In his visit to the G20 in Brisbane, President Barack Obama sought to promote his ambitious Pacific Rim trade agreement — the Trans-Pacific Partnership. He told an audience at the University of Queensland:
We’ll keep leading the effort to realize the Trans-Pacific Partnership to lower barriers, open markets, export goods, and create good jobs for our people. But with the 12 countries of the TPP making up nearly 40 percent of the global economy, this is also about something bigger. It is our chance to put in place new, high standards for trade in the 21st century that uphold our values. So, for example, we are pushing new standards in this trade agreement, requiring countries that participate to protect their workers better and to protect the environment better, and protect intellectual property that unleashes innovation, and baseline standards to ensure transparency and rule of law.
Obama insisted: ‘It’s about a future where instead of being dependent on a single market, countries integrate their economies so they’re innovating and growing together.’ He maintained that the trade deal would be a historic achievement: ‘That’s why I believe so strongly that we need to get it done — not just for our countries, but for the world.’ The President recognised that the TPP would have stringent regulatory demands, and require ‘big transitions for a lot of these countries, including for the United States’.
The Obama administration, though, has not had the support of Democrats in the United States Congress. Senior Democrat Representative Sander Levin has expressed reservations about the process and the substance of the TPP. Senator Elizabeth Warren has worried about how the TPP will affect financial regulation of Wall Street. Other Democrats have additional reservations about the TPP. Senator Ron Wyden is of the view that the fast-track regime needs to be overhauled and modernised. Three House of Representatives Democrats — Reps. Rosa DeLauro (Conn.), Louise Slaughter (N.Y.) and Alan Grayson (Fla.) — maintained that there are insufficient votes in the House to pass trade promotion authority to secure the approval of the 12-nation TPP. De Lauro commented: ‘Fast-track doesn’t have support in the current Congress and won’t have support in the next Congress’. She declared: ‘The votes are not there.’
Nonetheless, President Barack Obama has said that he is willing to defy United States Congressional Democrats on his support of the TPP, and work with Republicans if need be. However, there are significant divisions within the Republicans over the TPP. There could well be insufficient support within the United States Congress for a trade promotion authority.
Congressman Sander Levin
Ways and Means Committee Ranking Democrat, Congressman Sander Levin, was an interested spectator at the Sydney talks for the TPP.
In September 2014, Levin presented a Report to the Council on Foreign Relations reviewing the areas of debate and conflict in the TPP negotiations.
First, Levin emphasized that the Obama administration must respect the 10 May 2007 agreement on trade agreements negotiated between the US Congress and the Bush administration. This deal sought to protect workers’ rights, environmental protections, access to medicines, and human rights. The US Congressional Democrats have been aggrieved that Obama and his trade representatives have not honoured this deal: ‘That agreement is — and must remain — a bedrock principle within trade agreements.’
Second, Levin called for reciprocity in the TPP. He observed: ‘The TPP presents an enormously important opportunity to transform the trading relationship between the United States and those partners from something that in some cases looks like a one-way street to a fully reciprocal one with healthy flows that go both ways and create opportunities for everyone — the way trade is supposed to.’ Levin highlighted concerns about market access for agriculture, automobiles, currency manipulation, and state-owned enterprises.
Third, Levin stressed that there was a need to protect national sovereignty in the TPP, and the right to regulate. He commented: ‘Reaching for a high bar to increase standards of living, improve worker rights and strengthen environmental protections, and ensure that trade opportunities are reciprocal does not mean the United States gives up its right to regulate in all of the vitally important areas that affect our interests’. Levin was particularly interested in defending food safety rules, and tobacco control measures. He was also alarmed by the abuse of investor-state dispute settlement: ‘Investor-state disputes have proliferated in recent years and involve increasingly novel and costly challenges to public welfare and environmental regulations.’
Levin reaffirmed the key role of Congress in overseeing trade agreements: ‘”Fast Track,” or Trade Promotion Authority, is traditionally designed to be in place from the start of negotiations — to ideally give Congress a role in picking negotiating partners, to set out negotiating objectives, to establish full transparency, to provide an active role for Congress throughout the negotiations, to judge if the objectives have been achieved, and then to set procedures for legislative consideration’. He said: ‘No matter one’s view of the status of the TPP negotiations, whether in their “end game” or with much work remaining (as I believe), after four years, these negotiations clearly are not at the beginning.’
Levin put a sober press release at the end of the Ministerial talks on the TPP in Sydney. He observed: ‘With substantial work having been done, going forward there needs to be a sharp focus on the what, not the when’. In his view, ‘It is the substance of a TPP agreement that matters.’
