Better off without the grand trade pacts

Ben D. Kritz

Ben D. Kritz

LAST Thursday, two former UN officials offered an interesting, although somewhat premature, post-mortem on the Trans-Pacific Partnership trade agreement, which was signed early last year but is headed for an early death with its impending rejection by the US Congress.

All 12 countries that signed the TPP have to ratify it according to their own domestic processes within two years, so the US rejection of it effectively kills the agreement.

In an opinion piece published by Inter-press Service (IPS), Jomo Kwame Sundaram, a former United Nations Assistant Secretary-General for Economic Development, and economics professor Anis Chowdhury, who held a number of UN posts, wrote that the TPP was a “fraudulent” free trade agreement, one which did little to actually liberalize trade beyond the existing provisions of the World Trade Organization (WTO).

The two experts, who are committed globalization advocates, pointed to some specific problems with the TPP:
“The most convenient computable general equilibrium (CGE) trade model used for trade projections makes unrealistic assumptions, including those about the consequences of trade liberalization. For instance, such trade modeling exercises typically presume full employment, as well as unchanging trade and fiscal balances. Our colleagues’ more realistic macroeconomic modeling suggested that almost 800,000 jobs would be lost over a decade after implementation, with almost half a million from the US alone. There would also be downward pressure on wages, in turn exacerbating inequalities at the national level,” they wrote.

Sundaram and Chowdhury also explained that one of the biggest features of the TPP, its broadening of intellectual property protections, would be disastrous for developing countries, especially in the area of health care:

“Much of the additional value of trade would come from ‘non-trade issues.’ Strengthening intellectual property (IP) monopolies, typically held by powerful transnational corporations, would raise the value of trade through higher trading prices, not more goods and services. Thus, strengthened IPRs leading to higher prices for medicines are of particular concern,” they explained.

“The TPP would reinforce and extend patents, copyrights and related intellectual property protections. Such protectionism raises the price of protected items, such as pharmaceutical drugs,” they added.

The authors also slammed the TPP for its investor-state dispute settlement (ISDS) provisions. Under the TPP, an investor could sue a government for “ostensible loss of profits, including potential future profits, due to changes in national regulation or policies even if in the national or public interest.”

Sundaram and Chowdhury did not mince words in their assessment of the TPP. “Thus, rather than trade promotion, the main purpose of the TPP [agreement]has been to internationally promote more corporate-friendly rules under US leadership,” they said.

Although the current Philippine administration has quietly backed away from any further discussion of the country’s aspirations to join the TPP—aspirations that had risen to a near-hysterical level under former President BS Aquino 3rd—the fact that the giant trade agreement (the text of the thing covers more than 6,300 pages) is about to be scuttled is an unexpected benefit to the country. As the authors of the critique of the TPP pointed out, between the WTO and the large number of bilateral trade agreements that are already in force, new pacts like the TPP are really superfluous except, as they concluded, there is some bigger political ulterior motive to them.

Which makes one wonder if the China-led Regional Comprehensive Economic Partnership (RCEP) that the Duterte administration with its more eastward-looking orientation prefers, is just the same horse of a different color. It is similarly unnecessary, in terms of establishing trade relations; the Philippines is already part of the WTO, already part of Asean, and has trade agreements of one sort or another with all the parties to the RCEP.

The RCEP supposedly gathers all those disparate arrangements under one consistent umbrella, but it is an umbrella designed the same way the TPP was: Under the guidance of big transnational corporate interests with fingers in the economic pies of most if not all of the RCEP countries. The fact that these are mostly (but not exclusively) Asia-based interests does not make the RCEP a much better option than the TPP; national interests are still in some key ways—such as dispute resolution rules—subordinated to business interests.

One idea that President Rodrigo Duterte has taken pains to stress—but has yet to actually demonstrate in practice, busy as he has been with kowtowing to China and Russia—is that the Philippines should have an independent foreign policy. That is a sensible notion, and one that might be better supported by the Philippines opting out of the RCEP, or any other multilateral contrivance that might follow it.


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