, <a href="https://www.mfat.govt.nz/assets/Trans-Pacific-Partnership/Annexes/12-A.-Australia-Temporary-Entry-for-Business-Persons.pdf">it only commits Australia</a> to providing temporary entry (from three months, up to two years) of only five generic categories of CPTPP workers. These include occupations like installers and servicers, intra-corporate transferees, independent executives, and contractual service suppliers. </p>
<p>The above categories squarely match the shortages in the Australian labour market, according to the <a href="https://www.homeaffairs.gov.au/trav/work/work/skills-assessment-and-assessing-authorities/skilled-occupations-lists">Lists of Eligible Skilled Occupation</a> of the Home Affairs Department. </p>
<p>Bits of the original agreement are still included in the CPTPP such as tariffs schedules that slash custom duties on 95% of trade in goods. But this was the easy part of the deal. </p>
<h2>Before the deal is signed</h2>
<p>The new agreement will be formally signed in Chile on March 8 2018, and will enter into force as soon as at least six members ratify it. This will probably happen later in the year or in early 2019. </p>
<p>The geopolitical symbolism of this timing is poignant. The CPTPP is coming out just as Donald <a href="https://www.ft.com/content/ea72a0f6-ffc7-11e7-9650-9c0ad2d7c5b5">Trump raises the temperature</a> in the China trade battle by introducing new tariffs. It also runs alongside China’s attempts to finalise a much bigger regional trade agreement, the 16-nation Regional Comprehensive Economic Partnership. </p>
<p>Even though substantially the CPTPP is only a TPP-lite at best, it still puts considerable pressure on the US to come out of Trump’s protectionist corner.</p>
<p>It spells out the geopolitical consequences of the <a href="https://theconversation.com/in-the-economic-power-struggle-for-asia-trump-and-xi-jinping-are-switching-policies-90173">US trade policy switch</a>, namely that the Asia Pacific countries are willing to either form a more independent bloc or align more closely with Chinese interests. </p>
<p>Will this be enough to convince the Trump administration to reverse its course on global trade? At present, this seems highly unlikely. To bet on the second marriage of the US with transpacific multilateral trade would be a triumph of hope over experience.</p><img src="https://counter.theconversation.com/content/90619/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Giovanni Di Lieto is affiliated with the Australian Institute of International Affairs (AIIA).</span></em></p>The new TPP means fewer barriers for Australian exports, but there a number of loose ends – not least if the United States decides to rejoin.Giovanni Di Lieto, Lecturer, Bachelor of International Business, Monash Business School, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/874322017-11-14T06:38:16Z2017-11-14T06:38:16ZThe Trans-Pacific Partnership is back: experts respond<p>The <a href="http://dfat.gov.au/trade/agreements/tpp/news/Pages/trans-pacific-partnership-ministerial-statement.aspx">latest incarnation</a> of the Trans-Pacific Partnership (TPP) is said to have “<a href="http://www.smh.com.au/federal-politics/political-news/its-the-trans-pacific-partnership-with-fewer-bad-bits-20171112-gzjo48.html">fewer bad bits</a>”. But as our experts point out below, there’s still a great deal wrong with, or missing from, the regional free trade agreement. </p>
<p>The new TPP is informally known as the TPP11, after the United States pulled out of the original 12-country bloc earlier this year.</p>
<p>While the agreement has not yet been finalised, the 11 trade ministers have <a href="http://dfat.gov.au/trade/agreements/tpp/news/Pages/trans-pacific-partnership-ministerial-statement.aspx">released a statement</a> saying that the “core elements” have been agreed. </p>
<p>Twenty provisions from the original TPP <a href="http://dfat.gov.au/trade/agreements/tpp/news/Documents/annex-2.pdf">have been suspended</a>, but there are still a few areas to be worked out, including those relating to state-owned enterprises.</p>
<p>The Conversation’s experts respond:</p>
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<p><strong>Peter Robertson, Dean and Professor, University of Western Australia Business School:</strong></p>
<p>Trade deals such as the TPP11 that include some countries and exclude others are inherently flawed mechanisms for extracting the most benefit from trade (also known as “<a href="https://open.lib.umn.edu/principleseconomics/chapter/17-1-the-gains-from-trade/">gains from trade</a>”). </p>
<p>All trade deals are about “swings and roundabouts”. That is, a redistribution of income from producers to consumers and governments. For example, when we remove tariffs on automobiles, then consumers gain but producers and their employees lose. When we impose a tariff on agriculture, consumers lose by paying higher prices at the grocery store and producers gain. </p>
<p>Under reasonable circumstances there is reason to believe that the sum of the gains exceeds the losses. But when you add up all the potential winners and losers from the TPP11, from an Australian perspective you end up with pretty much zero. Or, to be more precise, <a href="https://piie.com/system/files/documents/wp17-10.pdf">an 0.5% increase</a> in GDP by 2030.</p>
<p>The gains are so small because the TPP11 diverts attention away from big trade issues like agricultural protectionism in Europe and the US, and focuses on smaller issues among a few countries who have <a href="https://www.austrade.gov.au/Australian/Export/free-trade-agreements">mostly</a> already liberalised every sector that is possible given the current political willpower.</p>
<p>From a global perspective the TPP11 could even have negative effects because it encourages us to buy from member countries, and not from outsider countries who may in fact have better and cheaper products.</p>
<p>The biggest winners in the world from current protectionist arrangements are the agricultural producers in Japan, the US and Europe where agricultural protection remains extreme and untouchable politically. We need trade agreements that focus on the big issues, not the small ones.</p>
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<p><strong>Pat Ranald, Research Associate, University of Sydney:</strong></p>
<p>The TPP11 retains all provisions on Investor-State Dispute Settlement (ISDS) from the previous TPP, except for two narrow improvements which only apply if investors have specific contracts or authorisations with governments.</p>
<p>Despite claimed “<a href="http://www.abc.net.au/news/2015-11-06/tienhaara-ttp-investment/6918810">safeguards</a>”, ISDS enables all other foreign investors to bypass national courts and sue governments for compensation in international tribunals if they can argue that changes in domestic laws or policies harm their investment. The cases are tried by tribunals composed of investment lawyers who can continue to represent clients. There is no independent judiciary, and no precedents or appeals to ensure consistency of decisions.</p>
<p>Many of the <a href="http://investmentpolicyhub.unctad.org/ISDS">817 known cases</a> involve public interest laws. Swiss Pharmaceutical company <a href="http://isds.bilaterals.org/?investigation-as-colombia-pushes">Novartis</a> is suing the Colombian government over the plans to reduce prices on a patented treatment for leukaemia. The US firm <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3002626">Bilcon</a> won its claim against the Canadian government for US$101 million after a provincial government refused to approve a quarry in an ecologically sensitive area. The French company <a href="http://www.bresserpereira.org.br/terceiros/2014/agosto/14.08.injustice-industry.pdf">Veolia</a> is claiming compensation from the Egyptian government for a rise in the minimum wage.</p>
<p>Even if a government wins a case, defending it can take years and cost millions. The US tobacco firm Philip Morris shifted some assets to Hong Kong and used ISDS in an Australia-Hong Kong investment agreement to claim billions in compensation for Australia’s plain packaging law. It took more than four years and <a href="http://www.smh.com.au/federal-politics/political-news/australia-faces-50m-legal-bill-in-cigarette-plain-packaging-fight-with-philip-morris-20150728-gim4xo.html">reportedly</a> cost A$50 million in legal fees for the <a href="http://www.smh.com.au/comment/the-dismissal-of-a-case-against-plain-cigarette-packaging-is-good-news-for-taxpayers-20151218-glrb53.html">tribunal</a> to decide that Philip Morris was not a Hong Kong company.</p>
<p>ISDS gives additional legal rights to global corporations to sue governments in unfair international tribunals, undermining democratic regulation in the public interest. Trade agreements should not increase corporate power at the expense of communities.</p>
<hr>
<p><strong>Kimberlee Weatherall, Professor and Associate Dean (Research),
The University of Sydney Law School</strong></p>
<p>The TPP11 suspends the most controversial copyright provisions. But not everything controversial is out.</p>
<p>The TPP11 will no longer extend the term of copyright to 70 years after the author’s death - a big deal for <a href="https://www.ic.gc.ca/eic/site/cipointernet-internetopic.nsf/eng/h_wr02281.html">Canada</a> and <a href="http://www.copyright.org.nz/basics.php">New Zealand</a> where copyright lasts 50 years after death. </p>
<p>It also suspends the anti-circumvention provisions, which means the TPP11 won’t make avoiding access measures (for example, technology that locks your ebooks or movies to a particular device) a crime. Although there’s a sting in the tail for Australia here - the TPP text on anti-circumvention is less restrictive than <a href="http://dfat.gov.au/trade/agreements/ausfta/official-documents/Pages/official-documents.aspx">our free trade agreement with the US</a>, and so we lose the benefit of that extra flexibility.</p>
<p>The incredibly complex <a href="https://theconversation.com/dont-sue-us-for-search-googles-unnecessary-safe-harbour-appeal-24405">safe harbours</a> provisions are also suspended – this leaves members with more flexibility to adjust copyright in the digital environment (but also potentially means no protection for online service providers for the acts of their infringing customers). </p>
<p>Also suspended is a funny little footnote that might have given TPP11 authors a claim on payments from some cultural funds (such as Canada’s). However, a provision that encourages copyright to be balanced is not suspended, so that’s good news. </p>
<p>But there is still a cornucopia of enforcement procedures and remedies, and very broad criminal liability for infringing copyright – including liability for “aiding and abetting” others’ infringement. There are broad provisions that allow right holders to claim any equipment used to infringe copyright. </p>
<p>And, beyond copyright, the ministers haven’t suspended a controversial provision (a first of its kind internationally) on the theft of <a href="http://law.unimelb.edu.au/__data/assets/pdf_file/0006/1994145/Rimmer.pdf">trade secrets</a>, and they’ve retained some key provisions on geographical indications and trade marks that are going to complicate efforts by countries in the region to use geographical indications (such as “<a href="https://theconversation.com/the-manuka-honey-fight-is-one-we-have-to-have-78261">Manuka honey</a>”) to develop local artisan and agricultural communities. </p>
<p>So while I’m happy to celebrate some realisation that the intellectual property chapter of the original TPP had serious problems, there is still quite a lot to dislike about what remains. </p>
<hr>
<p><strong>Deborah Gleeson, Senior Lecturer in Public Health, La Trobe University,</strong><br>
<strong>Belinda Townsend, Research Fellow, Australian National University:</strong></p>
<p>The <a href="http://dfat.gov.au/trade/agreements/tpp/news/Documents/annex-2.pdf">list of 20 items ministers have agreed will be suspended</a> in the re-branded TPP includes several of the intellectual property rules for pharmaceuticals that were demanded by the US but deeply unpopular amongst the other TPP countries. These rules would have <a href="https://theconversation.com/time-for-costly-medicine-monopolies-to-go-from-tpp-trade-talks-87176">made medicines less affordable</a> in the Asia-Pacific region.</p>
<p>Importantly for Australia, the provisions specifically targeting biologic medicines were on the list of suspended items. <a href="http://www.publish.csiro.au/AH/AH17031">Our recent study</a> found that this expensive class of drugs cost Australian taxpayers more than A$2.2 billion in 2015-16. Suspending the biologics rules means fewer barriers to making lower-cost treatments for conditions like cancer and rheumatoid arthritis available – at least for now. </p>
<p>Also suspended were rules requiring countries to provide patents for new uses, methods and processes of using existing products; extensions to patent terms; and what is known as “data exclusivity” – monopolies on clinical trial data submitted to regulatory agencies like the Therapeutic Goods Administration. These provisions would have <a href="http://journals.sagepub.com/doi/full/10.1177/1468018117734153">primarily impacted developing countries</a>, delaying access to generic medicines. They would also have cemented existing monopolies on new medicines in developed countries, including Australia – making it more difficult to reform our patent laws in future.</p>
<p>There is no doubt that suspension of these rules is a positive development. But simply putting them on ice for later implementation if the US re-joins the accord could just mean delaying their effects until a later time.</p>
<p>Despite the suspension of these specific items, there remain other provisions in the intellectual property chapter that could reduce access to medicines in the region. A better option than freezing a limited list of selected provisions would be to remove, or at least suspend, the whole intellectual property chapter.</p>
<p>There are many other parts of the TPP that could affect health, which have not been suspended or renegotiated. One example is the TPP’s alcohol labelling rules, which remain unchanged. These may <a href="https://pursuit.unimelb.edu.au/articles/could-new-trade-rules-mean-a-lack-of-health-warnings-on-alcohol">create difficulties for countries wanting to mandate effective health warnings</a> or other types of health information on alcohol containers. </p>
<p>Worse, there only seems to be some minor tinkering around the edges of the investment chapter being considered. The changes don’t appear to affect the chances that claims could be brought by corporations against governments over health and medicines policies. It’s a shame the TPP11’s negotiators haven’t taken the opportunity to exempt all health policies from potential investor-state disputes - tobacco control measures remain <a href="http://www.phrp.com.au/issues/april-2016-volume-26-issue-2/to-what-extent-does-a-tobacco-carve-out-protect-public-health-in-the-trans-pacific-partnership-agreement/">the only health policies that countries can elect to explicitly exclude</a>.</p>
<p>There is still time for a more comprehensive reassessment of the TPP, including its likely impact on health and human rights: the agreement has not yet been finalised. </p>
<p>Suspending a small number of the worst provisions doesn’t mean an agreement that is good for health.</p><img src="https://counter.theconversation.com/content/87432/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah Gleeson has received research funding in the past from the Australian Research Council. She has received funding from various national and international non-government (not-for-profit) organisations to attend speaking engagements related to trade agreements and health, including the TPP. She has represented the Public Health Association of Australia on matters related to trade agreements and public health.</span></em></p><p class="fine-print"><em><span>Belinda Townsend is a member of the People's Health Movement and the Public Health Association of Australia. She has been involved in the Public Health Association of Australia's advocacy on matters relating to trade agreements. </span></em></p><p class="fine-print"><em><span>Kimberlee Weatherall receives funding from the Australian Research Council, DP150104175, Process Matters: The new global law of intellectual property enforcement. She is an unpaid member of the board of the Australian Digital Alliance.</span></em></p><p class="fine-print"><em><span>Pat Ranald is the voluntary convener of the Australian Fair Trade and Investment Network, which advocates for fair trade base on human rights, labour rights and environmental sustainability.</span></em></p><p class="fine-print"><em><span>Peter Robertson receives funding from the Australian Research Council and The Department of Foreign Affairs.</span></em></p>Many provisions in the Trans-Pacific Partnership have been suspended after the United States pulled out. But there’s still much to debate about the regional free trade agreement.Deborah Gleeson, Senior Lecturer in Public Health, La Trobe UniversityBelinda Townsend, Research Fellow, NHMRC Centre for Research Excellence in the Social Determinants of Health Equity, School of Regulation and Global Governance, Australian National UniversityKimberlee Weatherall, Professor and Associate Dean (Research) The University of Sydney Law School, University of SydneyPatricia Ranald, Research Associate, University of SydneyPeter Robertson, Professor, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/871762017-11-09T06:00:37Z2017-11-09T06:00:37ZTime for costly medicine monopolies to go from TPP trade talks<p>Negotiators from 11 countries have been racing to resurrect the near-dead Trans-Pacific Partnership Agreement before the Asia-Pacific Economic Cooperation (APEC) summit this weekend.</p>
<p>The latest plan to get the controversial trade deal up and running again after the withdrawal of the United States involves <a href="https://asia.nikkei.com/Politics-Economy/International-Relations/TPP-11-negotiators-make-headway-before-crucial-summit-next-week">freezing some of its controversial rules</a>. These include rules for biologic drugs, an expensive class of medicines often used to treat conditions such as cancer and rheumatoid arthritis.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">Explainer: what are biologics and biosimilars?</a>
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<h2>The market monopoly</h2>
<p>Biologic drugs are <a href="https://theconversation.com/explainer-what-are-biologics-and-biosimilars-45308">produced from living organisms</a> using certain types of cells to produce particular proteins. Biologics have the ability to bind to specific cells, which means they are often more effective and may have fewer side effects than broadly acting drugs. </p>
<p>They are very expensive, particularly when they are under monopoly protection. This is when the drugs can’t be legally copied for a certain amount of time. Governments have accepted the pharmaceutical industry’s proposition that they need this monopoly period to <a href="http://www.palgrave-journals.com/biosoc/journal/v6/n1/abs/biosoc201040a.html">recoup their research and development costs</a>.</p>
<p>For example, pembrolizumab (Keytruda), a drug for metastatic melanoma, <a href="http://www.abc.net.au/news/2015-06-28/melanoma-drug-listed-on-pbs-saving-patients-thousands/6578554">cost patients approximately A$150,000</a> for a year’s treatment before it was subsidised by Australia’s Pharmaceutical Benefits Scheme (PBS). </p>
<p>Once the period of monopoly protection ends, biosimilar medicines (generic versions) can be produced and sold at lower prices. Currently in Australia, once a biosimilar is on the market and listed on the PBS the market prices will drop by about 16% for all brands of the medicine.</p>
<p>Disagreement over the period of monopoly protection for new biologic drugs <a href="https://theconversation.com/how-the-battle-over-biologics-helped-stall-the-trans-pacific-partnership-45648">once brought the negotiations</a> over the Trans-Pacific Partnership (TPP) agreement to a standstill. The final text of the TPP, negotiated before the withdrawal of the United States, includes a controversial provision for monopoly protection for biologics known as data exclusivity.</p>
<p>During the period of data exclusivity, other drug manufacturers wanting to replicate the medicine can’t access the clinical trial data used to demonstrate the safety and efficacy of the original drug to the regulator.</p>
<p>This form of monopoly protection is separate to the period of patent protection. In Australia, the data protection period is currently five years for both biologics and conventional drugs.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-biologics-were-such-a-big-deal-in-the-trans-pacific-partnership-48595">Why biologics were such a big deal in the Trans Pacific Partnership</a>
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<p><a href="https://ustr.gov/sites/default/files/TPP-Final-Text-Intellectual-Property.pdf">The final TPP text</a>, pushed by the United States, requires countries who ratify the agreement to provide for eight years of data exclusivity. Or alternatively five years of data exclusivity together with other (unspecified) measures that would still grant the original drug manufacturer a monopoly over the market.</p>
<p>While the industry argues this period is necessary to support innovation, there’s little evidence to validate this claim. <a href="https://www.researchgate.net/profile/Mike_Palmedo/publication/252931412_Do_Pharmaceutical_Firms_Invest_More_Heavily_in_Countries_with_Data_Exclusivity/links/00b7d51f582ee1caf5000000/Do-Pharmaceutical-Firms-Invest-More-Heavily-in-Countries-with-Data-Exclusivity.pdf">One international comparative study</a> found no relationship between the existence of data exclusivity and the amount of pharmaceutical industry investment in a country.</p>
<p><a href="http://www.pc.gov.au/inquiries/completed/intellectual-property/report">Two</a> <a href="https://www.ipaustralia.gov.au/about-us/public-consultations/archive-ip-reviews/pharmaceutical-patents-review">reviews</a> commissioned by the Australian government found no evidence exclusivity for biologic products need be extended.</p>
<h2>The prohibitive cost</h2>
<p>While there’s no evidence to support this form of monopoly protection, there is significant evidence of the costs for Australian taxpayers when there are monopolies on biologics.</p>
<p><a href="http://www.publish.csiro.au/AH/AH17031">New research in the Australian Health Review</a> shows biologic drugs cost Australia’s PBS over A$2 billion in the year 2015-2016 alone. If cheaper biosimilar versions of these medicines had been available in 2015/2016, at least A$367 million would have been saved.</p>
<p>Modelling shows annual PBS spending on biologics could be reduced by as much as 24% through the timely availability of biosimilars.</p>
<p>The TPP’s rules for biologic medicines could not only keep these biosimilars out of reach for longer, but also put hundreds of millions in PBS savings at risk. This is unless the negotiators agree to remove these rules completely from the revamped TPP.</p>
<h2>Intellectual property and the TPP</h2>
<p>TPP negotiators should also seek to drop <a href="http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001970">a suite of other intellectual property measures</a> that would extend pharmaceutical monopolies in several of the low- and middle-income countries participating in the remaining TPP-11 discussions. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-the-battle-over-biologics-helped-stall-the-trans-pacific-partnership-45648">How the battle over biologics helped stall the Trans Pacific Partnership</a>
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<p>These include measures to make it easier to obtain patents, extend patent terms, grant periods of data exclusivity for non-biologic drugs, and prevent drug regulatory authorities from approving generic drugs when patent holders claim potential infringement.</p>
<p>These provisions would likely delay generic medicines in several low- and middle-income countries participating in the negotiations. A <a href="http://journals.sagepub.com/doi/abs/10.1177/1468018117734153?ai=1gvoi&mi=3ricys&af=R">recent study</a> of the potential impact of TPP intellectual property measures for participating countries demonstrated different outcomes for high- and low-income countries. If these provisions remain in the TPP, low income countries would suffer, as they wouldn’t be able to provide cheaper medications to their people.</p>
<p>High-income countries, in contrast, would experience little change regarding access to medicines as a result of the TPP. Australia, for example, has already implemented these measures (aside from those affecting biologics) and would not have to make legislative changes. </p>
<p>But Australia and other high-income countries would become locked into these provisions, making it difficult for future governments to amend their domestic laws. Australia’s independent <a href="https://www.ipaustralia.gov.au/about-us/public-consultations/archive-ip-reviews/pharmaceutical-patents-review">Pharmaceutical Patent Review</a> panel recommended Australia should be working to reduce the length of patent term extensions.</p>
<p>The TPP-11 discussions provide an opportunity for negotiators to rectify some of the most contentious and politically unacceptable elements in the TPP, and drop them from the agreement.</p><img src="https://counter.theconversation.com/content/87176/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Belinda Townsend is a member of the People's Health Movement and the Public Health Association of Australia. She has been involved in the Public Health Association of Australia's advocacy on matters relating to trade agreements. </span></em></p><p class="fine-print"><em><span>Deborah Gleeson has received research funding in the past from the Australian Research Council. She has received funding from various national and international non-government (not-for-profit) organisations to attend speaking engagements related to trade agreements and health, including the TPP. She has represented the Public Health Association of Australia on matters related to trade agreements and public health.</span></em></p><p class="fine-print"><em><span>Joel Lexchin receives funding from the Canadian Institutes of Health Research. He is affiliated with Health Action International.</span></em></p><p class="fine-print"><em><span>Hazel Moir and Ruth Lopert do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Negotiators from 11 countries have been racing to resurrect the near-dead Trans-Pacific Partnership Agreement before the Asia-Pacific Economic Cooperation (APEC) summit this weekend.Belinda Townsend, Research Fellow, NHMRC Centre for Research Excellence in the Social Determinants of Health Equity, School of Regulation and Global Governance, Australian National UniversityDeborah Gleeson, Senior Lecturer in Public Health, La Trobe UniversityHazel Moir, Adjunct Associate Professor; economics of patents, copyright and other "IP", Australian National UniversityJoel Lexchin, Affiliate - pharmaceutical policy, University of SydneyRuth Lopert, Adjunct professor, Department of Health Policy & Management, George Washington UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/783782017-06-26T00:15:46Z2017-06-26T00:15:46ZZombie Trans-Pacific Partnership agreement lurches on<figure><img src="https://images.theconversation.com/files/173660/original/file-20170613-30067-1xeuw1l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Did the TPP die - or is it now a zombie? </span> <span class="attribution"><a class="source" href="https://visualhunt.com/f/photo/10545775696/aa0cf53099/">(Visual Hunt/Killaee)</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span></figcaption></figure><p>When Donald Trump pulled the United States out of the Trans-Pacific Partnership (TPP) agreement, the treaty appeared to die. Critics breathed a sigh of relief. In Canada, attention turned to Trump’s promise to renegotiate the 1994 North American Free Trade Agreement (NAFTA).</p>