Levin commented: ‘While the text must reflect these principles, the devil will be in the details of the text, in the annexes and the ‘non-conforming measures,’ and in the implementation of the obligations’. He stressed that ‘That is true in critical areas, including the environment, state-owned enterprises, labor rights, and a broad range of market access issues.’ Levin observed that, while ‘the quantity of increased trade is important’, ‘in this new era of globalization, the most important test is its quality, its potential impact on the lives of people’. Echoing the concerns of the economist Joseph Stiglitz about the TPP benefitting corporate elites — the 1% — he stressed: ‘The goal must be to ensure that the potential benefits of trade are spread broadly to the many, not just the few.’
Levin maintained that there was a need to ensure that the TPP contained appropriate safeguards in respect of labor rights, the environment, and public health. He recalled: ‘The May 10 structure, which I helped negotiate, was a major breakthrough on the rights of workers, environmental protections, and access to medicines, and it is vital that TPP build on them, not weaken them.’
Levin emphasized that there should be greater open and transparent democratic debate about the TPP: ‘We need more public input and debate on all of the mentioned issues, as well as intellectual property, food safety and investment.’
Levin was also conscious of tensions between the United States, and its trading partners: ‘TPP therefore presents a special opportunity and special challenges’. He noted: ‘Vietnam and Malaysia, for example, have very different structures from our own.’ Moreover, Levin insisted: ‘We must confront Japan’s longstanding and persistent exclusions of agricultural and automotive products from its markets.’
Senator Elizabeth Warren
Senator Elizabeth Warren has been a rising star in the progressive caucus in the Democrats in the United States Congress. She has been encouraged by a number of Democrats to make a run for the Presidency.
Warren has shown a strong interest in the TPP. She has warned: ‘From what I hear, Wall Street, pharmaceuticals, telecom, big polluters, and outsourcers are all salivating at the chance to rig the upcoming trade deals in their favour … I believe that if people would be opposed to a particular trade agreement, then that trade agreement should not happen.’
In a November 2014 piece, Senator Elizabeth Warren discussed the need to ‘work on America’s agenda.’ She expressed her concerns about corporate influence over law-making and trade deals:
Before leaders in Congress and the president get caught up in proving they can pass some new laws, everyone should take a skeptical look at whom those new laws will serve. At this very minute, lobbyists and lawyers are lining up by the thousands to push for new laws — laws that will help their rich and powerful clients get richer and more powerful. Hoping to catch a wave of dealmaking, these lobbyists and lawyers — and their well-heeled clients — are looking for the chance to rig the game just a little more.
Warren observed: ‘Americans are deeply suspicious of trade deals negotiated in secret, with chief executives invited into the room while the workers whose jobs are on the line are locked outside’. She noted that voters are ‘appalled by Wall Street banks that got taxpayer bailouts and now whine that the laws are too tough, even as they rake in billions in profits’. Warren commented: ‘If cutting deals means helping big corporations, Wall Street banks and the already-powerful, that isn’t a victory for the American people — it’s just another round of the same old rigged game.’
On the 17 December 2014, Senator Elizabeth Warren and a number of her colleagues, Tammy Baldwin and Ed Markey, wrote to the White House, outlining a number of concerns in respect of the TPP. Warren commented: ‘We are concerned that the Trans-Pacific Partnership (TPP) could make it harder for Congress and regulatory agencies to prevent future financial crisis.’ She observed, with her colleagues: ‘With millions of families still struggling to recover from the last financial crisis and the Great Recession that followed, we cannot afford a trade deal that undermines the government’s ability to protect the American economy.’
Warren, Baldwin, and Markey highlighted concerns with three specific provisions that could be part of the TPP. First, the Democrat politicians raised concerns about the investor-state dispute settlement process: ‘Including such provisions in the TPP could expose American taxpayers to billions of dollars in losses and dissuade the government from establishing or enforcing financial rules that impact foreign banks.’ Warren and her colleagues warned: ‘The consequence would be to strip our regulators of the tools they need to prevent the next crisis.’
Second, Senator Elizabeth Warren and her colleagues were concerned about including provisions in the TPP that would commit the American financial sector to ‘market access’ rules. She observed: ‘Such rules could be interpreted by international panels to prohibit basic, non-discriminatory restrictions on predatory or toxic financial products — such as particularly risky forms of derivatives — because those restrictions deny access to the U.S. financial markets.’ Warren and her colleagues observed: ‘To protect consumers and to address sources of systemic financial risk, Congress must maintain flexibility to impose restrictions on harmful financial products and on the conduct or structure of financial firms.’
Third, Warren and the other Democrat politicians were concerned about the inclusion of terms in the TPP that could limit the ability of the government to use capital controls: ‘If the TPP were to include provisions from past pacts that required unrestricted capital transfers, it could limit Congress’ prerogative to enact not only capital controls, but basic reform measures like a financial transactions tax.’
