August 27, 2012
Dean Baker
The Guardian Unlimited, August 27, 2012
See article on original website
“Free trade” is a sacred mantra in Washington. If anything is labeled as being “free trade” then everyone in the Washington establishment is required to bow down and support it. Otherwise they are excommunicated from the list of respectable people and exiled to the land of protectionist Neanderthals.
This is essential background to understanding what is going on with the Trans-Pacific Partnership Agreement (TPP), a pact that the United States is negotiating with Australia, Canada, Japan and eight other countries in the Pacific region. The agreement is packaged as a “free trade” agreement. This label will force all of the respectable types in Washington to support it.
In reality, the deal has almost nothing to do with trade; actual trade barriers between these countries are already very low. The TPP is an effort to use the holy grail of free trade to impose conditions and override domestic laws in a way that would be almost impossible if the proposed measures had to go through the normal legislative process. The expectation is that by lining up powerful corporate interests, the governments will be able to ram this new “free trade” pact through legislatures on a take-it-or-leave-it basis.
As with all these multi-lateral agreements the intention is to spread its reach through time. That means that anything the original parties to the TPP accept is likely to later be imposed on other countries in the region, and quite likely the rest of the world.
At this point it’s not really possible to discuss the merits of the TPP since the governments are keeping the proposed text a secret from the public. Only the negotiators themselves and a select group of corporate partners have access to the actual document. The top executives at General Electric, Goldman Sachs, and Pfizer probably all have drafts of the relevant sections of the TPP. However the members of the relevant congressional committees have not yet been told what is being negotiated.
There have been a few items that have been leaked that give us some insight as to the direction of this pact. One major focus is will be stronger protection for intellectual property. In the case of recorded music and movies, we might see provisions similar to those that were in the Stop On-Line Privacy Act (SOPA). This would make Internet intermediaries like Google, Facebook, and indeed anyone with a website, into a copyright cop.
Since these measures were hugely unpopular, the SOPA could probably never pass as a standalone piece of legislation. However tied into a larger pact and blessed with “free trade” holy water, the entertainment industry may be able to get what it wants.
The pharmaceutical industry is also likely to be a big gainer from this pact. It has decided that the stronger patent rules that it inserted in the 1995 WTO agreement don’t go far enough. It wants stronger and longer patent protection and also increased use of “data exclusivity.” This is a government-granted monopoly, often as long as 14 years, that prohibits generic competitors from entering a market based on another company’s test results that show a drug to be safe and effective.
Note that stronger copyright and patent protection, along with data exclusivity, is the opposite of free trade. They involve increased government intervention in the market. They restrict competition and lead to higher prices for consumers.
In fact the costs associated with copyright and patent protection dwarf the costs associated with the tariffs or quotas that usually concern free traders. While the latter rarely raise the price of a product by more than 20-30 percent, patent protection for prescription drugs can allow drugs to sell for hundreds or even thousands of dollars per prescription when they would sell for $5-$10 as a generic in a free market. Patent protection increases what patients pay for drugs in the United States by close to $270 billion a year (1.8 percent of GDP). In addition to making drugs unaffordable to people who need them, the economic costs implied by this market distortion are enormous.
There are many other provisions in this pact which are likely to be similarly controversial. The rules it creates would over-ride domestic laws on the environment, workplace safety, and investment. Of course it’s not really possible to talk about the details because there are no publicly available drafts.
In principle the TPP is exactly the sort of issue that should be featured prominently in the fall elections. The voters should have a chance to decide if they want to vote for candidates who support raising the price of drugs for people in the United States and the rest of the world, or making us all into unpaid copyright cops. But there is no text and no discussion in the campaigns and that is exactly how the corporations who stand to gain want it.
There is one way to spoil their fun. Just Foreign Policy is offering a reward, now up to $21,100, to WikiLeaks if it publishes a draft copy of the pact. People could add to the reward fund, or if in a position to do so, make a copy of the draft agreement available to the world.
We know that our political leaders will say that they are worried about the TPP text getting in the hands of terrorists. But we know the truth. They are afraid of a public debate. If the free market works, we will get to see the draft of the agreement.