<p>But wait.</p>
<p>Did the TPP die? Or is it now a bloody zombie? Many of the 11 remaining member countries have ratified the agreement, or plan to. Chile and Canada have both hosted meetings to consider <a href="https://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/tpp-members-to-decide-how-to-revive-pact-without-us/article35030576/?reqid=859df3ea-028a-43cd-a8ac-1b1089a81f7f">ways to resurrect it</a>. </p>
<p>NAFTA’s renegotiation also signals that the U.S. remains committed to new trade and investment treaties, so long as they are even more beneficial to American investors and export interests than they have been in the past. <a href="https://ustr.gov/sites/default/files/files/reports/2017/AnnualReport/Chapter%20I%20-%20The%20President%27s%20Trade%20Policy%20Agenda.pdf">New US trade objectives</a> are explicit on this point. The U.S. may never rejoin the TPP but will almost certainly export the provisions it likes into new bilateral trade deals.</p>
<p>Lurking in the shadows is the geopolitics at stake: the rising power of China and its role in another (very much alive) Asia-Pacific trade and investment negotiation, the Regional Comprehensive Economic Partnership (RCEP). The Obama administration’s adamant support for the TPP was based on a wish for American interests to forge a new Asia-Pacific agreement, not Chinese. Promises of increased growth, labour rights and environmental protection were window dressing for a wary public.</p>
<p>As Canada Research Chair in Globalization and Health Equity, and having spent four years studying the health impacts of the TPP, it’s worth recounting the zombie’s many weaknesses. </p>
<h2>Low economic growth, rising income inequality</h2>
<p>If, as claimed, the TPP really did boost economic growth that trickled down equitably, people’s health would likely benefit. But the most optimistic projections of the TPP’s impact on economic growth average only 0.5 per cent by 2025. The Canadian government estimates that the <a href="http://international.gc.ca/economist-economiste/analysis-analyse/tpp_ei-re_ptp.aspx?lang=eng">TPP would boost Canada’s growth by just 0.127%</a> (and not until 2040). The net dollar gains would be less than Canada’s losses on more expensive pharmaceuticals and adjustment subsidies to its dairy and auto sectors. </p>
<p>These projections all assume no changes to employment. They assume equal or rising incomes. In stark contrast, modelling that did not make these assumptions has estimated <a href="http://www.ase.tufts.edu/gdae/Pubs/wp/16-01Capaldo-IzurietaTPP.pdf">substantial employment losses</a>. A U.S. study further calculated that the TPP would <a href="http://cepr.net/documents/publications/TPP-2013-09.pdf">raise incomes for the 1% but drop those of everyone else</a>, an indication of who stands to gain with such treaties. </p>
<h2>Weak labour protection, silence on climate</h2>
<p>The labour chapter of the TPP only prevents countries from lowering existing standards if it affects trade or investment amongst member countries. It <a href="http://journals.sagepub.com/doi/10.1177/0020731416684325">does not guarantee health, safety or adequate pay for workers</a> whose share of economic product globally has plummeted since the 1980s. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=367&fit=crop&dpr=1 600w, https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=367&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=367&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=461&fit=crop&dpr=1 754w, https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=461&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/175511/original/file-20170626-13441-jv6eau.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=461&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A plane flies past the Peace Tower in Ottawa trailing a sign protesting the TPP agreement.</span>
<span class="attribution"><span class="source">(THE CANADIAN PRESS/Adrian Wyld)</span></span>
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</figure>
<p>The environment chapter similarly requires governments to uphold enforcement only if failure to do so affects trade or investment. It is silent on climate change and on greenhouse gas emissions from global trade driven by fossil fuels. </p>
<p>Trade treaty rules could work to reduce income inequalities and afford meaningful and enforceable protection of labour and environmental rights. The TPP zombie in present form does not.</p>
<h2>Unhealthy regulatory regime</h2>
<p>The TPP contains four especially troubling regulatory impacts:</p>
<p>– Tougher patent protection would <a href="http://www.ourcommons.ca/Content/Committee/421/CIIT/Brief/BR8384140/br-external/LexchinJoel-final-e.pdf">affect the price of drugs</a>, especially costly new “biologics” used in treating cancers and autoimmune disorders.</p>
<p>– Requirements to prove the necessity of, or scientific justification for, new <a href="http://dx.doi.org/10.15171/ijhpm.2016.41">health regulations</a> would be more stringent than those under the World Trade Organization (WTO) system. </p>
<p>– New obligations allowing “persons” (including private corporations) from any member country to participate in developing new technical regulations could potentially lead to <a href="http://www.investopedia.com/terms/r/regulatory-capture.asp">regulatory capture</a>. </p>
<p>– Contentious <a href="https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2016/06/Foreign_Investor_Protections_TPP.pdf">investor-state dispute settlement (ISDS) rules</a> would allow foreign investors to sue governments over new policies or regulations affecting the value of their investments. </p>
<p>The number and monetary value of ISDS disputes have exploded since the 1990s, with investors winning about 60 per cent of the cases.</p>
<h2>Time to reset the global trade agenda</h2>
<p>In the rush to prevent trade wars becoming world wars, <a href="https://www.wto.org/english/docs_e/legal_e/04-wto_e.htm">the initial intent of trade and investment liberalization</a> – to create full employment, raise living standards, and respect environmental sustainability – has been lost. The means have become the ends in themselves. It’s time to reset the global trade agenda.</p>
<p>To that end, may the TPP zombie rest in peace.</p><img src="https://counter.theconversation.com/content/78378/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ronald Labonte receives funding from Canadian Institutes of Health Research and the Canada Research Chair Secretariat. He is also a chief investigator on the Australian National Health and Medical Research Council funded Center for Research Excellence in the Social Determinants of Health Equity.</span></em></p>NAFTA renegotiations may see provisions from the Trans-Pacific Partnership revive like zombies. We must remember their failures - on income inequality, labour and environmental protection.Ronald Labonte, Professor and Canada Research Chair, L’Université d’Ottawa/University of OttawaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/781052017-05-29T06:39:34Z2017-05-29T06:39:34ZTrans Pacific Partnership to forge ahead without the US – at least for now<p>Free trade used to be a rallying cry for mainstream North American politicians. Back in the 1980s, Canada’s then prime minister, Brian Mulroney, campaigned successfully on the idea that <a href="https://books.google.com.hk/books?id=0Ol3Otvbuw0C&pg=PA413&lpg=PA413&dq=Brian+Mulroney,+%E2%80%9Cjobs,+jobs,+jobs%22&source=bl&ots=ZYi1_XjTbC&sig=2vKgUegwm2sm7JMpjKSvuc4ioS0&hl=en&sa=X&ved=0ahUKEwiD_JfE14XUAhWLpo8KHU5zDS8Q6AEINDAD#v=onepage&q=Brian%20Mulroney%2C%20%E2%80%9Cjobs%2C%20jobs%2C%20jobs%22&f=false">trade agreements</a> would <a href="https://www.socialism.com/drupal-6.8/articles/dateline-canada-proof-positive-nafta-kills-jobs">create</a> “<a href="http://www.cbc.ca/archives/entry/brian-mulroney-campaigning-for-a-parliamentary-seat-in-central-nova">jobs, jobs, jobs</a>”. </p>
<p>Today, such a slogan could well be political suicide. Indeed, during last year’s US presidential campaign, the only common ground among <a href="https://berniesanders.com/press-release/sanders-the-only-candidate-who-fought-job-killing-trade-deals/">Bernie Sanders</a>, <a href="https://www.theatlantic.com/politics/archive/2015/10/hillary-clinton-abandons-obama-on-trade/409546/">Hillary Clinton</a> and <a href="https://www.theatlantic.com/business/archive/2016/11/tpps-death-wont-help-the-american-middle-class/507683/">Donald Trump</a> was their contempt for the “<a href="https://berniesanders.com/candidates-must-take-a-firm-stand-on-the-job-killing-tpp-deal/">job killing</a>” Trans-Pacific Partnership (TPP) trade deal among American and Asian countries.</p>
<p>And within a few days of reaching office, President Trump <a href="http://www.businessinsider.com/sanders-mccain-trump-trans-pacific-partnership-2017-1">pulled the US out of the agreement</a>. But it now seems that news of the deal’s demise was premature. </p>
<p>At least for now, the 11 other countries party to the agreement – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – are <a href="http://www.bbc.com/news/39990686?ocid=global_bbccom_email_21052017_business">forging ahead</a>, even without the participation of the world’s largest economy.</p>
<h2>Understanding free trade</h2>
<p>Often lost in the fiery rhetoric about free trade agreements, such as the TPP, is their true economic benefit. Trade deals aren’t meant to be about jobs in this or that industry. They’re about raising a country’s overall productivity and prosperity.</p>
<p>In the short term, tariffs may seem beneficial as they allow less efficient homegrown companies to hire more and produce more. And, with free trade, <a href="http://www.imf.org/external/pubs/ft/fandd/basics/trade.htm">foreign competition dislodges local suppliers</a> and <a href="https://www.stlouisfed.org/on-the-economy/2015/june/how-international-trade-affects-the-us-labor-market">employment in certain industries falls</a>.</p>
<p>But what’s overlooked in these simple scenarios is the longer-term price of protectionism. While tariffs prop up some businesses, they <a href="http://www.jstor.org/stable/2006548?seq=1#page_scan_tab_contents">limit the international flow of resources</a> to most others.</p>
<p>Free trade, on the other hand, <a href="http://onlinelibrary.wiley.com/doi/10.1111/1468-0262.00467/full">bolsters productivity</a>. Once countries enter an agreement, resources naturally move around to the more efficient industries at home and abroad. </p>
<p>All countries tend to benefit from this shared increase in productivity – and, yes, from job creation in the long run.</p>
<p>Equally important, productivity usually rises for all countries in <a href="https://academic.oup.com/restud/article/75/1/295/1629450/Market-Size-Trade-and-Productivity">direct proportion to the size of the common market</a>. The larger the scope of the trade agreement and the more countries involved, <a href="https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp091906a">the better for everyone</a>. The reason is simple: an exporting industry now has access to many more markets, with the associated economies of scale reducing costs and increasing profits.</p>
<p>Without the US in the TPP, scale effects will certainly be much smaller. But the productivity effects of new markets remain attractive. Unless, that is, the US exit prompts TPP members to consider that agreement redundant because of the <a href="http://nationalinterest.org/feature/tpp-vs-rcep-america-china-battle-control-pacific-trade-14021">Regional Comprehensive Economic Partnership</a> (RCEP). </p>
<p>This partnership was first conceived as a regional trade agreement to enhance economic ties <a href="http://www.reuters.com/article/us-trade-tpp-rcep-idUSKCN0S500220151011">between the ten members of the Association of Southeast Asian Nations</a> (ASEAN): Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia. It then expanded to include China, Japan, South Korea, India, Australia and New Zealand. And <a href="https://www.pressreader.com/china/global-times/20161123/281487865946077">China has strongly backed the RCEP</a> since the TPP was announced.</p>
<p>Over time, the agreement’s design evolved to <a href="http://www.reuters.com/article/us-trade-tpp-rcep-idUSKCN0S500220151011">become an alternative</a> to the TPP, serving as a proxy for a political battle between the US and China. No more.</p>
<h2>Winners and losers</h2>
<p>Most TPP signatories are already part of the RCEP. That agreement comprises 16 countries and the TPP now has 11. Canada, Chile, Mexico and Peru belong to the TPP but not the RCEP. China, India and South Korea are in the RCEP but not the TPP. Meanwhile, China and South Korea are <a href="http://www.cnbc.com/2017/03/14/china-south-korea-join-tpp-members-in-trade-talks.html">having talks</a> with the other countries in the TPP.</p>
<p>For the Latin American countries, access to the Chinese and South Korean markets through the RCEP would be significant. After all, the US already has lower tariffs on average than emerging markets; Mexico and Canada are part of NAFTA; Chile has had an agreement with the US <a href="https://ustr.gov/trade-agreements/free-trade-agreements/chile-fta">since 2004</a>; and while Peru does not have an exclusive trade agreement with the US, it has had a promotion agreement to liberalise the services trade <a href="https://ustr.gov/trade-agreements/free-trade-agreements/peru-tpa">since 2009</a>. </p>
<p>Even with the US departure from the TPP, Canada, Chile, Mexico and Peru are well positioned for US trade through other agreements.</p>
<p>For the Asian countries, losing privileged access to the American market is certainly a blow, since geographical proximity and other economic ties already give them access to the Chinese and South Korean markets.</p>
<p>The reason trade agreements are not more plentiful is because <a href="https://theconversation.com/redesigning-nafta-is-not-a-bad-idea-if-workers-rather-than-vested-interests-win-76861">vested interests usually fight</a> tooth and nail to maintain their privileged position in local markets. Local companies tend to play the nationalist card – we create jobs! – and advance only a myopic view to convince politicians to abandon free trade deals. </p>
<p>Importing industries are <a href="https://www.econstor.eu/bitstream/10419/26285/1/559514182.PDF">less productive than exporting industries</a>. This is intuitive. If an importing industry were more efficient than the rest of the world, it would not be an importing industry in the first place.</p>
<h2>More than trade</h2>
<p>What is also lost in discussion is that the TPP is much more than a simple trade agreement. It also covers services and intellectual property. </p>
<p>While the US trade deficit in the first quarter of 2017 was approximately <a href="https://www.bea.gov/international/">US$65 billion a month</a>, the surplus in services offset a third of it. US exports in the service sector include <a href="https://www.bea.gov/newsreleases/international/trade/2017/trad0317.htm">over US$10 billion in royalties</a> on the use of American intellectual property. </p>
<p>The TPP would have been highly beneficial to the interests of the US software, publishing and financial firms. But to try to recapture the way of life of the 1950s, American politicians are forgetting about the industries of the 21st century. </p>
<p>At any rate, a zero trade deficit is a mirage in the case of the US. The country does not lose by importing more than it exports. It just means that it’s productive in other sectors. The <a href="https://www.bloomberg.com/news/articles/2017-03-01/trump-trade-friction-overlooks-america-s-huge-surplus-in-services">American financial sector is particularly strong</a> worldwide. </p>
<p>By withdrawing from the TPP, the US left a significant gap, as the total size of the trade agreement shrunk considerably. </p>
<p>The RCEP may fill it, or the countries may forge ahead without the US. It won’t be the same without the American market, but it should still bring enough benefits for the remaining countries to make it worthwhile to go through the trouble of enacting it.</p>
<p>While it may have been politically expedient, candidate – and now President – Trump was absolutely wrong when he said that “<a href="http://time.com/4386335/donald-trump-trade-speech-transcript/">trade reform</a> and the negotiation of great trade deals is the quickest way to bring our jobs back to our country”. </p>
<p><a href="http://www.apec.org/Press/News-Releases/2017/0516_tran">Globalisation is inevitable</a> and irreversible, as Vietnam’s president recently mentioned. </p>
<p>Most economists agree that free trade generates wider and greater benefits, and that’s why the US used to be a big promoter of deals such as the TPP. </p>
<p>The current US flip-flop is bad for the World Trade Organisation, which is likely to <a href="https://www.wto.org/english/news_e/news17_e/anti_10may17_e.htm">see more anti-dumping cases</a> (a dispute when <a href="https://www.wto.org/english/docs_e/legal_e/19-adp_01_e.htm">a country accuses another</a> of exporting goods at less than their normal value) by and against the US; for multilateral agreements, such as the TPP; and for the world, as protectionist talk increases the probability of trade wars.</p><img src="https://counter.theconversation.com/content/78105/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Rodrigo Zeidan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The TPP should still bring enough benefits for the remaining countries to make it worthwhile to go through the trouble of enacting it.Rodrigo Zeidan, Associate Professor, NYU Shanghai and Fundação Dom Cabral, NYU ShanghaiLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/727392017-02-14T07:28:16Z2017-02-14T07:28:16ZHas Abe got Trump’s measure? Golf diplomacy puts Japan back on the green<p>Japanese Prime Minister Shinzo Abe managed to be the <a href="http://www.independent.co.uk/news/world/politics/donald-trump-election-latest-japanese-prime-minister-shinzo-abe-meeting-a7424106.html">first foreign leader to visit then president-elect Donald Trump</a> last November. He was already embarking on his activist personal diplomacy to counter the <a href="http://www.forbes.com/sites/stuartanderson/2016/05/22/donald-trumps-plan-to-make-americans-poor-again/#3b98d7b02db0">bellicose rhetoric Trump occasionally aimed at Japan</a> during his election campaign, accusing the country of unfair trade practices and currency manipulation, and threatening tariffs against imports.</p>
<p>Trump even implied an end to the US-Japan alliance, stating that Japan, along with other US allies, <a href="http://time.com/4437089/donald-trump-nuclear-weapons-nukes/">should develop its own nuclear weapons</a>. But Abe’s first official meeting with President Trump last week – the second world leader after British Prime Minister Theresa May – has already achieved Japan’s most fundamental diplomatic goal: ensuring the continuity its security alliance with America.</p>
<p>The trip follows a <a href="http://www.japantimes.co.jp/news/2017/02/04/national/politics-diplomacy/inada-says-hopes-mattis-visit-strengthens-regional-security-ties-south-korea/">successful preliminary visit to Japan</a> the previous week by the US Secretary of Defense James Mattis, and a <a href="http://www.mofa.go.jp/press/kaiken/kaiken4e_000339.html">similarly positive phone call</a> between Japanese Foreign Minister Fumio Kishida and US Secretary of State Rex Tillerson.</p>
<p>Mattis praised the country’s financial contribution to the hosting of US bases in Japan (around 75%, with most bases in Okinawa) as a “<a href="http://the-japan-news.com/news/article/0003502433">model of cost-sharing</a>”. And he issued a statement that the US would continue to defend Japan’s claims over the Senkaku Islands in the East China Sea (claimed as the Daioyus by China), under the US-Japan Security Treaty.</p>
<h2>Maintaining the status quo</h2>
<p>Reassured by his firm endorsement of the value of Japan’s contribution to the expense of the alliance, the first stage of Abe’s trip to the US produced exactly what was hoped for. In a joint press conference following talks after Abe’s arrival in Washington DC, <a href="https://www.whitehouse.gov/the-press-office/2017/02/10/remarks-president-trump-and-prime-minister-abe-japan-joint-press">Trump said</a>: </p>
<blockquote>
<p>We are committed to the security of Japan and all areas under its administrative control and to further strengthening our crucial alliance. The bond between our two nations and the friendship between our two peoples runs very, very deep. This administration is committed to bringing those ties even closer.</p>
</blockquote>
<p><a href="https://www.whitehouse.gov/the-press-office/2017/02/10/joint-statement-president-donald-j-trump-and-prime-minister-shinzo-abe">A joint statement released afterwards</a> confirmed the US remains committed to defending Japan’s claims over the Senkaku Islands under Article 5 of the US-Japan Security Treaty, including use of conventional and nuclear military capabilities, if necessary. </p>
<p>The controversial relocation of the main US military air base on Okinawa will also continue. While maintaining rights to international freedom of flight and navigation in the East China Sea, Abe and Trump also hoped <a href="http://www.abc.net.au/news/2017-02-11/trump-committed-to-us-japan-security-after-abe-meeting/8261620">any actions that would escalate tensions</a> in the South China Sea could be avoided.</p>
<p>But, in the first such encounter under the Trump administration, the US Navy has already reported an “<a href="https://www.theguardian.com/world/2017/feb/10/south-china-sea-us-navy-aircraft-encounter">unsafe interaction</a>” between one of its reconnaissance aircraft and a Chinese aircraft during a patrol over the South China Sea.</p>
<p>And this is despite Trump having followed up his greeting letter to Xi Jinping, where he expressed hope they can work productively together, with his first phone call to the Chinese leader. During the call, he reiterated the <a href="http://www.vox.com/world/2017/2/10/14575442/trump-accept-one-china">USA’s long-held adherence to the “One China” policy</a> after all.</p>
<h2>The problem of trade</h2>
<p>Before and during the visit, ignoring criticism from opposition parties in Japan, <a href="http://www.asahi.com/ajw/articles/AJ201701310048.html">Abe remained uncritical of Trump’s controversial</a> – and possibly unconstitutional – immigration ban. Abe is hardly in any position to criticise it, given Japan’s own paltry record of accepting refugees. Despite a record number of over 10,000 applications, <a href="http://www.japantimes.co.jp/news/2017/02/10/national/record-10910-refugee-applicants-face-abysmal-odds-acceptance-japan/#.WKA43X82VOY">Japan only accepted 28 refugees in 2016</a>.</p>
<p>North Korea’s first missile launch test of the year, <a href="https://theconversation.com/forget-sanctions-reining-in-north-korea-will-need-a-whole-new-approach-70431">held in the middle of Abe’s US visit</a>, also gave the two leaders an immediate opportunity to display the ongoing strength of the alliance. <a href="http://www.bbc.com/news/world-asia-38947451">In a joint news conference</a>, Abe condemned the test as “absolutely intolerable”, while Trump declared “the United States of America stands behind Japan, its great ally, 100%.”</p>
<p>While the defence relationship may have been secured, trade remains the main area of contention. The Trans-Pacific Partnership (TPP), which Japan strongly supported <a href="https://theconversation.com/can-the-trans-pacific-partnership-survive-after-trump-71821">is now likely to be doomed</a>, due to Trump’s condemnation of multilateral trade pacts. </p>
<p>Abe hopes Trump’s hostile campaign rhetoric against Japan over trade can also be mollified. </p>
<p>Appealing to Trump’s populist economic nationalism, Abe brought along a plan called the <a href="http://in.reuters.com/article/us-usa-trump-japan-trade-exclusive-idINKBN15F0LD">US-Japan Growth and Employment Initiative</a>. Projected to be worth around US$450 billion, it pledges potential investment by Japanese corporations in the US – in infrastructure, energy, and robots. The package, which promises the <a href="http://the-japan-news.com/news/article/0003498622">creation of more than 700,000 jobs</a> in America over ten years, could be incorporated into a potential bilateral trade deal with Japan. </p>
<p>At their Washington meeting, Abe and Trump <a href="http://mainichi.jp/english/articles/20170211/p2g/00m/0dm/005000c">agreed to commence talks on a bilateral trade agreement</a>, in place of the TPP. A new US-Japan economic dialogue group is to be established toward that end, to be led by US Vice President Mike Pence and Japanese Deputy Prime Minister Taro Aso, who also held their first separate meeting in Washington.</p>
<p>As with the TPP though, concluding a bilateral trade treaty is likely to be long, complex, fraught process, particularly over agriculture.</p>
<h2>Work and play</h2>
<p>After the formal Washington meetings, Abe flew to Florida with Trump on Air Force One, accompanied by first ladies Melania Trump and Akie Abe, to the president’s extravagantly luxurious Mar-a-Largo resort, <a href="https://www.thesun.co.uk/news/2842627/donald-trump-golfing-japanese-prime-minister-abe/">to play golf for the weekend</a>. The White House stated the cost of Abe’s visit to the resort, including golfing fees, would be paid for by Trump as a personal gift. </p>
<p>This is a further sign of the apparently warm personal ties that Abe has managed to cultivate; Trump has already accepted an invitation to visit Japan later this year.<br>