The group also requested that the United States Trade Representative provide Congressmen and women with ‘all U.S. proposals and bracketed negotiating texts relating to the three provisions.’ The group wanted transparency in respect of the TPP’s chapters on investment, financial services, and dispute settlement.
The intervention by Senator Warren against the TPP attracted significant media interest. In the Huffington Post, Zach Carter highlighted the tensions between Warren and the United States Trade Representative, Michael Froman:
Financial issues are particularly sensitive for Froman, who left Citigroup in 2009 to join the Obama administration, eventually taking the helm at USTR in 2013. The bank gave Froman over $4 million in exit payments to take the government job. Warren voted against Froman’s confirmation.
Warren has been particularly concerned about Citigroup exercising inordinate influence over Congressional policy-making, and trade policy.
Public Citizen has shared some of these concerns of Senator Elizabeth Warren:
While governments across the world strive to rein in risk-taking by the financial firms that brought us the worst economic crisis since the Great Depression, U.S. trade negotiators (advised by many of those same firms) appear to be moving in the opposite direction. We cannot afford to insert into binding “trade” pacts more deregulatory constraints pushed by Wall Street. We cannot afford the TPP or TAFTA.
The White House’s rejoinder
In response, Jeffrey Zients, the director of the National Economic Council, wrote a piece for the White House blog in return, maintaining that the TPP would not undermine financial regulation. He insisted that ‘the Trans-Pacific Partnership (TPP) represents a once-in-a-generation opportunity for America to set the rules for global trade in the 21st century’. Zients maintained: ‘The agreement aims to expand access to the world’s fastest-growing markets, even as we enshrine higher standards of protection for workers and consumers.’
Zients maintained that President Barack Obama had worked hard to remedy poor financial regulation of Wall Street during his Presidency. Moreover, he maintained that ‘the President has pushed for stronger rules across the globe through the G-20 and other venues, and he has also fought against repeated attempts to undermine Wall Street reform here at home.’ While not mentioning Senator Warren by name, he noted that ‘questions have arisen over how we will protect the progress toward a safer financial system that we have made since the crisis in the context of these trade negotiations’.
Zients maintained: ‘As for TPP, there is nothing in the proposed agreement that would have inhibited our decisive response to the recent financial crisis or that would dilute the important financial reforms we have implemented over the past four years’. He insisted: ‘The President will not allow this agreement to undermine essential financial reforms.’ Zients commented:
On the contrary, this agreement will raise standards and level the playing field for American companies to compete abroad, including for services suppliers, the largest sector of our economy. TPP will also provide investor protections to benefit the 23 million Americans who work for U.S. firms doing business overseas.
Zients argued that the government would have the ability to engage in regulation for the public interest: ‘The United States wouldn’t negotiate away its right to regulate in the public interest — with regard to public health and safety, the financial sector, the environment, or any other area.’
This response from the White House, though, did not specifically address the substantive points raised by Senator Elizabeth Warren and her counterparts about investor-state dispute settlement, market access, and capital controls.
The White House will struggle to fast-track the TPP, without the support of Democrats in the United States Congress. At present, there seemssignificant opposition on a number of key issues in the trade deal by leading Democrats. Moreover, there is a great concern about the veil of secrecy in respect of the negotiations over the TPP. It remains to be seen whether the Obama administration will reconsider its negotiating stance in respect of the TPP in order to win the support of Democrats in the United States Congress.
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Dr. Matthew Rimmer is an Australian Research Council Future Fellow, working on Intellectual Property and Climate Change. He is an associate professor at the ANU College of Law, and an associate director of the Australian Centre for Intellectual Property in Agriculture (ACIPA). He holds a BA (Hons) and a University Medal in literature, and a LLB (Hons) from the Australian National University, and a PhD (Law) from the University of New South Wales. He is a member of the ANU Climate Change Institute. Dr Rimmer is the author of Digital Copyright and the Consumer Revolution: Hands off my iPod, Intellectual Property and Biotechnology: Biological Inventions, and Intellectual Property and Climate Change: Inventing Clean Technologies. He is an editor of Patent Law and Biological Inventions, Incentives for Global Public Health: Patent Law and Access to Essential Medicines, and Intellectual Property and Emerging Technologies: The New Biology. Rimmer has published widely on copyright law and information technology, patent law and biotechnology, access to medicines, plain packaging of tobacco products, clean technologies, and traditional knowledge. His work is archived at SSRN Abstracts and Bepress Selected Works.
Matthew Rimmer, ‘Senator Elizabeth Warren fights the White House over the Secretive Trans-Pacific Partnership #TPP #TPPA’, Medium, 22 December 2014, https://medium.com/@DrRimmer/senator-elizabeth-warren-fights-the-white-house-over-the-trans-pacific-partnership-tpp-3cd7bb0a1c91