If Abe returns with US trade relations relatively intact, as well as the military alliance, he will have taken advantage of the erratic and turbulent first weeks of the Trump administration to <a href="https://theconversation.com/japans-australian-sub-bid-fits-with-its-strategic-and-economic-transformation-48156">secure favourable strategic and economic relations</a>. His government is likely to be supported by the Trump administration, as it was by president Barack Obama’s, to continue increasing defence spending, and pursuing further constitutional change.</p>
<p>In return, Abe is likely to encourage the US to challenge China’s recent domination of the South China Sea, and <a href="http://www.abc.net.au/news/2017-02-09/could-the-indian-ocean-become-south-china-sea/8257204">compete with the expansion of Chinese influence into the Indian Ocean region</a>, through its planned massive “One Belt, One Road” land and sea transport infrastructure project. </p>
<p>Abe’s US visit could, in fact, eventually turn out to have been an important step in reviving his long-held ambition for <a href="http://www.nippon.com/en/column/g00339/">a “security diamond” between Japan, the US, India and Australia</a>, which he proposed during his first term as prime minister in 2006-2007. </p>
<p>These four states may now be more willing to revive this idea for a strategic alliance, but if it does proceed, this could threaten a Cold War-style hegemonic confrontation in the Asia-Pacific region. And it could have potentially catastrophic consequences if armed conflict breaks out over territorial disputes.</p>
<p>Abe is one of the most energetic practitioners of diplomacy among modern Japanese prime ministers. By flattering Trump’s ego, he has proved adept at handling Trump’s inexperience in foreign policy. He has managed to successfully challenge one of Trump’s strongest held attitudes, publicly expressed as long ago as 1987, that <a href="http://www.nybooks.com/articles/2017/02/09/what-trump-is-throwing-out-the-window/">the US is being exploited by its allies</a> in providing for their military protection. </p>
<p>Abe has demonstrated to other world leaders how to approach President Donald Trump: pay the price to strike a deal that panders to corporate interests and geostrategic nationalism of both sides. </p>
<p>This first official US visit has thus potentially become Abe’s most far-reaching diplomatic achievement so far. That is, if the notoriously temperamental, inconsistent and contradictory Trump can be counted on to stick to his deals.</p><img src="https://counter.theconversation.com/content/72739/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Mark does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Japanese Prime Minister Shinzo Abe may have just demonstrated to other world leaders how to possibly approach President Donald Trump.Craig Mark, Professor, Kyoritsu Women's UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/718212017-01-26T07:47:32Z2017-01-26T07:47:32ZCan the Trans Pacific Partnership survive after Trump?<p>True to his promise, President Donald Trump <a href="https://www.nytimes.com/2017/01/23/us/politics/tpp-trump-trade-nafta.html">withdrew the US from the Trans Pacific Partnership</a> within 72 hours of assuming office. His decision has many implications for trade and geostrategic issues in the Asia Pacific, and <a href="http://www.cbsnews.com/news/trans-pacific-partnership-members-try-to-salvage-pact-trump/">remaining members are planning to meet</a> and discuss their options. </p>
<p>The TPP is an ambitious <a href="http://www.bbc.com/news/business-32498715">regional trade agreement comprising 12 countries</a> – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Singapore, Peru, Vietnam and the United States – accounts for around 40% of world GDP. </p>
<p>Negotiations concluded in October 2015, and the deal was <a href="http://www.thehindu.com/business/12-nations-sign-transpacific-partnership-trade-deal/article8191992.ece">signed by members in February 2016</a>. But it needed to be ratified by at least six signatories – accounting for 85% of the total GDP of the bloc – to come into force. </p>
<p>Unless the US, which is the largest economy in the bloc, ratifies, it cannot. And, in this sense, the agreement is no longer a possibility.</p>
<h2>Reports of an early death</h2>
<p>The Trans Pacific Partnership ran into rough weather during the US presidential election campaign last year; <a href="http://www.businessinsider.com/what-is-tpp-2016-9">opposition to the deal was bipartisan</a>. Apart from Trump, <a href="https://www.sanders.senate.gov/download/the-trans-pacific-trade-tpp-agreement-must-be-defeated?inline=file">Bernie Sanders was heavily opposed</a> to the agreement. Even Hillary Clinton, who supported it during her tenure as Secretary of State in the Obama administration, <a href="http://www.seattletimes.com/opinion/editorials/hoping-hillary-clinton-changes-her-mind-on-the-trans-pacific-partnership/">began opposing it</a> soon after the text of the agreement became public. </p>
<p>Indeed, there was <a href="https://www.nytimes.com/interactive/2016/us/elections/trans-pacific-partnership.html">hardly any prominent political voice in favour</a> of the Trans Pacific Partnership during the election campaign. </p>
<p>Although the Obama administration <a href="http://abcnews.go.com/Business/pushing-tpp-president-obama-argument-trump-clinton/story?id=41074632">remained committed</a> until the very end, the chances of it being taken forward for ratification by a new administration – headed by either Hillary Clinton or Donald Trump – were distinctly remote. Clinton would have at the very least called for renegotiation. </p>
<p>Other members were hoping that the conclusion of the election would <a href="http://www.ictsd.org/bridges-news/bridges/news/asia-pacific-leaders-consider-next-steps-for-tpp-accord">lead to a more objective assessment</a> of the agreement by the new administration. But Trump’s swift action has dashed all such hopes. </p>
<p>Is it the end of the road for the agreement then? Other members, such as Australia, Japan, Canada and New Zealand have repeatedly affirmed their commitment to the agreement over the past few months. But are they be willing to move ahead without the US? </p>
<h2>Failed pivot</h2>
<p>The TPP would not be the same without the US. The economic size of the agreement would reduce significantly, along with its geostrategic importance. </p>
<p>The Trans Pacific Partnership was a key element of the Obama Administration’s “<a href="http://foreignpolicy.com/2011/12/21/the-american-pivot-to-asia/">pivot to Asia</a>”: a strategy for establishing a US-led regional order in the Asia Pacific. All non-US members are strategic allies and partners of the US. </p>
<p>They were enthusiastic about the agreement as it aimed to institutionalise common rules for trade and business fashioned by the US. The country’s withdrawal greatly reduces the possibility of a <a href="http://thediplomat.com/2015/11/abe-touts-the-tpp-in-battle-to-define-the-regional-order/">US-led regional order in the Asia Pacific</a>. </p>
<p>It also creates a <a href="https://theconversation.com/china-capitalises-on-trumps-hostility-to-trade-with-a-new-deal-for-asia-pacific-68685">vacuum in regional economic leadership</a>. </p>
<p>Australia has already begun <a href="http://www.abc.net.au/news/2017-01-24/donald-trump-tpp-federal-government/8207250?WT.mc_id=newsmail&WT.tsrc=Newsmail">searching for solutions to revive the agreement</a>. the government there says it’s willing to push ahead with the Trans Pacific Partnership without the US and to reformulate the deal to include presently excluded countries, <a href="https://amp.theguardian.com/australia-news/2017/jan/24/australia-open-to-china-and-indonesia-joining-tpp-after-us-pulls-out">such as Indonesia and China</a>. </p>
<p>But China’s entry might be opposed by existing members such as Japan and Vietnam due to their awkward geopolitical relations with the country.</p>
<h2>End of the line</h2>
<p>If the remaining members of the Trans Pacific Partnership decide to reformulate the agreement to make it work without the US, then the Asia-Pacific region could still have a trade agreement that’s more modern and ambitious than most other trade agreements in the world. Successful implementation would send a strong signal about the region’s commitment to free trade and globalisation. </p>
<p>But the agreement could be as good as dead if, instead of pushing ahead without the US, its members decide to explore bilateral trade agreements with the country. This is exactly what the Trump administration will be hoping for.</p>
<p>Donald Trump’s <a href="https://www.whitehouse.gov/the-press-office/2017/01/23/presidential-memorandum-regarding-withdrawal-united-states-trans-pacific">trade policy is to deal bilaterally</a> with countries rather than in a regional framework. One-on-one negotiations give more chances to the US to maximise the interests of American industries and workers. </p>
<p>The US may hope to work out bilateral trade deals with those Trans Pacific Partnership members with whom it doesn’t have similar accords already, such as Japan, Malaysia, Brunei, Vietnam and New Zealand. </p>
<p>Regional trade frameworks bind all members to a common set of rules. But the US can use its strategic influence and its role as a security provider to persuade allies, such as Japan, to enter into bilateral agreements instead. </p>
<p>If it succeeds in doing so, many Trans Pacific Partnership signatories may lose interest in a regional trade agreement. And that would certainly be curtains for accord.</p><img src="https://counter.theconversation.com/content/71821/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amitendu Palit does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The agreement could be as good as dead, if, instead of pushing ahead without the US, its members decide to explore bilateral trade agreements with the country.Amitendu Palit, Senior Research Fellow & Research Lead (Trade and Economic Policy) at the Institute of South Asian Studies (ISAS), National University of SingaporeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/685712016-11-10T02:56:52Z2016-11-10T02:56:52ZTrump can kill trade deals but he can’t kill globalisation<p>2016 will go down as a watershed year for all the wrong reasons: Britain’s EU exit faces strong opposition; Syria remains plunged in civil war; and in the wake of the US election politics in the two major Anglosphere democracies are now deeply polarised. </p>
<p>In Britain and the US, the majority of voters have embraced candidates and movements that eschew globalisation, immigration and free markets. Instead, they preach nationalism, closed borders and protectionism.</p>
<p>But it is hyperbolic to suggest that the post-2008 financial crisis era is beginning to look very much like the 1930s in the wake of the Wall Street crash. This is not a clash between fascism, communism and democracy. But what the Brexit and US presidential votes do show is that modern democracies have proven incapable of dealing adequately with income inequality, unemployment and declining opportunity.</p>
<p>With Trump as president, US policy is likely to become more unpredictable, but the business of government and policy implementation must go on nevertheless. </p>
<p>Despite Republican majorities in Congress, Trump will not be able to treat the legislature as a mere rubber stamp. In the US system, Congress holds the whip hand. Moreover, Trump is at war with so many senior Republicans, he is unlikely to enjoy a smooth ride. Where congressional Republicans and Trump do agree is that tax cuts are needed.</p>
<h2>Unchartered waters</h2>
<p>In this respect, we are really navigating unknown waters as to how Trump will behave in office as president. Trump has no public sector background. He will be the first US president to enter the office without any gubernatorial or congressional experience, or any previous role in an administration. </p>
<p>Ronald Reagan, Bill Clinton and George W. Bush served as state governors; John F. Kennedy and Barack Obama were junior senators (Obama also served as a state senator from 1996); George H.W. Bush served in multiple roles, including the vice presidency. In the post-war period, only Eisenhower comes close to Trump as a political cleanskin. But Eisenhower had a substantial military career, a reputation as a war hero, and had been a key adviser to both the military and the Department of Defense before and after World War II.</p>
<p>Trump’s victory has been built on his image as a Washington outsider. But his isolationist, nationalist and protectionist policies are not new; the first US Secretary of the Treasury, Alexander Hamilton, was an unabashed protectionist, viewing American infant industries as central to the US’s commercial rivalry with industrial Britain. </p>
<p>On defence and trade policy, Trump is close to many of the positions articulated by the America First movement in the 1930s and 1940s. Substantial figures, such as Charles Lindbergh and future president Gerald Ford, sought to keep America out of the second world war. But once Washington entered the war, it did not make the same mistake it made after Versailles in 1919; instead, the US became a global economic and military superpower, eschewing the isolationism of 1920–41.</p>
<p>As a self-declared neo-isolationist, one of the keys to Trump’s victory was his denunciation of the free-trade orthodoxy that has dominated Washington’s economic agenda since the Bretton Woods conference of 1944, which created the IMF, World Bank and, later, the GATT, the predecessor to the World Trade Organisation.</p>
<p>Let’s take a look at the state of play of the US’s current and mooted free trade negotiations. We’ll also briefly canvass how President Trump is likely to deal with Janet Yellen and the Federal Reserve.</p>
<h2>The Trans-Pacific Partnership (TPP)</h2>
<p>The TPP was initiated under George W. Bush’s administration, but President Obama pushed the 12-member bloc, obtaining fast-track trade promotion authority from Congress in June 2015. This allowed him to press forward with the finalisation of the agreement, which was released in October 2015. However, Trump’s opposition to TPP, along with Hillary Clinton’s second thoughts about her support for it means the deal is unlikely to pushed through during Obama’s final weeks in office.</p>
<p>In November 2015, Trump declared TPP “insanity”. Trump’s anti-TPP campaign demonstrated how he and the Tea Partyists had so convincingly vanquished the traditionally pro free trade Republican Party. By July this year, <a href="http://www.politico.com/story/2016/07/republican-platform-panel-tpp-225364">Republicans began to erase all trace of TPP support</a> from their websites. By September, staunch TPP supporters <a href="http://nymag.com/daily/intelligencer/2016/09/pro-trade-republicans-switch-sides-in-tpp-fight.html">Marco Rubio and Pat Toomey performed a volte-face</a>; having praised the TPP, now they sought to bury it. Both Obama and Hillary Clinton were depending on the pro-TPP Republicans to get the pact through Congress.</p>
<p><strong>Verdict:</strong> Dead in the water. Many Australians will applaud Trump for killing the TPP, as it was <a href="https://theconversation.com/ratifying-the-tpp-may-be-tough-but-australia-needs-it-48663">far from popular</a>.</p>
<h2>The North American Free Trade Agreement (NAFTA)</h2>
<p>NAFTA was a product of the Reagan-Bush years, building on its 1998 predecessor, the Canada-US Free Trade Agreement (CUSTA). George H.W. Bush’s administration did most of the heavy lifting, but Bill Clinton pushed NAFTA through Congress in 1993, expending considerable political capital as he faced off against the unions, the Democrats’ biggest supporters.</p>
<p>Trump has labelled NAFTA “the worst trade deal ever”. True, NAFTA may have destroyed 879,000 US jobs, <a href="http://www.epi.org/publication/briefingpapers_bp147/">according to one study</a>. But it also provided a low cost labour base for both the US and Canada, as they strove to compete with Asian manufacturing and the EU’s newly opened eastern periphery.</p>
<p><strong>Verdict:</strong> No happily ever NAFTA. Likely to stay, but regulatory changes will be made.</p>
<h2>The Transatlantic Trade and Investment Partnership (TTIP)</h2>
<p><a href="https://theconversation.com/explainer-what-is-the-transatlantic-trade-and-investment-partnership-37258">TTIP</a> may be dead already, mostly due to the fact that it’s as popular as Hillary Clinton. It is in Europe that TTIP has found its strongest opponents, with <a href="http://www.reuters.com/article/us-eu-usa-ttip-idUSKCN11N0H6">thousands protesting</a> against it.</p>
<p>Clinton, Sanders and Trump’s position against TTIP coalesced early, as it was clear it was a vote loser within all three candidates’ voter bases. In a pitch to Sanders supporters, Clinton declared <a href="http://www.express.co.uk/news/world/699362/TTIP-European-Union-crisis-Hillary-Clinton-EU-US-trade-deal-CETA-President-Donald-Trump">she would quash any deal that hurt American jobs</a>. </p>
<p>Clinton’s opposition to free trade deals demonstrated how decisive both the Sanders and Trump campaigns had been in shaping the narrative of the anti-free trade debate. Equally, the union base of the Democratic Party had always opposed FTAs. Had Clinton won the election, it is likely she would have attempted to revive TTIP during her tenure, as both the EU and US had pushed for a transatlantic FTA in some form since 1990.</p>
<p><strong>Verdict:</strong> This is an <a href="http://www.goodreads.com/quotes/64604-this-parrot-is-no-more-it-has-ceased-to-be">ex-parrot.</a></p>
<h2>A UK-US free trade deal?</h2>
<p>President Obama infamously intervened in the UK Brexit debate earlier this year, declaring Britain would go “to the back of the queue” if it left the EU and sought a FTA with the US. Theresa May, Boris Johnson and Liam Fox will be hoping that President-elect Trump will welcome a special free trade relationship.</p>
<p>During the campaign, Trump advisers indicated that he would be willing to discuss a FTA with the UK. Indeed, Trump <a href="http://www.politico.com/story/2016/06/brexit-us-britain-trade-deal-224776">stated</a> that Britain would “always be at the front of the line” when it came to trade deals. This would be critical to Brexit Britain; the US is the UK’s largest third-country market, with more than £30 billion in exports.</p>
<p>But the UK also enjoys a trade surplus in goods and services with the US, and Trump’s administration is unlikely to grant substantial concessions to an ally that already makes substantial hay from its existing tariff arrangements.</p>
<p>In other words, why would President Trump do a deal that gives UK firms more access to the US market?</p>
<p><strong>Verdict:</strong> Boris needs to grab that American passport of his, head for Washington and start speed-dating. Soon.</p>
<h2>Audit the Fed!</h2>
<p>What future for Janet Yellen, Federal Reserve Chair? The Donald has expressed his dislike of the Federal Reserve chair on more than one occasion.</p>
<p>In September 2016, Trump took aim at Yellen’s <a href="https://theconversation.com/in-a-world-of-low-rates-what-else-can-the-rba-and-central-banks-do-61981">near zero interest-rate policy</a>, arguing it existed <a href="http://www.bloomberg.com/news/articles/2016-09-27/trump-slams-yellen-s-fed-again-this-time-on-a-much-bigger-stage">only to make Obama look good</a>. Janet Yellen wasn’t about to take this lying down. In a press conference, <a href="http://fortune.com/2016/09/21/janet-yellen-fires-back-at-donald-trumps-attacks/">she responded – implicitly</a> – to Trump, arguing that:</p>
<blockquote>
<p>“I can say emphatically that partisan politics plays no role in our decisions…We do not discuss politics at our meetings.”</p>
</blockquote>
<p>It’s unknown whether Trump would seriously attempt to remove Yellen. But in May this year, <a href="http://www.wsj.com/articles/donald-trump-says-he-would-replace-janet-yellen-supports-low-interest-rates-1462465158">he did state</a> that he would “most likely” replace her as she was “not a Republican”. In September, Trump’s position hardened; he said <a href="http://money.cnn.com/2016/09/21/news/economy/janet-yellen-donald-trump/">he would audit the Fed and replace Yellen</a> in the first 100 days of his administration.</p>
<p>There are precedents; in 1981, US Treasury Secretary Donald Regan <a href="http://www.nytimes.com/1982/10/24/magazine/reaganomics-and-the-presidents-men.html?pagewanted=all">began to brow-beat Fed Chair Paul Volcker</a> for maintaining his tight monetary policies as the Reagan administration sought to introduce wide ranging tax cuts. Despite Reagan’s early support for Volcker (a Carter appointee), by 1987, the President had had enough; he ended Volcker’s tenure, bringing in Alan Greenspan.</p>
<p><strong>Verdict:</strong> Anyone looking for a central bank chief? Used for one term only. Low, low interest rates.</p>
<h2>Another brick in the wall</h2>
<p>Trump’s triumph is partly built upon faulty and drastically over-simplified conceptualisations of the operation of the US and the global economy. Corporations, banks, finance and even consumers are no longer “national” entities. They have not been for many years. Manufacturing and services are not local but global. This complex web of interdependence has manifested itself over many decades.</p>
<p>Globalisation has even brought jobs back to America; but in the post-GFC environment, this has produced US jobs that, <a href="http://www.latimes.com/business/la-fi-income-inequality-20140812-story.html">on average, pay 23% lower</a> than they did prior to 2008.</p>
<p>Mexican walls, Chinese trade negotiations and bans on Muslims: if Trump were to implement some of these initiatives it may have some impact upon people movements. But low-tech manufacturing jobs en masse are not coming back to America. The US used to build vast numbers of radios and TVs; these have not been made in America for a long, long time. Similarly, Apple is not about to repatriate iPhone production and establish manufacturing onshore. And US corporations are not about to stop doing business with the rest of the world.</p>
<p>This is the brutal reality that Trump cannot smash, but his supporters appear to believe he can. He is wrong and they are wrong. And they will be bitterly disappointed.</p><img src="https://counter.theconversation.com/content/68571/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Remy Davison's Chair is funded by the EU Commission.</span></em></p>Many of the US’s current and mooted free trade negotiations are now dead in the water, but that doesn’t mean it’s game over for free trade.Remy Davison, Jean Monnet Chair in Politics and Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/678682016-11-07T07:40:58Z2016-11-07T07:40:58ZUncertainty on security and trade worry allies in Asia as US election approaches<p><em>This article is part of The Conversation Global’s ‘The View From …’ series, explaining how governments and citizens in key countries and regions worldwide view the US presidential election. Today, we look at how nations in East Asia see the election and what they expect from the results</em>. </p>
<p>The impending US presidential election is causing some consternation among nations in East Asia that have been traditional allies of the country. Both security and economic interests, in the guise of the 12-member <a href="http://www.bbc.com/news/business-32498715">Trans-Pacific Partnership</a> (TPP) – seven of which hail from the Asia-Pacific – are causing anxiety, particularly because of the kinds of statements made by Republican candidate Donald Trump on the campaign trail.</p>
<p>Some middle and small powers, such as <a href="https://theconversation.com/thailands-crackdown-on-chinese-dissidents-reinforces-the-coalition-of-authoritarians-66634">Thailand</a> and <a href="http://thediplomat.com/2015/12/lessons-from-obamas-southeast-asia-trip/">Malaysia</a>, had already shifted their focus – if not their political support – to China. It remains to be seen if the incoming president will trigger a diplomatic shift for the whole region.</p>
<h2>Facing uncertainty</h2>
<p>The US has cultivated friendships in Asia since the end of the second world war. As a major international power, it has offered the region public goods, such as <a href="http://fpc.state.gov/212107.htm">security</a> and the shelter of its <a href="http://nwp.ilpi.org/?p=1221">nuclear umbrella</a>, as well as facilitating <a href="http://www.cfr.org/trade/future-us-trade-policy/p36422">market economy and free trade</a>. </p>
<p>Many American allies such as Australia, Japan, South Korea and Singapore, would be happy to see Hillary Clinton become the next American president, in part because she was responsible for the Barack Obama administration’s “<a href="http://www.theatlantic.com/china/archive/2013/04/what-exactly-does-it-mean-that-the-us-is-pivoting-to-asia/274936/">pivot to Asia</a>” strategy when she was the secretary of state. </p>
<p>The <a href="http://www.foreignpolicyi.org/content/obama-administrations-pivot-asia">policy saw the US aiming to shift</a> its strategic focus and necessary military capability back to Asia, and strengthen American alliances in the region. American <a href="http://www.smh.com.au/comment/as-us-marines-arrive-in-darwin-australia-must-consider-its-strategic-position-20160422-goco5s.html">deployment of marine forces in Darwin</a> in northern Australia is one the best examples of the policy in action. </p>
<p>Since China has established an <a href="http://www.scmp.com/news/china/article/1960954/beijing-ready-impose-air-defence-identification-zone-south-china-sea">air defence identification zone</a> in the East China Sea (also <a href="http://www.telegraph.co.uk/news/2016/07/13/china-declares-right-to-set-up-air-defence-zone-in-south-china-s/">possible in the South China Sea</a> at some stage), and the reclaimed the reefs in the South China Sea, it’s likely Clinton will stick to the policy.</p>
<p>Donald Trump’s proposed policy towards Asia, on the other hand, is <a href="https://www.washingtonpost.com/news/post-politics/wp/2016/08/31/clinton-plans-to-slam-trump-as-a-dangerous-isolationist-in-american-legion-speech/">isolationist</a> in that he does not seem to want the United States to provide security for other countries any more, or to enter further free trade agreements. </p>
<p>Perhaps Trump’s calculation reflects the rational businessman he claims to be, focusing on how to minimise costs and maximise profits. He has criticised Japan and South Korea as <a href="http://www.reuters.com/article/us-usa-election-japan-idUSKCN0WM017">free riders</a> when it comes to regional security, and has even suggested these two countries obtain <a href="http://www.nytimes.com/2016/03/27/us/politics/donald-trump-foreign-policy.html?_r=0">nuclear weapons</a> themselves. </p>
<p>Any withdrawal of the US security guarantee would be a nightmare for these and other American allies in the region, just as it would be <a href="https://theconversation.com/european-leaders-would-see-a-donald-trump-victory-as-total-calamity-67619">for the nation’s European allies</a>. </p>
<h2>Worried allies</h2>
<p>Japan has been doing what it can to ensure its alliance with the US continues. In April, Prime Minister Shinzo Abe declared: “no matter who will be the next president, the Japan-US alliance is <a href="http://www.straitstimes.com/asia/east-asia/japan-pm-shinzo-abe-defends-military-alliance-with-the-us-in-rebuff-to-donald-trump">the cornerstone of Japan’s diplomacy</a>”.</p>
<p>Abe met with Clinton in September to lobby for <a href="http://www.japantimes.co.jp/news/2016/09/20/national/politics-diplomacy/abe-clinton-meet-ny-restate-split-tpp-stances-weigh-pyongyang-threat/#.WBoQ3S197IV">continuing US military presence</a> in the region, and implementing the TPP. Hitoshi Tanaka, a former Japanese deputy minister for foreign affairs has <a href="http://www.japantimes.co.jp/news/2016/10/08/national/politics-diplomacy/unknown-quantity-outcome-presidential-election-november-affect-japan-u-s-relations/#.WBoRCC197IV">criticised Trump’s statements</a>, which Tanaka says can undermine the American role in the region, shake the confidence of its allies and weaken the credibility of its economic leadership.</p>
<p>The uncertainty created by the presidential election <a href="http://www.businessinsider.com.au/what-it-would-mean-for-australia-if-donald-trump-became-president-of-the-united-states-2016-3">also provides cause for concern in Australia</a>. In terms of values and preferences in foreign policy, Australia and the United States have human rights, democracy and free trade in common. But China has become an important trading partner for Australia because of its hunger for natural resources, such as <a href="http://www.smh.com.au/interactive/2016/us-election-impact-australia/alliances/">coal, iron ore and natural gas</a>.</p>
<p>If Trump becomes the US president, Australia will face an immediate dilemma – should Canberra strengthen its military capability in case of a possible American retreat or bandwagon with China?</p>
<p>Similar concerns also assail South Korea. Seoul has just <a href="http://edition.cnn.com/2016/07/13/asia/south-korea-thaad-north-korea-china/">finalised a site</a> for implementing the Terminal High Attitude Area Defence (THAAD), which is part of a defence system offered by the United States to intercept missile and nuclear attacks from <a href="http://www.reuters.com/article/us-southkorea-usa-thaad-idUSKCN0ZO084">North Korea</a>. Would it be rolled back if Trump enters the White House? </p>
<p>South Korea is itself now considering whether it is, in fact, better to develop <a href="http://www.wsj.com/articles/south-koreas-march-toward-a-strike-first-nuclear-policy-1477414963">nuclear weapons</a>, in case American foreign policy can no longer be expected to remain stable and predictable. </p>
<p>Taiwan, meanwhile, is in a rather embarrassing situation in relation to the diplomatic competition between China and the United States in that it’s neither a member of <a href="http://www.scmp.com/topics/asian-infrastructure-investment-bank-aiib">Asian Infrastructure Investment Bank</a> (AIIB), which is dominated and administered by China, nor in the TPP. </p>
<p><a href="http://udn.com/news/story/1/1986777%20and%20http://www.chinatimes.com/newspapers/20161030000056-260203">Its mass media</a> has expressed concerns that if Trump wins, he may disrupt the supportive US policy towards Taiwan.</p>
<h2>And then there’s trade</h2>
<p>The <a href="http://www.reuters.com/article/us-trade-tpp-idUSKCN0VD08S">signed but not yet ratified</a> free trade agreement known as the TPP involves the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. For the deal to take effect, it has to be ratified by February 2018.</p>
<p>Clinton has said, “<a href="http://www.ontheissues.org/2016/Hillary_Clinton_Free_Trade.htm">I am not in favor of what I have learned</a>” about the TPP and is likely to <a href="http://edition.cnn.com/2016/07/27/politics/tpp-what-you-need-to-know/">re-examine its provisions if elected</a>. But <a href="http://www.washingtontimes.com/news/2016/jun/28/donald-trump-vows-to-cancel-trans-pacific-partners/">Trump has decisively spoken against it</a> for threatening American jobs.</p>
<p>Singapore has been outspoken about the need to get the deal through. In speech at <a href="http://www.pmo.gov.sg/mediacentre/pm-lee-hsien-loong-us-chamber-commerceus-asean-business-council">the American Chamber of Commerce and US-ASEAN Business Council in August</a>, Prime Minister Lee Hsien Loong said ratifying the agreement “will be a clear statement of your commitment to and your confidence in our region.”</p>
<p>Lee reiterated the message again in an interview with Time in late October, saying the United States would lose its “<a href="http://www.straitstimes.com/singapore/pm-lee-warns-of-harm-to-us-standing-if-tpp-isnt-ratified">credibility as an ally and as a deterrent</a>” if the next president just lets the TPP go.</p>
<h2>Waning influence</h2>
<p>American influence in Asia has been weakened with the rise of Chinese economic capabilities. The best evidence for this is <a href="http://www.scmp.com/week-asia/opinion/article/2041077/four-reasons-duterte-will-have-change-tune-china-and-us">the ostensible change in Philippine foreign policy</a>. </p>
<p>President Rodrigo Duterte may have set aside territorial claims in the South China Sea (at least temporarily), in return for a Chinese investment and economic package, but at least Filippino fishers are now back in the <a href="http://www.nytimes.com/2016/10/29/world/asia/south-china-sea-scarborough-shoal.html?_r=0">Scarborough Shoal</a>.</p>
<p>Duterte’s diplomatic shift from the United States to China can be regarded as a pragmatic calculation. But statements, such as “<a href="http://edition.cnn.com/2016/10/25/asia/duterte-us-comments/">I am no American puppet…do not make us your dogs</a>” go far beyond concerns about who the next US president will be. Duterte’s emphasis is on nationalism and a sense of <a href="https://theconversation.com/he-may-have-insulted-obama-but-duterte-held-up-a-long-hidden-looking-glass-to-the-us-65085">rebellion against American colonial rule</a> in the Philippines.</p>
<p>Other middle and small powers within the Association of Southeast Asian Nations (ASEAN) have adopted a <a href="http://www.theasanforum.org/southeast-asian-strategies-toward-the-great-powers-still-hedging-after-all-these-years/">hedging policy</a> for a while. They buffer themselves by being on the side of the United States for security protection, while tending to the side of China for economic benefits.</p>
<p>Most of them – Myanmar, Laos, Cambodia, Thailand, <a href="http://economictimes.indiatimes.com/news/defence/china-pleads-with-vietnam-malaysia-and-brunei-to-resolve-south-china-sea-issues-bilaterally/articleshow/54312000.cms">Vietnam</a> and <a href="http://www.wsj.com/articles/malaysia-china-keep-low-profile-on-1403622597">Malaysia</a> – kept a low profile during the dispute in the South China Sea, even though the latter two have claims there. </p>
<p>Just two weeks ago, the <a href="http://thediplomat.com/2016/10/3-chinese-navy-ships-visit-vietnams-cam-ranh-bay/">Chinese navy arrived and stayed</a> in Vietnam’s Cam Ranh Bay. This was formerly a military port for the United States during the Vietnam War. And for the Soviet Union then Russia from 1979 to 2002. In late 2013, <a href="https://sputniknews.com/military/201605191039907645-russia-return-vietnam-military-base-analysis/">Russia and Vietnam signed an agreement</a> for repair and maintenance of submarines there. </p>
<p>Malaysian Prime Minister Najib Razak also went to Beijing recently to discuss various business deals, including a <a href="http://www.nst.com.my/news/2016/10/184147/malaysia-buy-navy-vessels-china-blow-us">military bid on patrol ships</a> that can fire missiles. </p>
<p>More than any other ASEAN country, <a href="https://www.washingtonpost.com/world/asia_pacific/domino-theory-or-hedging-after-the-philippines-now-malaysia-embraces-china/2016/10/31/d30984ea-9f63-11e6-b74c-603fd6bbc17f_story.html">Vietnam and Malaysia</a> seem to have made their choice between China and the United States. No matter who is the next American president, given their geographical proximity and increasing economic interdependence with China, they seem to be edging closer to their large neighbour.</p>
<p>Trump has <a href="http://www.wsj.com/articles/donald-trump-charges-china-with-yuan-manipulationagain-1474943701">expressed considerable hostility to China</a>, but Clinton isn’t likely to become a great friend to Beijing either. In international relations, great power competition rarely has room for trust or promises, and the American president must try to contain or prevent the rise of China. </p>
<p>While the nature of great power relations between China and the United States seem quite stable, what’s caught attention in China is the <a href="http://www.nbcnews.com/politics/2016-election/trump-vs-clinton-battle-turning-heads-china-n677901">“chaotic” nature of US democratic system</a> itself. <a href="http://www.nbcnews.com/news/china/china-donald-trump-gop-candidate-s-rise-big-news-n567726">Trump’s overblown statements</a> about the Chinese currency and terms of trade have also made headlines, although he has turned down the attacks in recent months.</p>
<p><a href="https://theconversation.com/trump-or-clinton-what-india-really-wants-from-the-us-election-67340">India is a natural ally to the United States</a> because the countries have converging values, norms and interests, such as democracy and regional stability. </p>
<p>Last but not least, we should not skip North Korea. An editorial in DPRK Today regards Trump as a <a href="https://www.nknews.org/2016/05/north-korean-editorial-supports-donald-trump/">“wise politician” and “far-sighted presidential candidate”</a>. Perhaps Kim Jong-Un is looking for a diplomatic breakthrough, but it is more likely that he doesn’t understand the American presidential election – rhetorical statements from a presidential candidate will not, after all, automatically translate into future policy.</p>
<p>The US presidential election matters most to American allies in Asia in terms of continuous commitment and credibility. But it won’t have much of an impact on the middle and small powers who have increasingly hedged on the side of China for economic gain.</p><img src="https://counter.theconversation.com/content/67868/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hak-yin Li does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Security and economic interests, in the guise of the 12-member Trans-Pacific Partnership (seven of which hail from the Asia-Pacific), are causing anxiety among US friends and allies.Hak-yin Li, Lecturer in International Relations, Chinese University of Hong KongLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/563612016-04-13T20:17:24Z2016-04-13T20:17:24ZWhy China could never sign on to the Trans-Pacific Partnership<p><a href="http://piie.com/publications/pubs_year.cfm?ResearchTypeID=1&ResearchYear=2016">Recent</a> estimates show that most members of the Trans-Pacific Partnership will make substantial gains, unlike those who opt not to participate. </p>
<p>US annual real income is expected to increase by 0.5% of GDP while annual exports will increase by 9.1%. Exports of Japan, Vietnam and Malaysia are expected to increase by 23.2%, 30.1% and 20.1% respectively. Non-members, on the other hand, are expected to gain little. China, for example, is expected to gain only 0.2% when the agreement is concluded in 2030.</p>
<p>So was China’s decision not to join a big mistake?</p>
<p>In 2013, the 12 countries participating in the TPP accounted for about a third of China’s trade in merchandise goods. However the US stands out as it makes up about half of the TPP in terms of exports, and about a quarter when it comes to imports. This would imply that exclusion from the TPP is essentially a lost opportunity for any country trying to secure a Free Trade Agreement (FTA) with the United States.</p>
<p>Meanwhile, a look at the Trade Complementary Index (TCI) – an indicator of how well the structures of a country’s imports and exports match – shows how much could be gained by both the US and China if the latter were included in the TPP.</p>
<p>But are those opportunities enough to get past the hurdles? Since the TPP is an agreement involving both emerging and advanced economies, it has to be more complex than those between economies at the same level of development; and it has to have sufficient room for bargaining. If China had chosen to be part of the TPP, the negotiations would have been slow and perhaps would not have ended with an agreement because of the many sensitive issues involved. </p>
<p>Some of the main stumbling blocks include state-owned enterprises, transparency, labour regulation, market-based competition and investor state disputes.</p>
<h2>State-owned enterprises (SOEs)</h2>
<p>The TPP requires that no subsidies should be provided to an SOE for its international business expansion. The goal: to ensure competition between an SOE and a private enterprise takes place on a level playing field inside the host country.</p>
<p>But <a href="http://www.ft.com/intl/cms/s/0/69253d76-633c-11e5-97e9-7f0bf5e7177b.html#axzz41eH3PAlR">China’s 150,000 SOEs</a> form the bedrock of the Chinese economy and therefore have certain privileges. </p>
<p>About a thousand SOEs are listed in the Shanghai or Shenzhen Stock Exchanges, indicating they are commercial in nature. More than 150 of these are managed by the central SASAC, and the list includes some of the largest companies in the world.</p>
<p>The Chinese government assists these SOEs in various <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2354348">ways</a>, including preferential interest rates. Although there have been exceptions under the TPP (for example New Zealand was able to get exemptions for its powerful cooperative Fonterra), it would have been an uphill battle for China to negotiate exemptions for so many of its SOEs engaged in various international operations within TPP member countries.</p>
<h2>Transparency and anti-corruption</h2>
<p>The TPP commits partners to writing and enforcing anti-bribery laws. It can be argued that enforcement would have been a challenge for China. </p>
<p>In Transparency International’s Corruption Perception index, which ranks countries based on the degree of corruption in the public sector, only two TPP countries <a href="http://www.transparency.org/cpi2014">ranked</a> below China in 2014 – Vietnam and Mexico. Although one can argue that membership in the TPP could raise the bar for China’s efforts at eradicating corruption, the gap between China and important partners (the US and Japan) is significant. The TPP could have been yet another platform for critics to accuse China of lacklustre anti-corruption efforts.</p>
<h2>Labour</h2>
<p>The inclusion of labour issues in an FTA is rare since labour rights are considered “domestic issues” and interference by external parties jeopardises the sovereignty of individual members. In this regard, the TPP can be considered bold. </p>
<p>The chapter on labour would have been a contentious issue between China and the US. For example China’s labour laws, while allowing freedom of association, require all trade unions to be affiliated with the All-China Federation of Trade Unions, which is an agency of the Chinese Communist Party. The agreement, meanwhile, requires TPP partners to adopt a legal framework that upholds fundamental labour rights as recognised by the International Labour Organization.</p>
<h2>Free and open competition</h2>
<p>A common philosophy within the TPP agreement is free competition among signatories. Firms from any TPP country will be allowed to bid for government contracts in another, for example. Testing and certification awarded by an assessment body in one country should be accepted in other countries as well. </p>
<p>The chapter on competition generally calls for member countries to reach the standards practised in countries like Singapore and New Zealand, known for their ease of doing business. But in the World Bank’s Doing Business <a href="http://www.doingbusiness.org/data">rankings</a> for 2016, China was lower than all TPP partners, except Vietnam. China would have had to negotiate hard to get exemptions for its SOEs and SMEs from these open competition clauses and chapters.</p>
<h2>Investor-State Dispute Settlement (ISDS)</h2>
<p>While it has its <a href="https://www.washingtonpost.com/blogs/monkey-cage/wp/2015/03/26/people-are-freaking-out-about-the-trans-pacific-partnerships-investor-dispute-settlement-system-why-should-you-care">critics</a>, the ISDS – a system under which an investing company can seek compensation from a host country if its property rights are violated – has been included in several FTAs recently. This is because it offers an assurance to multinational corporations that expropriation by host governments is only a remote <a href="http://aib.msu.edu/publications/insights/volume/16/issue/1">possibility</a>.</p>
<p>Over the last 15 years China has been <a href="http://www.ft.com/intl/cms/s/0/07507e0e-5e05-11e4-bc04-00144feabdc0.html#axzz41XcPJli0">signing</a> agreements containing the ISDS clause as it has been <a href="http://www.ft.com/intl/cms/s/87437290-0620-11e2-bd29-00144feabdc0,Authorised=false.html?siteedition=uk&_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F87437290-0620-11e2-bd29-00144feabdc0.html%3Fsiteedition%3Duk&_i_referer=&classification=conditional_standard&iab=barrier-app#axzz42ldHahRe">effective</a> in protecting the country’s investments abroad. However the World Justice <a href="http://worldjusticeproject.org/publication/rule-law-index-reports/rule-law-index-2015-report">Project</a>, which ranks countries on the rule of law – and regulatory enforcement in particular – shows that China fares miserably when compared with other TPP countries. Only Mexico is marginally below it.</p>
<p>It’s very likely the ISDS would have been a heated issue for China, and it is possible that like Australia, Mexico, Peru and Vietnam, China would have fought for many exemptions.</p>
<h2>Opportunity cost limited, for now</h2>
<p>China’s other international initiatives, as well as its sheer size, reduce the losses of being a TPP outsider. But it has lost an opportunity to commit to an improvement in the general trading and investment climate and drive new impetus to its dwindling export sector. </p>
<p>The agreement offers member countries a road map and a schedule to reform the business environment and make it more competitive. Countries with similar capabilities, like Japan and South Korea on the higher end and Vietnam on the lower end, will be able to divert some trade away from China. It is therefore important for China to build up its productivity to ensure it is able to compete with TPP members for market share.</p>
<p>China has also lost an opportunity to sign an FTA with the US, but following a specified TPP schedule would be seen as the US dictating the reforms in China. And the US is hardly likely to penalise China given its importance to world trade.</p>
<p>China has always reformed using its own timetable. For a country that is establishing its legitimacy as a global economic power, it has to write its own future. The rules of the TPP may not fit the current state of the Chinese economy. China has to mould a domestic economy that is large enough to withstand any global economic slowdown. To create that domestic economy, certain features of the “old” economy may still be required.-</p><img src="https://counter.theconversation.com/content/56361/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bala Ramasamy does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>To create a resilient domestic economy, certain features of the “old” economy may still be required in China.Bala Ramasamy, Professor of Economics, China Europe International Business SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/562412016-03-29T10:09:54Z2016-03-29T10:09:54ZCan free trade and TPP survive rise of the ‘new right’?<p>If there is one area on which the more extreme representatives of the political left and right can agree, it is the nefarious character of the Trans-Pacific Partnership (TPP), the comprehensive trade deal <a href="http://www.bbc.com/news/business-35480600">signed</a> last month by President Barack Obama and the leaders of 11 other Pacific nations. </p>
<p>Republican front-runner <a href="http://www.slate.com/blogs/moneybox/2015/11/12/is_donald_trump_right_about_china_and_the_tpp.html">Donald Trump</a> calls TPP “a horrible deal” and “insanity.” Democratic candidate <a href="http://www.sanders.senate.gov/download/the-trans-pacific-trade-tpp-agreement-must-be-defeated?inline=file">Bernie Sanders</a> believes the TPP is “a disastrous trade agreement designed to protect the interests of the largest multinational corporations at the expense of workers, consumers, the environment and the foundations of American democracy.” </p>
<p>Even <a href="http://www.huffingtonpost.com/entry/hillary-clinton-tpp_us_56157832e4b0fad1591a9289">Hillary Clinton</a>, who has long embodied the (left-leaning) center of the political spectrum and whose husband <a href="http://www.history.com/this-day-in-history/nafta-signed-into-law">signed NAFTA into law</a>, has backed away from her previous support of the pact.</p>
<p>Why has the TPP, and free trade more generally, attracted so much ire during the presidential campaign? And with the deal still awaiting Congress’ approval, can it even survive?</p>
<h2>Trade’s losers</h2>
<p>Opposition from the left of the Democratic Party, of course, comes as no surprise. </p>
<p>According to <a href="https://en.wikipedia.org/wiki/Heckscher%E2%80%93Ohlin_model">mainstream trade theory</a>, lower-skilled workers in rich countries will typically be hurt by free trade, at least in the long run. They will be directly in competition with workers from poorer countries, which have a comparative advantage in labor-intensive industries. </p>
<p>The left, traditionally linked with the working class and unions, <a href="http://www.politico.com/story/2015/04/democrats-free-trade-bill-117066">has long opposed</a> trade accords that might hurt their constituents. Clinton, her recent rhetoric to the contrary notwithstanding, is actually more pro-trade than might be expected of a left-of-center politician. </p>
<p>But it should be remembered that she represents the centrist wing of her party, one made up of socially liberal, economically pragmatic voters. Most Democrats who are skeptical of markets have been <a href="http://www.huffingtonpost.com/ian-fletcher/unlike-clinton-sanders-re_b_9015000.html">mobilized by Sanders</a>.</p>
<p>The more interesting story is the puzzling opposition to trade from right-wing Republicans. </p>
<h2>Trade’s winners</h2>
<p>While low-skilled occupations are often on the losing side of trade deals, there are many winners as well. Trade theory suggests that higher-skilled workers, business owners and consumers in countries like the United States are likely to enjoy long-run benefits from free trade. </p>
<p>Not surprisingly, Republicans, as the party of business and capitalism, have mostly <a href="http://scholar.harvard.edu/hiscox/publications/magic-bullet-rtaa-institutional-reform-and-trade-liberalization">supported free trade</a> since the realignments of the New Deal and the Second World War. Before that, they <a href="https://theconversation.com/do-protectionist-policies-like-trumps-lead-to-trade-wars-56532">tended toward protectionism</a>.</p>
<p>If Clinton and Trump are ultimately the nominees, then we will face an unusual situation in which the Republican candidate is anti-trade and the Democratic candidate is, at least lukewarmly, pro-trade. Does this represent a fundamental realignment of the parties on trade, similar to what occurred during the Great Depression and World War II? </p>
<p>The argument in favor of realignment is belied by a <a href="https://newrepublic.com/article/121989/trans-pacific-partnership-divides-left-dems-support-free-trade">continuing pro-trade outlook</a> among moderates in both parties. That makes it tough to argue that, in the future, we will see a pro-trade Democratic Party and an anti-trade Republican Party. </p>
<p>Instead, the split seems to be between the center and extreme in both parties. Why?</p>
<h2>Odd bedfellows</h2>
<p>In multiparty systems, such as those found in most European democracies, Sanders and Clinton, John Kasich and Trump would be in different parties.</p>
<p>Sanders would probably be a social Democrat, Clinton a liberal, Kasich a Christian Democrat, and Trump a far-right populist. </p>
<p>Trump, in other words, is America’s <a href="https://en.wikipedia.org/wiki/Marine_Le_Pen">Le Pen</a> of France, its <a href="https://en.wikipedia.org/wiki/J%C3%B6rg_Haider">Haider</a> of Austria, its <a href="https://en.wikipedia.org/wiki/Geert_Wilders">Wilders</a> of the Netherlands. And like the European far right, Trump mobilizes members of the majority group who feel that the economy has let them down. </p>
<p>These voters are likely to see free trade as a culprit in their economic malaise and to link it with other policies that they consider anti-national, such as open immigration and multiculturalism. With that in mind, it is not surprising that Trump, like the European far right, is an anti-trade populist. </p>
<p>So the split on trade within the Republican Party results from its effort to mobilize voters with contrasting economic interests and ideologies. </p>
<p>These voters may agree with one another on social issues, or on foreign policy, and so they live together within the same party. But their views diverge on a number of points, including trade.</p>
<p>In a multiparty system like those in Europe, groups on the extreme right are typically shut out of government by the unwillingness of center-right parties to form coalitions with them. </p>
<p>In the United States, the unique primary system has usually meant that the far right (and to a lesser extent the far left) mobilizes around a presidential candidate. This candidate is generally defeated by the centrist candidate of each party, who goes on to be the nominee. This happened in 2008 with the nomination of John McCain and again in 2012 with Mitt Romney.</p>
<p>What we are seeing now is the real chance that the candidate of the populist far right may walk away with the Republican nomination. </p>
<p>The possibility of a Trump victory coincides with the <a href="http://www.businessinsider.com/map-shows-far-right-growth-across-europe-2016-3">growth</a> of similar ideologies in Europe, though these are mostly embodied in separate parties rather than as wings of a major party. Undoubtedly, the ongoing effects of the 2008 financial crisis (especially on employment), combined with increasing virulence of Islamist movements such as ISIS, is fueling this growth. </p>
<p>Of course, the increasing popularity of far-right populism is likely to matter well outside the realm of trade policy. But to return to the theme of this article: what would a Trump victory mean for the passage of TPP and for free trade more generally?</p>
<h2>What this means for the TPP</h2>
<p>In order to take effect, the Trans-Pacific Partnership needs to be approved by Congress with a majority vote, which leaders <a href="http://www.wsj.com/articles/house-passes-trade-component-but-trans-pacific-partnership-still-in-doubt-1449863100">may well postpone</a> until at least after the election.</p>
<p>Because of Congress’ prior grant of <a href="https://theconversation.com/four-lessons-for-us-and-world-as-president-finally-gets-what-he-wants-a-free-hand-on-trade-43750">trade promotion authority</a> to President Barack Obama, this vote must be taken without amendments.</p>
<p>Despite these advantageous terms for the president, however, there is <a href="https://www.washingtonpost.com/politics/mcconnell-warns-that-trade-deal-cant-pass-congress-before-2016-elections/2015/12/10/b8151f26-9f66-11e5-8728-1af6af208198_story.html">great doubt</a> that the TPP has enough voters in Congress for approval. </p>
<p>Left-wing Democrats and right-wing Republicans may well join together to kill it, especially in this highly polarized election year. <a href="http://www.cbc.ca/news/politics/transpacific-trade-deal-tpp-signing-freeland-1.341856">Reluctance</a> to ratify the agreement among Canada’s new Liberal leaders is not likely to help move the deal forward.</p>
<p>If a vote on TPP is indeed postponed until after next January, a President Trump would undoubtedly kill the agreement. A President Clinton, on the other hand, would probably move forward with it and, in a postelection Congress chastened by its brush with the populist right, would stand some chance of success. </p>
<p>So the future of trade policy in the United States and around the world is likely to rest, in large measure, with the outcome of the current election and whether Trump’s new right triumphs. </p>
<p>Not only would this outcome lead to the death of TPP, but it would also call into question America’s basic commitment to international cooperation. If the United States, as the primary guarantor of the liberal economic order, is unwilling to stand behind it, who will?</p><img src="https://counter.theconversation.com/content/56241/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Trans-Pacific Partnership is one of President Obama’s biggest accomplishments of his second term. Can it survive the anti-trade tide in the race to replace him?Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/543762016-03-07T00:22:46Z2016-03-07T00:22:46ZWeighing the costs and benefits of joining TPP for Indonesia<figure><img src="https://images.theconversation.com/files/113152/original/image-20160228-26673-8ttwda.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Indonesia must carefully consider the cost and benefits of joining the Trans-Pacific Partnership. </span> <span class="attribution"><span class="source">Grasko/www.shutterstock.com</span></span></figcaption></figure><p><a href=".theguardian.com/world/2015/oct/27/indonesia-will-join-trans-pacific-partnership-jokowi-tells-obama">Southeast Asia’s biggest economy is eyeing the US-led Trans-Pacific Partnership</a> (TPP) trade deal, already signed by a dozen countries, including Australia. </p>
<p>Before coming to a decision, policymakers in Indonesia must measure the benefits of joining (or not) through careful studies, discussions and judgement. </p>
<h2>Fear of missing out</h2>
<p>Indonesian Trade Minister Thomas Lembong said if Indonesia does not join, it will <a href="http://economictimes.indiatimes.com/news/international/business/indonesia-must-join-tpp-trade-deal-or-risk-being-left-behind-tom-lembong-trade-minister/articleshow/49902616.cms">miss out on TPP benefits and trail behind TPP-member countries</a>, especially Vietnam and Malaysia. </p>
<p>But there are concerns back home that joining TPP will threaten Indonesian producers and flood the local market with imports. Indonesia is already facing <a href="http://jakartaglobe.beritasatu.com/economy/indonesia-posts-230m-trade-deficit-dec-7-51b-surplus-2015/">a trade deficit</a>. Some worry that having cheap imported goods from TPP members in Indonesia’s market, in addition to strict market regulations for members may exacerbate this problem. </p>
<p>People are also wary of how <a href="http://www.thejakartapost.com/news/2016/02/15/tpp-may-bankrupt-indonesia-activists-say.html">the TPP will benefit corporations from developed economies over struggling developing countries</a>, with the <a href="https://theconversation.com/investor-rights-to-sue-governments-pose-real-dangers-40004">mechanism for foreign companies to sue governments</a>. </p>
<h2>Weighing the TPP</h2>
<p>The current 12 TPP members (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam) accounts for 40% of world economy, US$ 295 billion of global income, and a potential gain of US$1.9 trillion. </p>
<p>We should examine the overall benefit of having access to markets of these countries and measure it to the potential losses that may come from increased competition and market regulation. </p>
<p>TPP members are spread across the Asia-Pacific region, which is geographically favourable for Indonesia. </p>
<p>It has two of Indonesia’s major trading partners - United States and Japan - where the trade balance between the two countries has always been a surplus. </p>
<p>TPP’s reduction in 18,000 tariff and other non-tariff barriers opens up market access for member countries. This includes tariffs for textiles and apparel, one of Indonesia’s main export products to the US. </p>
<p>The agreement may also benefit members by providing regulations that promises clearer and fairer trade practice. </p>
<p>Under the TPP, Small Medium Enterprises (SMEs) receive support to export their products to overseas markets. The TPP will also increase cooperation between different actors in the production and supply chain, a string of activities that bring goods into the consumers’ hands. The deal will help raw material producers like farmers connect with manufacturers and traders. </p>
<p>The TPP is expected to help reduce poverty and improve human development through support to small producers. </p>
<p>Aside from the potential benefits of greater market access by being a member of the TPP, Indonesia should also consider the cost of not joining. </p>
<p>A <a href="http://www.adb.org/sites/default/files/publication/156283/adbi-wp428.pdf">2013 study by the Asian Development Bank Institute</a> shows non-member countries including Indonesia can experience economic losses, by being less competitive from members in the same competing markets. </p>
<p>For example, not joining the partnership means Indonesia would be less competitive than TPP members Malaysia and Vietnam, also large producers and exporters of textiles. </p>
<p>Nevertheless, market access and tariff reductions are not the only areas that we have to consider in deciding to join. </p>
<p>The TPP covers the so-called “21st century issues” - such as intellectual property (IP) protection, investment assurance, movement of people, rules of origin, environmental protection, and labour standard. Experts in Indonesia must look into how the TPP will affect Indonesia’s growing digital industry and e-commerce, as well as the movement of people between member countries. </p>
<p>Lastly, we should also consider whether joining the TPP will give a substantial difference from existing trade agreements that Indonesia already has with some of the TPP members. For example, currently Indonesia is already part of the <a href="http://www.aseanbriefing.com/news/2014/02/13/understanding-aseans-free-trade-agreements.html">ASEAN Free Trade Agreement</a> (AFTA) with Malaysia, Singapore, and Brunei. We also have <a href="http://dfat.gov.au/trade/agreements/aanzfta/pages/asean-australia-new-zealand-free-trade-agreement.aspx">the ASEAN Australia New Zealand FTA</a> (AANZFTA).</p>
<h2>Finding a middle ground</h2>
<p>Indonesia has a lot of homework to do. It still faces the rapidly growing and modernised global market. Criticism certainly can guide us to act carefully, but we also need to be aware of the global opportunity and the risk of missing out when we are excluded from a strategic partnership. </p>
<p>Indonesia should make its decision based on a comprehensive study of all aspects of the TPP to gain the full benefit of the agreement and be prepared for all its challenges. </p>
<p>Additionally, to compete in a globalised economy, Indonesia must improve its infrastructure – especially roads and ports for transportation of goods and power plants to provide energy for manufacturing. Its institutions and human resources should also be improved. </p>
<p>Any trade agreements have some degree of flexibility. We should not be stuck in the dichotomy of join or not to join. But we should find a middle ground of joining at certain rate of conditions.</p><img src="https://counter.theconversation.com/content/54376/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ranitya Kusumadewi works for the Ministry of Trade Republic of Indonesia. She receives funding from the Fulbright Presidential Scholarship Program to pursue her PhD in United States. </span></em></p>Southeast Asia’s biggest economy is eyeing to join the US-led Trans-Pacific Partnership (TPP) trade deal, already signed by a dozen countries, including Australia.Ranitya Kusumadewi, PhD candidate in political science, Syracuse UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/532112016-01-20T00:38:48Z2016-01-20T00:38:48ZLeaders weigh up a challenging year of transitions in the Australia-US relationship<figure><img src="https://images.theconversation.com/files/108651/original/image-20160119-29790-1hpabo9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Barack Obama has become adept at welcoming new Australian prime ministers to the White House.</span> <span class="attribution"><span class="source">EPA/Michael Reynolds</span></span></figcaption></figure><p>Malcolm Turnbull has <a href="http://www.abc.net.au/news/2016-01-20/turnbull-speech-to-us-chamber-of-commerce/7099808">held talks with</a> President Barack Obama at the White House on his first official visit to the US as Australian prime minister. With the fight against Islamic State (IS) in the Middle East high on the agenda, Obama had high praise for Australia’s involvement in the conflict.</p>
<p>2016 will be a year of transitions in the Australia-US relationship. Obama, who has become adept at welcoming new Australian prime ministers, has less than a year remaining in office. Against this backdrop of change are three important issues: the fight against IS, the challenges of China, and the passage of the Trans-Pacific Partnership (TPP). </p>
<p>There is also one final important transition – Australia’s enormously popular ambassador to the US, Kim Beazley, will soon be replaced by <a href="https://theconversation.com/mr-hockey-goes-to-washington-so-what-challenges-will-he-face-49642">Joe Hockey</a>.</p>
<figure>
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<figcaption><span class="caption">Barack Obama and Malcolm Turnbull make their opening remarks.</span></figcaption>
</figure>
<h2>Farewell Beazley</h2>
<p>Australians know Beazley as an ALP stalwart, a former deputy prime minister and opposition leader. Americans know Beazley as one of Australia’s most effective interlocutors. Beazley’s knowledge and passion for American history and his love of ideas have made him a Washington favourite.</p>
<p>Beazley also brought to Washington an excellent understanding of Australia’s strategic challenges. He was no mere consumer of others’ strategic analysis; he quite capably generated his own.</p>
<p>What sometimes gets lost amid all this admiration is Beazley’s effectiveness in representing Australia’s cause. His <a href="https://twitter.com/ausambusa">15,700-odd Twitter followers</a> may not rival pop star <a href="https://twitter.com/katyperry">Katy Perry</a>, but his following is more than double than that of the outgoing <a href="https://twitter.com/PeterWestmacott">British ambassador to the US</a>, Peter Westmacott.</p>
<p>Not only was Beazley effective in articulating an Australian point of view, but he did so tirelessly. He will be a hard act to follow.</p>
<h2>Turnbull’s challenges</h2>
<p>Turnbull has already begun to put a different kind of stamp on the Australia-US relationship. </p>
<p>In a speech to the <a href="http://www.malcolmturnbull.com.au/media/australia-and-the-united-states-new-responsibilities-for-an-enduring-partne">Center for Strategic and International Studies</a>, Turnbull outlined his vision for co-operation between Australia and the US. Thucydides and a more nuanced view on how to address turmoil in the Middle East have replaced Tony Abbott’s <a href="https://theconversation.com/abbott-vows-to-shirt-front-putin-as-russian-diplomat-recalls-better-times-32889">more muscular approach</a>.</p>
<p>For some in Washington there may be disquiet over Australia’s decision <a href="http://www.theguardian.com/australia-news/2016/jan/13/malcolm-turnbull-rejects-us-request-for-more-australian-troops-to-fight-isis">not to increase</a> its troop deployment to Iraq. Turnbull explained:</p>
<blockquote>
<p>Other nations with larger economies, larger defence forces and closer to the theatre are beginning to step up their commitments. As they should.</p>
</blockquote>
<p>While other countries must do more to support the anti-IS coalition, Turnbull observed:</p>
<blockquote>
<p>The destruction of ISIL [Islamic State in Iraq and the Levant, another name for IS] requires military action including boots on the ground. But they must be the right boots on the right ground. </p>
</blockquote>
<p>Many in Washington will applaud this call. </p>
<p>In the speech, Turnbull also touched upon the other issue that exercises minds in Washington – China. </p>
<p>Two challenges emerge from China that test the Australia-US relationship. Turnbull turned to Athenian philosopher and historian <a href="http://www.canberratimes.com.au/comment/malcolm-turnbull-and-thucydides-and-all-that-20151217-glputw.html">Thucydides</a> to illustrate the problem. Thucydides described the rising power of Athens leading to Sparta’s intemperate and violent reaction. Will China’s rise come about peacefully or not? </p>
<p><a href="https://theconversation.com/why-the-world-is-wary-of-chinas-great-wall-of-sand-in-the-sea-40070">China’s conversion</a> of water-logged atolls and reefs in the South China Sea into airstrips and harbours provide grounds for concern. Australia’s support of <a href="http://www.bbc.com/news/world-australia-35099445">freedom-of-navigation patrols</a> is an important adjunct to American efforts. Both the US and Australia share an interest in China’s peaceful rise. It is hard to see how the territorial dispute in the South China Sea will be easily resolved. </p>
<p>Turnbull wisely called for calm:</p>
<blockquote>
<p>Australia has no claims in the South China Sea, nor do we make any judgement on the legitimacy of any of the competing claims. We urge all parties, not just China, to refrain from further construction on those islands or reefs, and to refrain from militarisation. </p>
</blockquote>
<p>Whether anybody listens to these soothing words remains to be seen.</p>
<p>The second equally complex threat to international peace and stability is the Chinese economy. China can barely manage its increasingly complex and opaque economy. The International Monetary Fund released its <a href="http://www.imf.org/external/pubs/ft/weo/2016/update/01/">World Economic Outlook update</a> the same day Turnbull met Obama. This projected a weakening Chinese economy, with Chinese growth slowing to 6.3% in 2016 and 6% in 2017. </p>
<p>The questions for the Australia-US relationship are the extent to which the slowing Chinese economy will have a spillover effect, and how deeply a weakening Chinese economy will impact domestic stability.</p>
<p>The final challenge concerns the TPP. The timing of <a href="http://www.theguardian.com/business/2015/oct/05/tpp-trade-deal-obama-us-congress-approval-bernie-sanders-hillary-clinton">congressional approval</a> of the trade deal remains a mystery. In this, a presidential election year, the TPP may not make much progress. </p>
<p>The TPP’s signing is high on Australia’s list of achievements in Washington. Unfortunately, real success depends more on individual members of Congress than it does on anything the White House might want. </p>
<p>Turnbull, in his meeting with Obama, made clear the TPP’s importance. He claimed that “the critical thing is the way it promotes the continued integration” of the Asia-Pacific’s economies, which is an important peg in regional security. Passage of the TPP may well be important, but members of Congress may be more concerned about their own re-election.</p>
<p>Such are the challenges of Washington.</p><img src="https://counter.theconversation.com/content/53211/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alan Tidwell does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>2016 will be a year of transitions in the Australia-US relationship. Against a backdrop of change are three important issues: the fight against Islamic State, China, and passage of the TPP.Alan Tidwell, Director, Center for Australian, New Zealand and Pacific Studies, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/530382016-01-13T01:53:57Z2016-01-13T01:53:57ZGovernments undermining encryption will do more harm than good<figure><img src="https://images.theconversation.com/files/107963/original/image-20160113-8441-1o5alr5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Western governments are threatening to undermine the encryption that keeps our online communications private.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Western governments, notably the UK and the US, are pushing the software industry to open “backdoors” into our encrypted communications. </p>
<p>The argument touted by government agencies for nearly 20 years is that terrorists use strong encryption to hide their communications, therefore we should ban strong encryption.</p>
<p>British Prime Minister David Cameron has been outspoken in his desire for a <a href="http://www.wired.co.uk/news/archive/2015-07/15/cameron-ban-encryption-u-turn">such a ban</a>. </p>
<p>And last week, US President Barack Obama’s Chief of Staff and a team of national security officials flew to Silicon Valley to meet with top technology companies Twitter, Microsoft, YouTube, Facebook, LinkedIn, Apple and Dropbox. It’s likely <a href="http://www.theguardian.com/technology/2016/jan/07/white-house-social-media-terrorism-meeting-facebook-apple-youtube-">they discussed</a> collaboration between the Silicon Valley and the US intelligence and law enforcement on backdooring encryption.</p>
<p>Next week, Prime Minister Malcolm Turnbull will be <a href="https://www.pm.gov.au/media/2016-01-09/prime-minister-visit-united-states">meet the US president in Washington DC</a> and encryption may also be on their security agenda. </p>
<p>Australia is already a member of the “<a href="https://en.wikipedia.org/wiki/Five_Eyes">5-Eyes</a>” alliance, and a <a href="https://www.privacyinternational.org/node/658">user</a> of the <a href="https://theconversation.com/nine-reasons-you-should-care-about-nsas-prism-surveillance-15075">PRISM regime</a> to spy on citizens, which was revealed by Edward Snowdon. It is also a signatory to the <a href="https://theconversation.com/au/topics/trans-pacific-partnership">Trans Pacific Partnership</a>. It seems likely Australia will try to follow the US and UK lead.</p>
<p>In response to this push to undermine encryption, an open letter to governments, called “<a href="https://securetheinternet.org/">Secure The Internet</a>”, was published this week. It is signed by more than 170 companies, organisations and individuals from around the world, including leading data security researchers.</p>
<p>The letter calls for all governments to reject backdooring or the weakening of encryption products.</p>
<h2>Keys to the door</h2>
<p>Encryption is used by most of us every day, typically with no conscious effort. If you log into your email or bank site with an address starting “https://”, then you are using encryption.</p>
<p>It seems likely governments around the world are trying to either <a href="http://www.zdnet.com/article/australia-may-do-dumb-things-with-crypto-in-2016-eff/">woo or cajole the tech industry</a> and security researchers to “break” the software they build by installing backdoors or other holes for the government to access our communications effortlessly.</p>
<p>The problem with installing backdoors is that bad actors – organised crime, fraudsters, hostile foreign governments and the like – may also focus their attention on these security holes. Any universal “passkey” built into such a system would be immensely valuable, and worth spending enormous resources to capture, thus making those who had them significant targets for espionage.</p>
<p>The push to emasculate the strong encryption we use every day is akin to the government telling every citizen we can’t lock our front door, or maybe we can only use a weak little latch. It’s like requiring everyone to send our passwords to a central government office.</p>
<p>The aim should be to improve security on the internet, not to break it. Governments colluding to break internet security introduces the risk of breaking our evolving digital economy as well by undermining trust in businesses and banks. Imagine logging into your online banking at National Australia Bank, ANZ, Westpac, Commonwealth Bank or your insurance company, and not knowing if the encryption was secure.</p>
<p>The argument that terrorists might use encryption so we should ban it is without nuance and probably even effect. Terrorists might also use steak knives to commit crimes, but we don’t make steak knives illegal. Steak knives have other useful purposes in society. And, like strong encryption, these benefits greatly outweigh the very small risks.</p>
<h2>Will it even work?</h2>
<p>The Secure the Internet letter references the <a href="https://www.schneier.com/cryptography/paperfiles/paper-keys-under-doormats.pdf">research paper</a> authored by a who’s who of the world’s top computer security researchers. </p>
<p>The paper highlights the numerous problems with implementing such policies in practice. Many of these researchers were around when the first major push came from government to impose weakened encryption on the masses in the form of <a href="https://en.wikipedia.org/wiki/Clipper_chip">Clipper Chip</a> in 1997. </p>
<p>They concluded “the damage that could be caused by law enforcement exceptional access requirements would be even greater today than it would have been 20 years ago.” Such schemes kill innovation. Indeed the authors query whether Facebook and Twitter would even exist today if the previous scheme had been imposed.</p>
<p>Australian security agencies have significantly expanded their powers over the past few years. The agencies can break into computers remotely, plant software, copy data, <a href="http://mslods.com/2015/02/04/data-retention-whats-at-stake/">access related metadata</a>, install keyloggers to track a target’s every keystroke. </p>
<p>These agencies’ methods require some targeting, although some do not even require the oversight of judge. They already can force anyone to <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/ca191482/s3la.html">reveal a harddrive’s encryption passphrase</a> or face a prison term for failing to do so.</p>
<p>Agencies have also had a huge budget increase, with an extra <a href="http://www.budget.gov.au/2015-16/content/highlights/nationalsecurity.html">A$1.2 billion</a> added for national security in the 2015 budget. In short, they have a cornucopia of powers and resources to chase terrorists.</p>
<p>At some point, that chase has to be about the mundane gumshoe work of gathering “HUMINT” – intelligence from human contacts – not just about sitting at a desk of computers scanning communications.</p>
<p>Realistically, backdooring strong encryption software, which is what is being floated here, will not stop terrorists. They will simply find and use other channels, including secure software distributed via other countries that do not have such restrictive laws.</p>
<h2>Making us more or less secure?</h2>
<p>The desire to break the computer security of an entire population also hints at the more insidious aim of governments trawling all of our private communications. With <a href="https://theconversation.com/au/topics/edward-snowden">Edward Snowden’s</a> revelations about exactly this, it is important to view this recent push to destroy the innocent citizen’s right to use encryption securely through this lens.</p>
<p>The contradiction of this push is that governments are trying to force our communications to be less secure while claiming to make us more secure.</p>
<p>If we want to retain our freedoms, we will also need to take some responsibility by changing our own mindsets. We as citizens need to accept that there is some risk in an uncertain world. We cannot expect law enforcement nor intelligence agencies to provide 100% guarantees; it is both unrealistic and unreasonable. </p>
<p>The urge to “do something” after terrible attacks like those in Paris, should be spent fixing the underlying causes of terrorism, not creating legislative overreach designed to grab tomorrow’s headline.</p>
<p>Keeping the keys to our own house requires a balanced approach in all things.</p><img src="https://counter.theconversation.com/content/53038/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Suelette Dreyfus is affiliated with Blueprint for Free Speech, a not-for-profit international NGO which supports freedom of expression, protection of individual privacy and institutional transparency. She is a signatory to the 'Secure the Internet' open letter.</span></em></p>An open letter signed by security experts from around the world is calling on governments to protect encryption rather than undermine it in a quixotic attempt to tackle terrorism.Suelette Dreyfus, Lecturer, Department of Computing and Information Systems, The University of MelbourneLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/525412015-12-18T05:04:50Z2015-12-18T05:04:50ZAustralia’s plain packaging win over Philip Morris should take the heat off ISDS<p>Christmas has come early for advocates of tobacco control, with tobacco giant Philip Morris’s lawsuit against Australian plain packaging legislation <a href="http://www.pcacases.com/web/view/5">ruled invalid</a>. Australia will not have to pay any damages to Philip Morris. Indeed, it is likely that Philip Morris will be ordered to reimburse the Australian government’s costs in defending this suit. </p>
<p>This outcome is also an early Christmas present for defenders of much maligned investor state dispute settlement (ISDS). The Philip Morris case had become the bogeyman of ISDS. It was held up as a reason to <a href="https://www.getup.org.au/campaigns/tpp/tpp-text-released/the-dirtiest-deal-ever?t=4QtnteW">object to ISDS clauses in free trade agreements</a>. </p>
<p>This is understandable. A tobacco company sued a government for enacting laws designed to improve public health. They used a little understood mechanism - ISDS – to sue, despite having lost in Australian courts. International trade law disputes rarely have such a clear-cut villain. It is natural to distrust the mechanisms they relied on. However, this victory - in the first ISDS claim brought against Australia - should allay those concerns.</p>
<h2>The award</h2>
<p>This determination is a victory for common sense. Philip Morris argued that the plain packaging legislation - which prevents them from using their trademarks on the packages of their cigarettes and in advertising – was “expropriatory”. That is it was akin to the government seizing their assets without compensation. Further, Philip Morris argued they were entitled to compensation for lost profits. I have previously noted that <a href="https://theconversation.com/sovereign-risk-fears-around-tpp-are-overblown-39865">this position is nonsense</a>. It has no basis in law. Philip Morris were seeking suspension of the plain packaging legislation and compensation of “<a href="http://www.pcacases.com/web/sendAttach/1476">an amount to be quantified but of the order of billions of Australian dollars</a>.”] They will get nothing.</p>
<p>In a typically truculent press release Philip Morris <a href="http://www.financialpost.com/news/business-wire/detail.html?b=www.businesswire.com%2Fnews%2Fsyndication%2F20151217006627%2Fen%2FPhilip-Morris-Asia-Limited-Comments-Tribunal%25E2%2580%2599s-Decision">continued its attack on plain packaging</a>. Its grandiose claim that the “real point” of the dispute went to “the essence of the rule of law” is correct; though perhaps not in the way they intend. </p>
<p>Ultimately this dispute turned on a question of jurisdiction. Australia argued that Philip Morris was not entitled to bring ISDS proceedings. It argued that Philip Morris had improperly made a foreign “investment” so as to avail itself of these proceedings. It also argued that Philip Morris <a href="http://www.pcacases.com/web/sendAttach/1476">misrepresented the nature of its investment to the Australian government</a>. Further Australia argued that the case constituted an abuse of right. For these reasons Australia argued that the case could not proceed. In essence Australia was asking the tribunal to find that Philip Morris had - to use a colloquialism - attempted to “game” the system. That jurisdictional argument succeeded. </p>
<p>While the specifics are not yet published, it is clear that the tribunal has rejected Philip Morris’ capacity to bring this suit. Multinational companies are not able to use free trade agreements and investment treaties to do an end run around the proper processes. This is entirely in keeping with the essence of the rule of law.</p>
<h2>Myth busting</h2>
<p>This case exposes many of the errors opponents of ISDS proceedings make. Claims that such <a href="https://wikileaks.org/tpp-investment/press.html">proceedings are secret</a> are simply untrue. Large swathes of this dispute are available online, just as court proceedings in Australia would be. The equivalent ISDS clause contained in the Trans-Pacific Partnership agreement <a href="https://ustr.gov/sites/default/files/TPP-Final-Text-Investment.pdf">goes further</a>. It has very far-reaching and specific provisions requiring disputes to be resolved transparently.</p>
<p>Equally, we can now demonstrate that these cases proceed according to fairly standard legal processes. Claims that such tribunals are not bound by precedent, and therefore <a href="https://theconversation.com/investor-rights-to-sue-governments-pose-real-dangers-40004">not bound to follow the ordinary legal process</a> are incorrect. That claim discloses a misunderstanding of the nature of precedent. </p>
<p>Many other jurisdictions do not share Australia’s technical rules of precedent - the “<a href="https://en.wikipedia.org/wiki/Precedent"><em>stare decisis</em></a>” rule. Yet they still make predictable decisions. Civil law countries apply “<em>jurisprudence constante</em>”. This rule strikes a balance between the need for predictable decisions and the civil law insistence that only the legislature may make law. International law must accommodate a plurality of legal systems. Australia’s approach to legal reasoning is not the last word in justice. Predictable, coherent legal decisions are possible even without strict application of <em>stare decisis</em>.</p>
<p>I have previously called for a sober analysis of the costs and benefits of ISDS clauses. Australia’s victory over Philip Morris should take much heat out of this debate.</p>
<p>The bogeyman has been slain.</p><img src="https://counter.theconversation.com/content/52541/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tomas Fitzgerald has received funding from the WA Bar Association. He is a member of WA Labor and the NTEU. </span></em></p>Australia’s plain packaging win over Philip Morris will kill the ISDS bogeyman.Tomas Fitzgerald, Senior Lecturer, Law, University of Notre Dame AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/509792015-11-20T05:44:31Z2015-11-20T05:44:31ZAs Asia embraces the Trans-Pacific Partnership, ISDS opposition fluctuates<p>Alongside this week’s APEC leaders’ summit in Manila, US President Obama met counterparts and trade ministers from 11 other Asia-Pacific states that agreed in October to the expanded <a href="http://dfat.gov.au/trade/agreements/tpp/Pages/trans-pacific-partnership-agreement-tpp.aspx">Trans-Pacific Partnership (TPP)</a>.</p>
<p>These states, covering around 40% of world GDP, cannot sign the free trade deal before February 3, when the US Congress finishes its 90-day review. But Obama and others in Manila <a href="http://www.freemalaysiatoday.com/category/nation/2015/11/18/tpp-may-be-sealed-in-nz-in-february-says-najib/">reiterated</a> the importance of the TPP for regional and global economic integration.</p>
<p>There are, however, ongoing concerns in <a href="http://www.smh.com.au/federal-politics/political-news/australia-could-be-sued-for-billions-by-foreign-companies-for-new-laws-under-tpp-20151106-gksbjx.html">Australia</a> and <a href="http://ccsi.columbia.edu/2015/11/18/the-tpps-investment-chapter-entrenching-rather-than-reforming-a-flawed-system/">the US</a> about the TPP’s investment chapter, including its investor-state dispute settlement (ISDS) provisions. </p>
<p>The ISDS provisions grant foreign investors the right to use dispute settlement proceedings against a foreign government when they are unable to persuade their home country to do so. If the host state discriminates, seizes a foreign investment or renders it largely worthless without paying adequate compensation, or denies justice in local courts, the investor can use ISDS to bring a direct claim. ISDS helps depoliticise disputes and encourages a rules-based framework for investment, especially in <a href="http://ssrn.com/abstract=2401504">developing countries</a>. </p>
<p>Yet ISDS has become a lightning rod for those in Australia who are unhappy about entering into free trade agreements aimed at promoting cross-border trade and investment beyond the WTO system. Polarised media coverage <a href="http://ssrn.com/abstract=2685941">has escalated</a> particularly since 2011.</p>
<p>Part of the criticism comes from <a href="http://www.smh.com.au/business/the-economy/tpp-will-the-transpacific-partnership-really-benefit-australia-20151006-gk24so.html">some economists</a>, including the <a href="http://www.pc.gov.au/inquiries/completed/trade-agreements/report">Productivity Commission</a> in 2010. It favoured greater economic liberalisation, but prefered unilateral moves, or at least multilateral treaties. Although accompanied by a vigorous dissent, the commission’s main report also adopts a laissez-faire approach to investment: firms should make their own decisions about whether to invest locally or abroad, and do not need treaties to set baseline legal standards of protection.</p>
<p>However, most criticism of ISDS in Australia comes from the political left, which is generally opposed to economic liberalisation. Treaty-based protections for investors are seen as <a href="http://aftinet.org.au/cms/node/962">undermining national sovereignty</a>, altough others <a href="http://ssrn.com/abstract=2033167">point out</a> this is inherent whenever one state commits to an international agreement. </p>
<p>Critics are also very concerned about <a href="http://theconversation.com/leaked-tpp-investment-chapter-shows-risks-to-australias-health-39799">“regulatory chill”</a>. They often <a href="http://ssrn.com/abstract=2041680">highlight</a> the first (and only) arbitration brought against Australia by Philip Morris Asia, regarding tobacco plain packaging. Yet a careful <a href="http://etheses.lse.ac.uk/897/">empirical study</a> recently found no significant extra regulatory chill even in a country like Canada, which has lost a few ISDS claims under the North American FTA in effect since 1994.</p>
<p>These two lines of critique came together in the Trade Policy Statement the <a href="http://ssrn.com/abstract=1860505">Gillard government issued</a> in 2011. <a href="http://ssrn.com/abstract=2152752">Controversially</a>, Australia declared it would never agree to any form of ISDS in future investment treaties. The stance complicated negotiations for major bilateral FTAs as well as the TPP.</p>
<p>In 2013, the Abbott government <a href="http://dfat.gov.au/trade/agreements/chafta/fact-sheets/Pages/fact-sheet-investor-state-dispute-settlement.aspx">reverted</a> to including ISDS on a case-by-case assessment. This helped Australia to reach agreement on major FTAs, but the political left continues its opposition through <a href="http://ssrn.com/abstract=2561147">multiple parliamentary inquiries</a>, especially in the Senate.</p>
<p>The Greens began by proposing an <a href="http://ssrn.com/abstract=2483610">“Anti-ISDS Bill”</a>, which would have legislated the 2011 Trade Policy Statement stance. Even the Labor members on that Senate committee disagreed, mindful of setting a dangerous precedent that might constrain a future Labor government from negotiating and signing treaties in other fields. </p>
<p>However, Labor parliamentarians did <a href="http://ssrn.com/abstract=2643926">initially side with Greens members</a> on inquiries into the Korea and then China FTAs, objecting in part to their ISDS provisions. Yet these are very limited regarding <a href="http://blogs.usyd.edu.au/japaneselaw/2015/06/compromised_isds_china.html">China</a>, and eventually Labor voted with the Coalition parliamentarians to allow tariff implementation legislation and therefore ratification to bring both FTAs into force.</p>
<p>The big question now is what approach Labor will take to the TPP, given its inclusion of ISDS (albeit with <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/australia-new-zealand-investor-state-dispute-settlement-trade-remedies-and-transport-services.PDF">side letters</a> proposing a carve-out between Australia and New Zealand), with Australia’s general election scheduled for 2016. </p>
<p>Labor may well fudge its stance. After all, if elected but again only in coalition with Greens, a new Labor government may want to revive the Gillard government Trade Policy Statement to eschew ISDS provisions. If elected outright, Labor may instead be willing to accept them at least for the TPP. It may negotiate some further side letters or take the lead on a code of conduct already envisaged for ISDS arbitrators. </p>
<p>Overall, the TPP’s ISDS-backed commitments are quite similar to those in Australia’s FTAs since 2003. These, in turn, are largely modelled on <a href="http://blogs.usyd.edu.au/japaneselaw/2015/11/tpp_investment.html">treaties between third parties and the US</a>, which has never been subject to a successful ISDS claim.</p>
<p>Labor will also have to bear in mind that other TPP partners are generally comfortable with ISDS (as are large economies like <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2643926">Korea</a> and <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2244634">China</a> that may <a href="http://m.lowyinstitute.org/node/46209">accede later</a>). These include capital exporters like <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1724999">Japan</a>, but also foreign direct investment (FDI) hosts like <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2643926">New Zealand</a> and <a href="http://www.transnational-dispute-management.com/article.asp?key=2041">Vietnam</a> – after subjecting ISDS to closer scrutiny recently.</p>
<p>Ironically, apart from Australia, it is mainly therefore the US – typically a strong proponent of ISDS – where some recent opposition <a href="http://www.eastasiaforum.org/2015/10/29/the-tpp-isnt-a-done-deal-yet/">may complicate TPP ratification</a>, especially in light of its own elections next year.</p><img src="https://counter.theconversation.com/content/50979/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Luke Nottage receives funding from the Australian Research Council for a project on international investment dispute management (DP140102526) and Canada's Centre for International Governance Innovation (CIGI) for a research project comparing investor-state arbitration policy and practice particularly in advanced democratic economies (<a href="https://www.cigionline.org/articles/investor-state-arbitration">https://www.cigionline.org/articles/investor-state-arbitration</a>).
He has or had executive functions on the International Law Association's committee for the International Committee of Consumers, the Law Council of Australia's international law section and ADR committee, ACICA's rules drafting committee, and the Asia-Pacific Forum for International Arbitration.</span></em></p><p class="fine-print"><em><span>Leon Trakman receives funding from the Australian Research Council for a project on international investment dispute management (DP140102526).</span></em></p>Opposition against Investor-State Dispute Settlement clauses seems likely to fall away as Asian economies flock to the TPP.Luke Nottage, Professor, Sydney Law School, University of SydneyLeon Trakman, Professor, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/503982015-11-11T19:22:36Z2015-11-11T19:22:36ZThe Trans-Pacific Partnership poses a grave threat to sustainable development<p>This month’s <a href="https://theconversation.com/tpp-revealed-at-last-we-have-the-details-and-a-democratic-deficit-to-be-fixed-50232">long-awaited release</a> of the Trans-Pacific Partnership (TPP) <a href="https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text">text</a> was the result of years of negotiations on trade ties between nations around the Pacific Rim. </p>
<p>Some six weeks earlier, another set of deliberations came to an end as the United Nations <a href="https://theconversation.com/explainer-the-worlds-new-sustainable-development-goals-47262">unveiled its 17 Sustainable Development Goals</a> (SDGs), which aim to eradicate poverty and reduce inequality by addressing critical issues such as food security, health care, access to education, clean and affordable water, clean energy, and climate action. </p>
<p>Unfortunately, the two documents are incompatible. Several chapters of the TPP impinge upon the SDGs, potentially undermining the UN’s efforts to promote sustainable development and equality throughout the Pacific region. Moreover, many developing countries, least-developed countries, and small island states in the Pacific region are excluded from the preferential trade deal.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/101358/original/image-20151110-29326-juwcu.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The global goals of sustainable development.</span>
</figcaption>
</figure>
<h2>What does the TPP say on development?</h2>
<p>The US Trade Representative has <a href="https://medium.com/the-trans-pacific-partnership/development-a9869aa451c4">boasted</a> that the TPP’s <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/ch23-development.pdf">chapter on development</a> will be a boon for developing Pacific nations, and that it will “focus attention on major development goals including inclusion of women, micro-enterprise, poverty reduction, and education, science, and technology”.</p>
<p>But while the chapter is laden with aspiration, it lacks firm commitments or hard obligations. Here’s how it opens:</p>
<blockquote>
<p>The Parties affirm their commitment to promote and strengthen an open trade and investment environment that seeks to improve welfare, reduce poverty, raise living standards and create new employment opportunities in support of development.</p>
</blockquote>
<p>It then goes on to discuss the promotion of development, and broad-based economic growth. There is text on economic growth with regard to women (despite the fact that the Sydney TPP talks were an <a href="http://trademinister.gov.au/Pages/Archive-DisplayAlbum.aspx?w=O%2F%2FeXE%2BIYc3HpsIRhVl0XA%3D%3D&Album=TPP%20Ministerial%20Meeting%20Sydney%2025-27%20October">all-male affair</a>). However, in terms of its substance, the TPP does not address gender inequality.</p>
<p>There then follows some empty text on recognising the importance of “education, science and technology, research and innovation” and a pledge to replicate in miniature the existing <a href="http://www.undp.org/">UN Development Programme</a> (although the UNDP itself has <a href="http://fta.miti.gov.my/miti-fta/resources/auto%20download%20images/55ae15c666acc.pdf">criticised the TPP</a>). But then comes a giveaway statement that reveals the insignificance of the TPP’s development provisions: </p>
<blockquote>
<p>In the event of any inconsistency between this Chapter and another Chapter of this Agreement, the other Chapter shall prevail to the extent of the inconsistency.</p>
</blockquote>
<p>The US journalist Dylan Matthews has <a href="http://www.vox.com/policy-and-politics/2015/11/6/9680538/tpp-development-trade-poverty">described the TPP’s development chapter</a> as being “like a parody of a treaty, using various formalities to dress up the fact that it does absolutely nothing”.</p>
<h2>What about sustainability?</h2>
<p>Several other chapters in the TPP reinforce yet more problems with meeting the Sustainable Development Goals.</p>
<p>The <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/ch18-intellectual-property.pdf">Intellectual Property Chapter</a> of the TPP undermines efforts to promote access to knowledge and educational initiatives. Likewise, the patent measures for pharmaceutical drugs and biotechnology will hamper access to affordable and essential medicines. There has also been a concern about the impact of plant breeders’ rights and other forms of plant intellectual property upon food security and farm-saved seed. Criminal penalties and procedures for trade secrets will clash with open innovation.</p>
<p>The <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/ch20-environment.pdf">Environment Chapter</a>of the TPP has been <a href="http://www.smh.com.au/federal-politics/political-news/details-of-transpacific-partnership-finally-released-20151105-gkrivo.html">condemned</a> for its limited coverage, weak enforcement measures, and failure to mention climate change. </p>
<p>Australia’s trade minister Andrew Robb <a href="http://www.abc.net.au/am/content/2015/s4346466.htm">has retorted</a> that the TPP does not need to address climate change:</p>
<blockquote>
<p>This is not a climate change policy. It’s not an agreement to do with climate change, it’s a trade agreement.</p>
</blockquote>
<p>Yet trade and climate change are intimately related. If we want to reduce global carbon emissions, it is essential to move to a low-carbon economy. In her 2014 book <a href="http://thischangeseverything.org/">This Changes Everything</a>, the Canadian author and activist Naomi Klein comments that we can no longer think about trade and climate change in two solitudes. In her view, trade deals need to promote climate action too.</p>
<p>The <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/ch19-labour.pdf">Labor Rights Chapter</a> is also a disappointment. It has been <a href="http://www.aflcio.org/Issues/Trade/Trans-Pacific-Partnership-Free-Trade-Agreement-TPP">criticised by unions</a> who say that it fails to protect jobs, wages, freedom of association, workers’ rights, and human rights more generally.</p>
<p>Moreover, the <a href="http://dfat.gov.au/trade/agreements/tpp/official-documents/Documents/ch9-investment.pdf">Investment Chapter</a> empowers foreign investors to challenge government decisions and regulations in international tribunals. There has been much disquiet about the creative and innovative use of investor clauses by multinational corporations. </p>
<p>UN human rights rapporteur Olivier de Schutter and his Columbia University colleague Kaitlin Cordes have raised concerns about how the TPP will <a href="http://www.project-syndicate.org/commentary/olivier-de-schutter-and-kaitlin-y--cordes-demand-that-the-trans-pacific-partnership-s-terms-be-subject-to-a-human-rights-impact-assessment">affect food security</a>. Margaret Chan of the World Health Organisation has warned of the impact of <a href="http://who.int/dg/speeches/2015/intellectual-property-trips/en/">investor clauses in respect of public health</a>. Maude Barlow of the Council of the Canadians has warned that investor clauses will undermine <a href="http://www.huffingtonpost.ca/maude-barlow/corporations-un-climate-change_b_8179118.html">water rights, the protection of the environment, and climate action</a>. There is widespread concern about whether the value placed on the investment rights of foreign corporations will conflict with the SDGs.</p>
<h2>Rethink needed</h2>
<p>It is clear that much of the TPP is at odds with key elements of the global sustainable development agenda. There needs to be a thorough human rights assessment of the whole agreement.</p>
<p><a href="http://www.bostonglobe.com/opinion/2015/11/08/jeffrey-sachs-tpp-too-flawed-for-simple-yes-vote/sZd0nlnCr18RurX1n549GI/story.html?event=event25">Considering this package of measures</a>, Columbia University economist Jeffrey Sachs laments the lack of substance in the Development Chapter, writing: </p>
<blockquote>
<p>Yes, they rhetorically defend global economic development, labor standards, and environmental sustainability, but they do so without specific enforcement powers. </p>
</blockquote>
<p>Meanwhile, his colleague Joseph Stiglitz is concerned about <a href="http://www.project-syndicate.org/commentary/us-secret-corporate-takeover-by-joseph-e--stiglitz-2015-05">the TPP exacerbating poverty and inequality</a>.</p>
<p>We need a new kind of trade agreement – one that respects and supports the world’s sustainable development goals. In particular, it is essential that future trade deals promote human development, access to knowledge, public health, human development, and climate action.</p><img src="https://counter.theconversation.com/content/50398/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew Rimmer is a past recipient of Australian Research Council grants in respect of intellectual property, food security, and climate change.</span></em></p>The Trans-Pacific Partnership has been described by its backers as a boon for development. But with no concrete commitments, nor any mention of climate, it is really at odds with the UN development agenda.Matthew Rimmer, Professor in Intellectual Property and Innovation Law, Queensland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/489712015-10-14T19:31:36Z2015-10-14T19:31:36ZLife plus 70: who really benefits from copyright’s long life?<figure><img src="https://images.theconversation.com/files/98165/original/image-20151013-17843-sn1flu.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How many of these are still protected by copyright?</span> <span class="attribution"><span class="source">Samuel John/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Few of us wish to disclose our age. But, for the purposes of this article, I am willing to do so: in 2012, I turned 30. </p>
<p>According to data generated by the <a href="http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/3105.0.65.0012014?OpenDocument">Australian Bureau of Statistics</a>, a woman in Australia aged 30 in 2012 will likely live for another 54.90 years. If this figure is correct in my case, then copyright will protect this article for nearly 125 years. It will officially enter the public domain on 1 January, 2141. </p>
<p>Is what I say in this article so significant that I, and many generations of Bonds to come, should enjoy a right to control who copies this piece for the course of the next century and beyond? </p>
<p>Probably not. However, that is how copyright applies in Australia. So why do we protect copyright for the life of the creator plus 70 years?</p>
<h2>Term of his natual life</h2>
<p>The length of copyright protection has been <a href="http://www.abc.net.au/news/2015-10-06/rimmer-tpp-favours-old-ip-industries/6830884">in the news recently</a> following the leaking of the <a href="https://www.eff.org/issues/tpp">Intellectual Property Chapter</a> of the forthcoming Trans-Pacific Partnership (<a href="http://dfat.gov.au/trade/agreements/tpp/pages/trans-pacific-partnership-agreement-tpp.aspx">TPP</a>). </p>
<p>Under the TPP, Australia won’t be required to make any changes to our term of copyright for works (such as this article). We already introduced the TPP-mandated period of protection for published works – life of the author plus 70 years – when we signed the <a href="http://dfat.gov.au/trade/agreements/ausfta/pages/australia-united-states-fta.aspx">Australia-United States Free Trade Agreement</a> in 2004. </p>
<p>Before this, Australia’s term of protection was life of the author plus 50 years, which is the minimum standard required by the <a href="http://www.wipo.int/treaties/en/ip/berne/summary_berne.html">Berne Convention</a>, our main international copyright agreement. However, other countries in the TPP, such as Canada and New Zealand, will need to extend copyright in works to life plus 70 years if the TPP proceeds.</p>
<p>For as long as there has been statutory copyright protection, there has been a stated term of protection for published works. That duration is seen as part of what is described as the “copyright balance”. </p>
<p>When the High Court of Australia considered in 2009 whether copyright should protect a TV guide created by Channel Nine in <a href="http://www.austlii.edu.au/au/cases/cth/HCA/2009/14.html">IceTV v Nine Network Australia</a>, the judges stated that:</p>
<blockquote>
<p>[…] the purpose of a copyright law respecting original works is to balance the public interest in promoting the encouragement of “literary”, “dramatic”, “musical” and “artistic works”, as defined, by providing a just reward for the creator, with the public interest in maintaining a robust public domain in which further works are produced.</p>
</blockquote>
<p>Copyright provides authors with an incentive to create works and release these to the public, by rewarding that author with a number of rights for a limited period of time. </p>
<p>These rights include control over who can copy it or make it available online. In turn, during the term of copyright, the public can use the work as allowed under law, but after copyright expires, any person may copy the work in part or in whole in a variety of ways. </p>
<h2>Out of public domain</h2>
<p>Over the years, that period of protection has been extended a number of times to take account of factors, including the impact of war, although today copyright protects works for far longer than a patent might protect an invention (20 years) or a design (two terms of five years).</p>
<p>Jane Austen’s books, for example, have been in the public domain for more than 150 years. As a result, anyone can publish and sell their own edition of Emma or Sense and Sensibility, or use Austen’s characters in another story, as happened in Pride and Prejudice and Zombies and its forthcoming film adaptation. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/98164/original/image-20151013-17849-10q02dz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Innovative works such as Pride and Prejudice and Zombies are made possible only once copyright lapses.</span>
<span class="attribution"><span class="source">Robert Burdock/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>When Austen died in 1817, copyright in her works passed to family members, as was intended under copyright law. A posthumous term of copyright was to ensure that heirs of the copyright owner could benefit from what his or her family member created, and to continue to enjoy some financial benefit after the death of the original author. </p>
<p>However, this does not always happen. Austen’s relatives sold the copyright in her works to an English book publisher in the 1830s, and it often happens that a publisher or another third party will own copyright. </p>
<p>When Men at Work were famously sued for copying the children’s song Kookaburra Sits in the Old Gum Tree, the owner of the copyright was not Marian Sinclair, the writer of the song, or her direct heirs. Instead, it was a music publishing company, Larrikin, which purchased copyright in the song from the Public Trustee.</p>
<p>Today, we have <a href="https://theconversation.com/a-healthy-public-domain-generates-millions-in-economic-value-not-bad-for-free-39290">empirical evidence</a> that a strong public domain provides significant economic benefits. </p>
<p>Often these benefits are overlooked when we are negotiating trade agreements like the TPP, which may have broader strengths and consequences beyond those that affect IP. However, when the duration of copyright in an online article starts to sound like science fiction, it may be time to limit the time of copyright.</p><img src="https://counter.theconversation.com/content/48971/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Catherine Bond receives funding from the Australian Research Council (DP140100172)</span></em></p>Copyright lasts the life of the author plus 70 years before it enters the public domain. But the author and their family are often not the beneficiary. Perhaps it’s time for shrink that term.Catherine Bond, Senior Lecturer in Law, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/483612015-10-07T10:09:42Z2015-10-07T10:09:42ZWe may have cinched TPP, but is US trade a lost cause?<figure><img src="https://images.theconversation.com/files/97493/original/image-20151006-7335-15t4kr9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">About 98% of US exporters are small businesses. </span> <span class="attribution"><span class="source">Cargo ship via www.shutterstock.com</span></span></figcaption></figure><p>President Barack Obama, with <a href="http://thehill.com/homenews/administration/246418-obama-to-sign-fast-track-trade-legislation">fast-track negotiating powers</a> in his back pocket, managed to seal the biggest trade agreement of the World Trade Organization era this month. </p>
<p>The passage of fast-track, agreed by Congress in June to allow a straight up-or-down vote on trade deals, means the <a href="https://theconversation.com/explainer-negotiators-reach-landmark-pacific-trade-deal-so-whats-next-48641">Trans-Pacific Partnership (TPP) agreement</a> involving the US and 11 other countries stands a strong chance of passage, at least in the US. </p>
<p>The TPP encompasses 40% of global trade, links the US with mostly Pacific countries including Singapore, Japan and Australia, and is the biggest US trade deal since at least 1995. </p>
<p>But large, much-trumpeted trade agreements like the <a href="https://theconversation.com/five-things-you-need-to-know-about-the-trans-pacific-partnership-48653">TPP</a> and the Transatlantic Trade and Investment Partnership with Europe belie a troubling trend: US trade with the world, and the Pacific in particular, has been declining. Is it too late to turn the tide? </p>
<h2>A steady decline in trade</h2>
<p>The US share of the Asia-Pacific region’s imports declined about <a href="http://www.rollcall.com/issues/58_4/Asia-Pacific-Exporting-Will-Expand-Economy-216054-1.html">43%</a> from 2000 to 2010. Clawing that back would mean the need to export an additional <a href="http://www.thirdway.org/report/boatloads-of-growth-recapturing-americas-share-of-asia-pacific-trade">US$600 billion</a> annually by 2020. </p>
<p>Meanwhile other countries have filled the gap. Part of the problem is that the US has a history of being reluctant to enter into regional trade agreements. </p>
<p>The US’ oldest trade agreement is with Israel, an <a href="https://www.uschamber.com/sites/default/files/open_door_trade_report.pdf">accord</a> that celebrated its 30th anniversary last month. Since then, the US <a href="http://www.state.gov/e/eb/tpp/bta/fta/c26474.htm">has signed</a> just 14 regional trade agreements involving about 20 countries (18 more are currently being deliberated).</p>
<p>But during the same 30-year period, the world has seen <a href="http://rtais.wto.org/UI/PublicPreDefRepByEIF.aspx">256</a> new trade agreements, as registered with the World Trade Organization (see chart), with 132 of them being implemented just in the last decade.</p>
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<p>These regional trade agreements, when the US is not involved, create barriers and constraints that have an effect on market opportunities and <a href="http://fortune.com/2014/09/08/us-economic-competitiveness/">profits</a> of US companies. It is common to see tariffs that are five times higher in foreign markets than the US average. </p>
<p>Another way to look at it is that the US ranked 130 of 138 nations in terms of the amount of “<a href="https://www.uschamber.com/sites/default/files/open_door_trade_report.pdf">tariffs faced</a>” by the country’s exports – that is, US companies face higher tariffs than nearly all our trading partners.</p>
<h2>Trade’s familiar battle lines</h2>
<p>The battle lines on TPP – which still stands a chance of being blocked by Congress – seem to be the same as for most trade agreements. Special interest groups don’t like the potential undermining of US regulations. Labor unions argue that jobs will be lost to low-salaried countries. And many argue that these agreements help only large corporations.</p>
<p>Is this really true? Not really. Barriers to exporting significantly hurt small and medium-sized US enterprises as well. Such SMEs, with fewer than 500 employees, sales of less than $33.5 million and a small geographic footprint, represent <a href="http://blog.trade.gov/2015/04/08/profile-of-u-s-exporters-highlights-contributions-of-small-and-medium-sized-businesses/">98%</a> of US exporters. Exporting is their best bet for growth.</p>
<p>Unfortunately, indications are that SMEs are slowly <a href="http://fortune.com/2014/09/08/us-economic-competitiveness/">decaying</a>, and the lack of trade is partly to blame. In a global competitiveness <a href="http://www.hbs.edu/competitiveness/research/Pages/research-details.aspx?rid=18">survey</a>, small businesses were found to be declining as a job creation vehicle, were more pessimistic about the business environment than large firms and were the businesses most affected by the decline in US global competitiveness.</p>
<h2>A not-so-rosy picture</h2>
<p>Why doesn’t the US government do more? Perhaps it is hubris. </p>
<p>The US is still the world’s <a href="https://www.uschamber.com/international/international-policy/benefits-international-trade-0">largest</a> exporter, with $2.35 trillion sent annually around the world. Some 38 million Americans have jobs because of trade. So even with the decline in overall manufacturing output since 1979, the US is doing well globally. And some of the decline has been offset by service exports ($710 billion). </p>
<p>Sound rosy? Not really.</p>
<p>While the US is consistently <a href="http://reports.weforum.org/global-competitiveness-report-2014-2015/report-highlights/#rankings">ranked</a> as one of the most competitive of the world’s 200 <a href="http://globaledge.msu.edu/global-insights/by/country">countries</a> and, by most accounts, is also perceived as the leader in foreign <a href="https://www.foreignaffairs.com/articles/united-states/2015-06-09/measuring">policy</a> and world affairs, the country has not proactively engaged in worldwide trade agreements at the pace of other nations. This hurts large corporations and small businesses alike.</p>
<p>In looking at the chart, covering 1960 to 2015, it’s pretty easy to see that the proliferation of trade agreements follows the same rate as the increase in cross-border trade. Meanwhile, world production has not increased as much. We trade more across borders than we make relative to the past.</p>
<h2>Are we in or out?</h2>
<p>Based on my research, this “global supply chain effect” will continue. Just to stay competitive, companies’ global supply chains will have to become <a href="http://www.mhprofessional.com/product.php?isbn=0071827420">43%</a> more global by 2023. A primary reason is to keep up with the in- and out-flows from the Asia-Pacific region.</p>
<p>Can the US keep up? With the US engaging in fewer regional trade agreements than much of the rest of the world, it stands to reason that US companies will continue to lose out. Research that I have done backs this up. A lack of trade agreements adds to the negative “country effect” – that is, how much residing in a specific locale affects business performance. Results show that about 6% of the performance of companies depends on such <a href="http://onlinelibrary.wiley.com/doi/10.1002/smj.2422/abstract">country effects</a>.</p>
<p>Either the US is in the “in group” or it has to face the “out group” consequences. Naturally, trade among countries in a trade agreement increases, while trade with countries outside it stays flat or may even decline.</p>
<p>These country effects have serious consequences, particularly for <a href="http://www.tradingeconomics.com/united-states/balance-of-trade">consumer products</a>, which are often sold like generic commodities with low profit margins. Regional trade agreements, if negotiated properly and timely signed, can help bring down <a href="http://economistsview.typepad.com/economistsview/international_trade/">costs</a> and increase profit margins, especially for SMEs. The net gain is an increased positive country effects vis-à-vis competitors.</p>
<p>So let’s hope Congress doesn’t delay in approving TPP. But let’s also hope that the next president takes advantage of the six-year renewal of fast-track and picks up the pace of negotiating new trade deals so America’s workers and small businesses don’t get left behind.</p><img src="https://counter.theconversation.com/content/48361/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tomas Hult receives funding from U.S. Department of Education, National Science Foundation, and Michigan Economic Development Corporation. He is also Executive Director of the Academy of International Business, President of the Sheth Foundation, and serves on the US District Export Council.</span></em></p>The signing of the Trans-Pacific Partnership belies the fact that the US’s share of trade in the region has been declining for some time.Tomas Hult, Byington Endowed Chair and Professor of International Business, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/487422015-10-07T03:48:35Z2015-10-07T03:48:35ZOh no, we forgot about China - the flaw at the centre of the TPP<p>Like many trade policy initiatives, the newly <a href="https://theconversation.com/five-things-you-need-to-know-about-the-trans-pacific-partnership-48653">finalised 12-nation Trans-Pacific Partnership (TPP)</a> is motivated by a desire to help domestic exporters get better foreign market access. The key idea is one of mutual concessions – in exchange for foreign market access we give up some of our own subsidies or protection. </p>
<p>Despite the headlines, however, the TPP agreement has little to do with the economic argument for free trade.</p>
<p>This is because the economic gains from free trade don’t come from exporting more, or from preferential market access. They have nothing to do with mutual concessions. Rather the gains from trade are derived from being able to import at lower prices. This means that costs of trade barriers are incurred by consumers in the country that imposes the trade barriers. Consequently the benefits of free trade can be mostly gained by removing one’s own trade barriers. </p>
<p>This is the approach the Australia took toward trade policy when it unilaterally reduced tariffs throughout the 1980s and 1990s. This generated economic gains to Australians and didn’t require armies of lawyers and bureaucrats to manage the preferential access as rules of origin or tariff schedules.</p>
<p>When one thinks about the costs of trade barriers and the benefits of trade liberalisation in these terms, it is easy to see major flaws in the TPP as an economic policy.</p>
<p>Firstly because tariff barriers are all already very low between the member countries, any economic gains that might be realised by mutual concessions are likely to be exceedingly small. Reasonable estimates come up with numbers like one tenth of a percent of GDP. This, as the Nobel Laureate and economist Paul Krugman notes, is hardly world-shaking.</p>
<p>Second, the TPP is an international club with exclusive benefits for members. Like any selective club, it’s not so much about who you let in, but who you keep out - like China.</p>
<p>This exclusivity and security baggage is the second flaw. If, as they claim, the twelve TPP countries really wanted to promote economic growth and raise living standards, they would have sought to include China from the outset. The omission of China is of course strategic. But it is further cause for scepticism over the claim that the TPP is designed to generate economic benefits. The benefits would have been much larger with China and larger still with other countries.</p>
<p>Am I being too idealistic? Proponents of TPP say the collapse of the multilateral World Trade Organisation (WTO) process, at Cancun in 2003, shows that is unrealistic to expect a trade deal that is all inclusive. This then necessitates regional agreements with like-minded nations.</p>
<p>That failure, however, was not a result of too many countries with different agendas. Rather it was caused by the refusal of the United States, and a few other rich countries with high levels of agricultural protection, to reduce those protection levels. </p>
<p>This hurts US consumers since US farm support schemes are currently costing taxpayers $20 billion dollars per year. But, along with similar schemes in OECD countries, it also depresses world prices and so which redistributes income away from many of the worlds’ poorest countries that export agricultural products.</p>
<p>So the exclusivity of the TPP agreement, and the omission of China, is not born of necessity. It results from the torpedoing of the WTO process by the protectionist stance of some influential large countries with highly protected agricultural sectors.</p>
<p>Thus the TPP seeks to remove barriers only where there is the least political cost, and excludes countries and sectors where there could be significant economic gains. As such it appears to be maximising political kudos while minimising the potential for economic gains. The eminent trade economist Jagdish Bhagwati has labelled it “a testament to the ability of US to obfuscate public policy”.</p>
<p>No doubt the politicians are pleased with the last minute deal. The Economist magazine suggests it has saved face for US political leadership. But - as Shania Twain says - that don’t impress me much.</p><img src="https://counter.theconversation.com/content/48742/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Robertson receives funding from The Australian Research Council</span></em></p>If the Trans-Pacific Partnership was really about economic growth, it would include China, rather than deliberately locking it out.Peter Robertson, Professor, The University of Western AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/486632015-10-07T02:13:47Z2015-10-07T02:13:47ZRatifying the TPP may be tough, but Australia needs it<p>Eight years in total of protracted negotiations. Twelve countries. The largest multi-continental trade agreement since <a href="http://www.apec.org/">APEC</a>in 1989. The Trans-Pacific Partnership (TPP) is complete.</p>
<p>Almost.</p>
<p>But the road to ratification will be rough. American unions, together with environmental and public health lobbies, are amongst those opposed, which guarantees TPP will have a tough time getting through US Congress.</p>
<p>Some 22 years ago, US President Bill Clinton faced a similarly-implacable union movement and a hostile legislature when he sought to pass President George Bush Snr’s legacy, the North American Free Trade Agreement (NAFTA), through Congress. “Tell your President,” America’s most powerful union leader told Labour Secretary Robert Reich, “to forget about NAFTA.”</p>
<p>Wrong. Clinton used the power of the presidency to push NAFTA through, although he had to make some domestic concessions. But on 1 January, 1994, NAFTA was duly promulgated.</p>
<p>President Barack Obama has faced similar difficulties. He finally obtained fast-track Trade Promotion Authority from Congress in June 2015. But TPP may yet fall at the final hurdle.</p>
<p>If TPP is passed, what will it mean for Australia? Here, we examine two of its most contentious aspects: Investor State Dispute Settlement (ISDS) and pharmaceutical intellectual property (IP) under the mooted TPP agreement.</p>
<h2>Investor State Dispute Settlement</h2>
<p>The TPP will incorporate controversial investor state dispute settlement (ISDS) provisions that enables corporations to litigate against governments in off-shore international fora.</p>
<p>Such provisions are not a new phenomenon; there are over 150 signatory countries to the UN Convention on International Trade Law (UNICTRAL) establishing ISDS. Currently, there are <a href="https://icsid.worldbank.org/apps/ICSIDWEB/about/Documents/ICSID%20Fact%20Sheet%20-%20ENGLISH.pdf">more than 2,700 international agreements</a> that include ISDS provisions.</p>
<p>Judging by the available TPP material, the ISDS provision in the agreement is in line with other Bilateral Investment Treaties (BITs). All non-sensitive case information will be made public. Within TPP, awards are specifically limited to monetary damages.</p>
<p>It can take up to 18 months for a case to be heard by a tribunal, under a process that actively encourages both governments and firms to mediate. There are also numerous country-specific exceptions, as many governments have opted to include financial and foreign investment protections. Moreover, the Transatlantic Business Council <a href="http://www.transatlanticbusiness.org/wp-content/uploads/2014/05/ISDS-in-TTIP-January-2015.pdf">asserts</a> that “over 90 percent of the nearly 2,400 BITs in force have operated without a single investor claim of a treaty breach.”</p>
<p>Safeguards are in place to protect governments from being sued when they legislate in policy areas such as public health, education and the environment. During the TPP negotiations, the Australian government sought specific exclusions: tobacco companies have been explicitly identified as ineligible to utilise ISDS provisions. Australia is currently party to 26 ISDS provisions under existing trade and investment agreements (27, once the China Australia Free Trade Agreement (ChAFTA) is in force).</p>
<p>In Australia’s case, ISDS provisions have only been employed once: by Philip Morris Asia over tobacco plain packaging, utilising an Australia-Hong Kong BIT. The Australian High Court has already rejected Philip Morris’ arguments, while Ukraine, which brought a case before the WTO against Australia with four other plaintiffs, has withdrawn from the WTO hearing. Although the other four litigants, (which have received funding from Philip Morris) remain, it is highly unlikely that either the WTO or the ISDS tribunal would deliver outlying judgements at variance with the reasoning of the High Court.</p>
<p>While many are fearful over corporations’ ability to sue governments, the reality is that in a total of 608 ISDS cases globally (as of December 2014), only 87 ruled in favour of corporate litigants (that is, a poor success rate of 14%). On average, corporations were awarded financial compensation of less than 10% of the dollar amounts they sought. Of these 608 cases, European corporations were responsible for more than half (327). </p>
<p>In 2013, 117 cases were brought against EU member states; <a href="http://www.transatlanticbusiness.org/wp-content/uploads/2014/05/ISDS-Fact-Sheet.pdf">most these (75%) were internal (“intra-EU”) disputes</a> brought by investors in one member state against EU member governments, governed by internal bilateral investment treaties and the <a href="http://www.energycharter.org/">Energy Charter Treaty.</a> In addition, Spain and the Czech Republic were by far the worst offenders, accounting for 42% of all cases.</p>
<p>Environmentally sensitive ISDS cases have often drawn considerable attention. On occasions where governments have sought to settle cases outside tribunals, such as Ethyl v. Canada (1998), the Canadian government was, bizarrely, attempting to circumvent its own regulatory regime. In other ISDS cases, such as Metalclad v. Mexico (2000), the NAFTA tribunal made its first arbitral award to a corporation of $US16 million. However, the Mexican government petitioned the High Court of British Columbia, which partially set aside the award.</p>
<p>For TPP members, such as Australia, Japan and the US, such provisions are entirely manageable. However, it is true that less developed countries may face considerable costs if ISDS provisions resulted in more frequent litigation. What mitigates against this is the exceedingly limited level of success for corporations under existing trade and investment regimes, which suggests ISDS will be no more controversial under TPP than under any previous agreements.</p>
<h2>Pharmaceutical Intellectual Property</h2>
<p>One of the most divisive components of the TPP are the pharmaceutical intellectual property (IP) provisions. However, Prime Minister Malcolm Turnbull claims the <a href="http://mashable.com/2015/10/05/tpp-malcolm-turnbull/#E6Cgz4k0X8qm">TPP will not change Australia’s IP laws.</a></p>
<p>The US and Japan have long been pushing for a clause to include “evergreening”, when the owners of a patent create a variation of the drug – which adds little or no value – to extend the life of a patent. This prevents any generics derived from that drug from entering the market, effectively enabling the producer to maintain a monopoly on the drug.</p>
<p>Patent protection has become critical for pharmaceutical companies. Between 2002 and 2011, R&D investment by the world’s top 500 pharmaceutical and biotechnology companies is estimated to have increased by 93 per cent, even as the number of new drug launches in the US remained stagnant at an annual average of 25.</p>
<p>Critics of both ISDS and pharmaceutical IP provisions within the TPP frequently cite the current Eli Lilly v. Canada case (2013) involving patents on Strattera (an attention-deficit disorder pill) and Zyprexa (an anti-psychotic treatment), which were invalidated by Canadian courts in 2011–12. According to one of the foremost authorities on IP law, Ruth Okediji, Eli Lilly is advancing a weak claim. Okediji <a href="http://scholarship.law.upenn.edu/jil/vol35/iss4/8/">states</a> that “the United States and Canada are party to the same intellectual property agreements, and Lilly was not denied protection for any category of intellectual property.” Eli Lilly has lost at every level of the Canadian legal system; its NAFTA action is likely to suffer the same fate.</p>
<p>Following the conclusion of the TPP negotiations, there has been no announcement regarding whether evergreening will remain in the final text. The final days of the TPP talks saw Japan and the US isolated on the issue, with all ten other members opposing the inclusion of evergreening. Watch this space.</p>
<p>The major sticking point that forced TPP negotiations to be extended was biologics: new pharmaceutical drugs that are derived from biological resources. Australia and the US were divided, with the powerful US pharmaceutical lobby pressing hard for 12 years’ protection for medicines. A 12-year protection period would prohibit the entry of cheaper, generic “biosimilar” vaccines, cancer treatments and other life-saving medicines.</p>
<p>Australia, with support from other TPP member countries, insisted upon five-year data exclusivity; extending the data protection to eight years, as Washington had insisted originally, would have cost the Commonwealth government’s Pharmaceutical Benefits Scheme hundreds of millions of dollars annually.</p>
<p>US concessions enabled the TPP stalemate to end. Although the precise language of the pharmaceuticals IP deal remains unknown, TPP member countries will have the option of providing either a minimum of five years data exclusivity, or eight years of biologic exclusivity. It is not yet known what option other TPP countries will select.</p>
<p>There will be losers, NGOs such as Medecins sans Frontieres <a href="http://www.smh.com.au/national/health/transpacific-partnership-health-groups-say-tpp-will-cost-lives-20151005-gk229t.html">claim</a> developing countries will pay more for pharmaceuticals. The TPP, the MSF argues, will “cost lives” and the TPP pharmaceutical chapter will impact heavily upon future trade agreements. Generic pharmaceutical manufacturers stand to lose as well, if IP is ring-fenced for eight years in some TPP markets.</p>
<h2>Keep calm and carry on</h2>
<p>The fact is that governments have effectively handed significant arbitral autonomy to international organisations for decades. Australia was a foundation signatory to the General Agreement on Tariffs and Trade (GATT, 1947) and the WTO (1994), as well as the UN Convention on the Law of the Sea (1958), which spawned the International Tribunal on the Law of the Sea (ITLOS, 1982). Australian corporations may apply for remedies under the single market legal regime governed by the European Court of Justice. The lesson is clear: “hard” international law provides certainty and security for business, government and consumers. The TPP consolidates existing international trade law and extends the network of FTAs signed by successive governments since 1984, that integrate the Australian economy more closely with New Zealand, Singapore, the US, Thailand, ASEAN, Japan, South Korea and China.</p>
<p>Contrary to the <a href="http://www.amazon.com/How-Kill-Country-Australias-Devastating/dp/1741145856">hyperbole</a>, the Australia-US FTA (2005) did not cause the sky to fall. Australia needs bilateral and plurilateral agreements like the TPP to apply the blowtorch of liberalisation to its trade partners who would otherwise keep their protectionist barn doors well and truly shut. The 1957 Australia-Japan agreement reignited a trade relationship that World War II had terminated. Gough Whitlam understood that slashing protectionism in 1973 lit a fire under the fat, lazy, inefficient manufacturing sector. In the 1990s, APEC, the EU Single Market and NAFTA compelled Asian economies to abandon tariff walls and monopolist, crony capitalism, in order to transform the Asian region into the world’s most dynamic production hub.</p>
<p>You can pine for the 1970s if you want to: replete with stagnation, stagflation, Jeremy Corbyn and morbid unemployment rates. The 1970s: when Australia’s share of world trade was slashed by half. But you cannot avoid the realities of the cut-throat business of international capital, trade and investment. Australia’s FTAs and the TPP are strategic responses to the forces of globalisation. As Renato Ruggiero, the late WTO Director-General once noted, “it is not whether you globalise that matters. It’s how you globalise.”</p>
<p><em>Jessi Canny, from Politics and International Relations at Monash University, co-authored this article.</em></p><img src="https://counter.theconversation.com/content/48663/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Remy Davison's Chair is funded by the EU Commission.</span></em></p>The Trans-Pacific Partnership may not be a done deal, but Australia cannot avoid the realities of the cut-throat business of international capital, trade and investment.Remy Davison, Jean Monnet Chair in Politics and Economics, Monash UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/486802015-10-06T19:30:44Z2015-10-06T19:30:44ZGrowing our services industry will be the main gain from the TPP<figure><img src="https://images.theconversation.com/files/97392/original/image-20151006-7358-1amtwjp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The new Trans-Pacific trade deal has its sights squarely on financial services.</span> <span class="attribution"><span class="source">Image sourced from www.shutterstock.com</span></span></figcaption></figure><p>Just as surely as day follows night, the Australian media have broken the announcement of a trade deal with yet another series of Australian food selfies. Cows on the paddock, cheese on the plate and – for those prone to scepticism or pure scaremongering – sugar spilling away.</p>
<p>All that is fine, it’s lovely. The rest of the world should devour our fabulous Australian produce, and after all what sort of neighbours would we be if we provided our friends with Australian waygu, but left out the bottle of shiraz?</p>
<p>Without wishing to offend those on the land, however, it must be stated that the overall gains from increasing exports of agricultural products are limited. Agriculture contributes just under 3% of Australian economic output (value added) and less than 5% of employment. Doing better for this sector is absolutely a positive thing – it’s just not the main game for the nation.</p>
<p>It’s also not the main game for the Trans-Pacific Partnership deal. Though we don’t yet know the details, we do know the component parts of the negotiations that have been underway for nearly a decade. This agreement is about much more than tariffs, and that is what is so exciting about it.</p>
<p>This agreement is about cross-border deregulation, competition and cooperation. Not only that, it is promoting deregulation, competition and cooperation in Asia – a region that tends to feature a relatively high regulatory burden, huge discrepancies in treatment of cross-border business and a complex, fractured legal framework. There are enormous gains to be made.</p>
<p>The question for trade minister Andrew Robb is how he is going to sell this deal. Steak is tangible, easy to understand. Not so much for cross-border investment and customs practices. These are intangible, to most punters anyway. The photo opportunities are not obvious. Even worse, the benefits cannot always be easily quantified.</p>
<p>It is time for the Australian economic fraternity to step up. There is a clear to call to action here. For the decades leading up to the deregulation of the Australian economy in the 1980s and 1990s, Australian classical economists played the hero in the trade wars – quantifying the gains from tariff reduction, arguing the case and being generally helpful in tearing down protectionism. The narrative was a clear and compelling one: Reducing tariffs and deregulating industry would lift prosperity for all, and grow the economic pie. And so it did.</p>
<p>What is the narrative today? Are we working on trade in services with a view to increasing inbound tourism and university student take up? Like beef, that a nice to have – but it lacks imperative.</p>
<p>Rather, we need to talk about how the TPP will grow our pie.</p>
<p>Financial services is a case in point. In a <a href="http://www.australiancentre.com.au/sites/default/files/NewsDocs/ACFS%20Financial%20Integration%20website%20version.pdf">study published earlier this year</a>, we documented how poorly we are able to understand the implications of Asia’s rise for Australia’s financial services industry.</p>
<p>This is a central 21st century question. The financial services sector is the largest single industrial segment of the Australian economy, equivalent to about 9% of gross value added. Financial services firms are a major employer across all states, and financial services firms are the largest contributors of corporate tax.</p>
<p>Extrapolating from an ABS survey last undertaken in 2009, we estimated that financial services is also probably Australia’s largest services export, equivalent to about A$55 billion in 2013, or 17% of all exports. This is larger than tourism exports, and more than double the value of education exports.</p>
<p>Why don’t we know about this, or talk about it? Because the majority of cross-border trade in financial services is delivered on the ground overseas, and occurs through inter-company activity of multinational firms or their small service providers. ANZ sales of banking services in Hong Kong don’t get counted, and neither do IAG policies written in Malaysia or AMP management of funds from Singapore, for example, into Hong Kong. Not to mention the business generated amongst small traders in Australia who sell their services to the large, overseas conglomerates that operate here.</p>
<p>No services delivered through this on the ground “mode of supply” find their way into ABS data. The same is true of accountancy, IT, legal and all manner of other professional services – think of accounting done out of India, call centres in Manila or graphic design production in Singapore. What hope have we got in quantifying the gains from trade in services if we can’t count the current trade activity in the first place?</p>
<p>And in the services economy – what are the critical barriers to and enablers of growth? A safe and secure digital environment, the ability to set up shop offshore quickly and easily, the certainty of delivery from offshore vendors and the confidence that contractual obligations will be enforced should things go wrong.</p>
<p>By all accounts, this is what the TPP will start to address. It has its sights squarely on financial services, investment, telecommunications, e-commerce, data storage and protection, government procurement, customs practices, mutual harmonisation and recognition of legal frameworks – all the core issues for a 21st century economy. All critical enablers of growth for Australian services firms, large and small.</p>
<p>The TPP is a call to arms for Australia’s highly capable 21st century economists – or at least, a call to your computers. It’s time to build the case.</p><img src="https://counter.theconversation.com/content/48680/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>ACFS is currently undertaking a project entitled "Financial Integration in the Asia Pacific" that is being funded by a range of industry partners and a limited grant from DFAT and the Australian China Council. </span></em></p>Trade minister Andrew Robb must now “sell” the benefits of the Trans-Pacific Partnership - he could do worse than to concentrate on how our services sector will gain.Amy Auster, Executive Director, Australian Centre for Financial Studies Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/486532015-10-06T05:34:01Z2015-10-06T05:34:01ZFive things you need to know about the Trans-Pacific Partnership<p>After eight years and 19 rounds of <a href="http://dfat.gov.au/trade/agreements/tpp/pages/trans-pacific-partnership-agreement-tpp.aspx">negotiations</a> that began in Melbourne in 2010, the <a href="https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/summary-trans-pacific-partnership">Trans-Pacific Partnership Agreement</a> has been concluded in Atlanta.</p>
<p>The agreement will create a free trade zone among 12 nations, including Australia, the US, Japan and New Zealand. Together, the TPP nations account for 40% of global GDP and 24% of the world’s trade in services.</p>
<p>The <a href="https://theconversation.com/multilateral-regional-bilateral-which-agreement-is-best-19664">multilateral trade deal</a> will eliminate 98% of all tariffs levied by signatory countries, on products including beef, dairy, wine, sugar, rice, horticulture and seafood. It also extends to manufactured goods, resources and energy, and services.</p>
<p>Here are five of the key things you need to know about it.</p>
<hr>
<p><strong>1. We still don’t have the full text of the agreement, so many people are reserving judgement</strong></p>
<p>Despite some leaks of various chapters of the agreement the TPP has largely been shrouded in <a href="https://theconversation.com/the-trans-pacific-partnership-and-australias-right-to-know-20334">secrecy. </a></p>
<p>Once the wording of the agreement is finalised it will be posted on the Department of Foreign Affairs and Trade website. This is expected to happen within 30 days.</p>
<hr>
<p><strong>2. The deal still has to be ratified in national legislatures, including the US Congress, which has been hostile</strong></p>
<p><em>Jeffrey Wilson, Lecturer in Politics and International Studies, Murdoch University:</em></p>
<p>Negotiating a text for the TPP was only half the political challenge – governments now have to implement the agreement through a process known as “ratification”. This involves a country amending its own domestic laws to ensure they comply with the specified treaty commitments.</p>
<p>In case of the TPP this is a major task, as its provisions range across a wide range of areas as diverse as trade, investment government procurement, telecommunication, labour rights, environmental protection and financial services. Many interest groups have already indicated they will try and sink the deal by obstructing ratification in national legislatures.</p>
<p>It is expected that ratification will be unproblematic in Singapore, Brunei, Vietnam, and New Zealand, where governments currently have the political capacity to legislate for the required changes.</p>
<p>I predict that ratification will be relatively straightforward in Australia as well. While the LNP government requires support from the ALP in the Senate, most of Australia’s core requests (particularly tobacco ISDS safeguards and biologic drug restrictions) were obtained during negotiations. Australia also stands to make major gains in agriculture and services, which have eluded us in bilateral FTAs with China and Japan. It would be a “<a href="https://www.youtube.com/watch?v=ik8JT2S-kBE">courageous’ political move</a>” for the ALP to block the deal.</p>
<p>The key “problem” countries are Japan, Canada and the US.</p>
<p>In Japan and Canada, there will be widespread opposition to some agricultural liberalisation provisions from farm and rural groups. Japanese Prime Minister Abe likely has the support to push these reforms ahead, but Canada’s position hinges on the outcome of the October 19 election.</p>
<p>Paradoxically, it is the US – the key driver of the TPP - where it faces the hardest domestic sell. In June 2015, President Obama obtained “fast-track” authority from the US legislature, which means the TPP will now be put to the Congress for a “yes or no” vote in 90 days. However, Obama relied on support from moderate Republicans to gain fast-track authority, and a number of prominent Democrats (including Presidential Candidate Bernie Sanders) oppose the deal. The current Presidential primaries will also cloud the US policy debate. For what it is worth, Donald Trump is against the TPP.</p>
<p><em>Further reading:</em></p>
<p><a href="https://theconversation.com/explainer-negotiators-reach-landmark-pacific-trade-deal-so-whats-next-48641">Explainer: Negotiators reach landmark Pacific trade deal, so what’s next?</a></p>
<hr>
<p><strong>3. There is an Investor State Dispute Settlement clause in the agreement</strong></p>
<p><em>Elizabeth Thurbon, Senior Lecturer in international Relations, UNSW Australia:</em></p>
<p>ISDS clauses allow foreign investors to sue host country governments for regulatory changes that “harm” their investments. In agreeing to the inclusion of ISDS in the TPP (and in the Korea and China deals) the Abbott and Turnbull governments have ignored the advice of the Productivity Commission, which has argued strongly against ISDS clauses since its 2010 review of Australia’s Preferential Trade Deals. </p>
<p>As the PC points out, ISDS clauses can promote “regulatory chill” by disinclining governments from regulating in the public interest, lest they be subject to action by foreign firms. ISDS clauses are also inherently discriminatory, in that they grant arbitration privileges to foreign but not local companies. Furthermore, those arbitrations are carried out by small groups of legal experts who are not required to consider legal precedent and whose decisions are not open to appeal. The decision to accept ISDS in KAFTA, CHAFTA and the TPP marks a significant departure from the previous Labor government’s explicit and principled objection to the inclusion of ISDS in any future trade deals (which is largely what held up CHAFTA and KAFTA under Labor). </p>
<p>In agreeing to ISDS, Australia is now swimming against the tide of other advanced economies including France and Germany, which have both taken a strong stance against it. This follows the German government being sued by Swedish energy firm Vattenfall for its decision to shift away from nuclear power following the Fukushima disaster in Japan.</p>
<p>Both the US and Australian governments have indicated in their TPP announcements that the ISDS clauses negotiated have been designed to exempt “public interest” regulation from appeal, to make transparent the arbitration process and to discourage “frivolous” ISDS claims. As the text of the agreement is not yet available, it is unclear whether these exemptions extend to regulations aimed, for example, at transitioning away from a fossil fuelled economy towards more a sustainable energy footing. </p>
<p><em>Further reading:</em></p>
<p><a href="https://theconversation.com/when-trade-agreements-threaten-sovereignty-australia-beware-18419">When trade agreements threaten sovereignty: Australia beware</a></p>
<p><a href="https://theconversation.com/sovereign-risk-fears-around-tpp-are-overblown-39865">Sovereign risk fears around TPP are overblown</a></p>
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<p><strong>4. Medicines are not likely to end up more expensive in Australia as a result</strong></p>
<p><em>Belinda Townsend, Sessional Academic, Deakin University</em></p>
<p>The Australian government has signalled the deal will have <a href="http://www.abc.net.au/news/2015-10-06/pacific-nation-ministers-negotiators-lock-in-tpp-trade-deal/6829368">“no impact on the Pharmaceutical Benefits Scheme”</a>. The <a href="http://dfat.gov.au/trade/agreements/tpp/resources/Pages/myths-versus-realities.aspx">Department of Foreign Affairs and Trade</a> has also claimed it would not accept an outcome that increases the price of medicines for Australians. If this is correct, Australia may have avoided adopting intellectual property measures that would increase the cost of medicines in the country. </p>
<p>Australia has apparently resisted attempts by the United States to extend data exclusivity protection on biologic drugs beyond five years. This move will likely <a href="http://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&uact=8&ved=0CB0QFjAAahUKEwip-Yj74KzIAhWnF6YKHSiMDEo&url=http%3A%2F%2Fdfat.gov.au%2Ftrade%2Fagreements%2Ftpp%2Fsubmissions%2FDocuments%2Ftpp_sub_gleeson_lopert_moir.pdf&usg=AFQjCNGmbH9lsTfJDPp8b0TfSR-SBg0SAQ">save taxpayers millions of dollars a year</a> by preventing unnecessary additional delays in the introduction of biosimilars (also known as generics). </p>
<p>While this would be a great outcome for patients, it remains to be seen what Australia actually has agreed to given the text is still secret. It is very likely, however, that the final TPP intellectual property chapter contains measures that will <a href="http://infojustice.org/wp-content/uploads/2015/08/gleeson08052015.pdf">delay market entry of generic or biosimilar medicines</a> in low and middle income countries party to the agreement. Delays in generic competition often result in paying higher prices for originator medicines under monopoly. This creates problems for access when medicines are priced out of reach.</p>
<p><em>Further reading:</em></p>
<p><a href="https://theconversation.com/trans-pacific-partnership-puts-member-countries-health-at-risk-13711">Trans-Pacific Partnership puts member countries health at risk</a></p>
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<p><strong>5. Labour protections are included, but that doesn’t mean the unions will support it</strong></p>
<p><em>Tim Harcourt, J.W Nevile Fellow in Economics, UNSW Australia</em></p>
<p>The TPP parties are all members of the International Labor Organization (ILO) and have agreed to “have laws governing minimum wages, hours of work, and occupational safety and health”. In reality, most countries pay above the minimum wage in the ILO, but it’s probably a good provision to have.</p>
<p>Ultimately all the developing countries and emerging countries that sign the agreement aspire to have better labour conditions. The whole idea of having trade agreements is to lift standards up, not drag them down. How that happens is often complex but most economists support the idea that if you pay efficiency wages you improve productivity.</p>
<p>I would think if anything the union movement would be more opposed to the TPP than CHAFTA given the sectors involved. Most of the CHAFTA provisions involving labour are about taking executives from state-owned enterprises to work on Chinese projects.</p>
<p>My <a href="https://www.business.unsw.edu.au/research-site/centreforappliedeconomicresearch-site/Documents/T.%20Harcourt%20-%20Why%20Australia%20Needs%20Exports.pdf">research</a> has found that exporters, on average, are more likely to be unionised, pay 60% higher wages than non-exporters, provide better levels of occupational health and safety, more education and training, and equal opportunity provisions.</p>
<p><em>Further reading:</em></p>
<p><a href="https://theconversation.com/australia-can-get-the-balance-right-on-free-trade-and-workers-rights-47196">Australia can get the balance right on free trade and worker’s rights</a></p><img src="https://counter.theconversation.com/content/48653/count.gif" alt="The Conversation" width="1" height="1" />
There’s still some way to go before the 12 countries involved can celebrate.Charis Palmer, Deputy Editor/Chief of StaffLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/458122015-08-12T10:18:25Z2015-08-12T10:18:25ZPacific trade deal’s outlook clouded by patent disputes, elections as talks enter final stage<figure><img src="https://images.theconversation.com/files/91507/original/image-20150811-11097-19tfcvt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Storm clouds are gathering in the Pacific.</span> <span class="attribution"><span class="source">Clouds via www.shutterstock.com</span></span></figcaption></figure><p>When the US Congress finally <a href="https://theconversation.com/four-lessons-for-us-and-world-as-president-finally-gets-what-he-wants-a-free-hand-on-trade-43750">agreed</a> in June to give the president fast-track negotiating authority, many trade supporters hoped that the final obstacle to completion of the Trans-Pacific Partnership (TPP) had been breached. This agreement, currently in the final stages of negotiation, would create a massive trading bloc among the United States, Canada and 10 Pacific countries, including Japan. </p>
<p>Two challenges now make that prediction appear overly optimistic. First, there remain a number of serious disagreements that need to be hammered out before any agreement can be concluded. And, second, these disagreements are pushing future negotiations into the election seasons of Canada and the United States, injecting more political uncertainty into TPP discussions.</p>
<p>As a result, pressure is growing to wrap up the talks as soon as possible. </p>
<h2>The major sticking points</h2>
<p>So what are the sticking points holding back the final conclusion of TPP? </p>
<p>Intellectual property (IP) issues are generally among the most controversial in any trade agreement, and this one is no exception. The United States, home to much of the world’s drug industry, is pushing for <a href="http://www.politico.com/agenda/story/2015/06/tpp-deal-leaked-pharma-000126">longer pharmaceutical patents</a> than many other countries are willing to stomach. And the US is arguing for longer copyright restrictions – as well as stronger punishment for IP violators – than most of its negotiating partners would prefer.</p>
<p>Another controversial issue has been the <a href="http://www.washingtonpost.com/blogs/monkey-cage/wp/2015/03/26/people-are-freaking-out-about-the-trans-pacific-partnerships-investor-dispute-settlement-system-why-should-you-care/">inclusion</a> of investor-state dispute settlement (ISDS) mechanisms in the agreement. These mechanisms would allow private corporations to demand compensation from states, through quasi-judicial international panels, for violations of TPP that directly harm their interests. </p>
<p>The panels would not be able to force states to change their regulatory or financial policies, and TPP is hardly the first agreement to include ISDS. Nevertheless, the <a href="https://theconversation.com/sen-warren-is-right-fast-track-could-help-roll-back-dodd-frank-41941">threat</a> that an international panel could force states to pay compensation to corporations has generated significant <a href="https://theconversation.com/investor-rights-to-sue-governments-pose-real-dangers-40004">backlash</a> in many countries – just as it did in the US during the debate over fast-track. Australia, for example, is demanding a “<a href="http://thediplomat.com/2015/08/after-hawaii-what-issues-remain-for-the-trans-pacific-partnership-talks/">carve out</a>” for ISDS on environmental and health policies.</p>
<p>Other disputes center on more traditional trade issues. Japan, which sources many of its car parts from outside of countries included in the TPP agreement, is pushing for looser content restrictions on automobile manufacturing. <a href="http://www.theglobeandmail.com/news/politics/conservatives-were-sure-trans-pacific-partnership-deal-would-be-signed/article25856504/">Canada</a> and Mexico oppose this move, arguing that most of a car’s content should be produced inside the TPP zone in order for it to qualify under the agreement’s more open rules. </p>
<p>And on the agricultural front, Australia is seeking more access to the US sugar market and (with New Zealand) to the <a href="http://www.cbc.ca/news/business/federal-election-2015-choosing-the-best-negotiator-for-the-trans-pacific-partnership-1.3178991">Canadian dairy market</a>.</p>
<p>All of these sticking points in the agreement represent only a small proportion of the total issues that have already been resolved. But it is also true that the toughest issues in international diplomacy typically get saved for last.</p>
<h2>Election season poses a challenge</h2>
<p>Now, to these challenges, we can add the upcoming elections in the United States and Canada. </p>
<p>In the US, there is a good chance that TPP, and trade policy more generally, will become an issue in the <a href="http://www.latimes.com/business/la-fi-tpp-talks-20150806-story.html#page=1">2016 presidential election</a>. That said, the extension of fast-track means that it would take a very serious revolt in Congress for TPP to be rejected. </p>
<p>More serious, perhaps, is the situation in Canada, where elections are coming up in October. The current conservative government, which supports TPP, could be replaced by a more skeptical party. Moreover, during election seasons, existing “caretaker governments” are generally expected to refrain from any new policy initiatives (though the Harper government <a href="http://www.michaelgeist.ca/2015/08/canadian-government-amends-caretaker-rules-to-give-itself-power-to-continue-negotiating-tpp/">seems intent on completing TPP</a>).</p>
<p>What, then, will be the future of TPP? Will the negotiations come to a successful conclusion, and will the agreement be ratified by all of the signatories? </p>
<p>These are difficult questions to answer, but all 12 countries have already invested significant political capital in the negotiations. In the United States, for example, TPP is one of the planks of President Barack Obama’s “<a href="http://www.nytimes.com/2015/06/15/world/asia/the-trans-pacific-trade-deal-and-a-presidents-legacy.html?_r=0">Asia pivot</a>” strategy. And the looming presence of China pushing many TPP states together should also not be forgotten.</p>
<p>In the end, then, it seems likely that TPP will be concluded and ratified. In what form and with which stipulations remain to be seen.</p><img src="https://counter.theconversation.com/content/45812/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Charles Hankla does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Disputes over intellectual property and car parts are emerging as last-minute hurdles as negotiators race to complete the Trans-Pacific Partnership ahead of elections.Charles Hankla, Associate Professor of Political Science, Georgia State UniversityLicensed as Creative Commons – attribution, no derivatives.