The Trans-Pacific Partnership: the most controversial trade agreement you’ve never heard of

Monday, 26 May, 2014

Illustration by Harry McLean
Infographics by Kevin Hawkins and Michelle See-Tho

Australia is currently negotiating a plurilateral trade agreement known as The Trans-Pacific Partnership (TPP) along with 12 other countries around the Pacific Rim, including the US, Japan, Malaysia and Canada.

On the surface, the agreement would provide significant opportunities for Australian exporters. The proposed TPP region, our potential market, would encompass more than 33 per cent of Australia’s trade and account for 39 per cent of global GDP. The Abbott government has made its position clear that the TPP is only the beginning, a stepping stone to their longer term goal of an Asia-Pacific free trade zone.

If you haven’t heard of the TPP, don’t feel as though you’ve fallen behind. A survey released by the Australia Institute last year revealed that only 11 per cent of people knew about it. In large part, this is probably due to the fact that for the past nine years or so the deal has been negotiated in complete secrecy.

While it isn’t unheard of for smaller country-to-country bilateral trade deals to be negotiated behind closed doors, the TPP has made a radical departure from the multilateral model championed by institutions like the World Trade Organisation.

“The lack of transparency is a huge problem,” explains Dr Kimberlee Weatherall, an associate professor at the University of Sydney School of Law. “The reason that they do it,” Dr Weatherall explains, “is because there are a bunch of things that people would be concerned about in the text.”

From the little that we know it is clear the agreement will be sweeping, covering everything from agriculture to IT pricing. One particular section generating significant controversy is the intellectual property chapter. Wikileaks released its draft copies in November last year.

Dr Matthew Rimmer, an Australian Research Council Future Fellow at ANU, says that the intent of this chapter is to, “enhance the intellectual property rights, particularly of large transnational corporations”.

These corporations include huge players in the film, TV and music industries, in addition to the tech and pharmaceutical sectors, who all want an extension on copyright and stricter penalties for infringement. These industries hold a lot of sway over the US government because they generate so much money for their economy. Intellectual property isn’t so much of a sticking point in Australia, compared to areas like agricultural subsidies or environmental provisions around mining.

Harrison Polites, a contributor for Technology Spectator, says the documents suggest the agreement is, “basically an Internet pirate’s worst nightmare”.

If the final agreement resembles the drafts Wikileaks has released then the tightening Media_TPPinfographic_261x800of IP law would mean that every individual act of downloading, even that most recent episode of Game of Thrones sitting on your laptop, would be a criminal offence.

The concern around IP law isn’t limited to peer-to-peer file sharing though. Writing for the New Yorker, Nobel Prize-winning economist Joseph Stiglitz voiced his concerns that the TPP would worsen inequality in the Asia-Pacific region.

Key to this is that tightening the law around patented pharmaceuticals could limit access to essential medicines in developing countries that can’t afford the high name-brand price tag. Essential medicines, as important as their name would suggest, are used to treat conditions like AIDS, malaria and tuberculosis.

The Obama Administration has made it clear they want TPP negotiations wrapped up by the end of 2014. Department of Foreign Affairs and Trade (DFAT) representative David Brightling echoed this at a recent conference at Melbourne University’s School of Government. Mr Brightling confirmed that the agreement, having been negotiated by Australia for four years now, is very close to conclusion.

Harrison Polites says that the US is pushing to conclude the agreement because, “in the drafts it appears that they have got what they want.”

Once the negotiations conclude, the Partnership will be submitted to both the Australian House and Senate for 20 days. The Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) will accept public submissions on the agreement and then return it to both parliamentary houses with its recommendations.

But the issue remains, as Mr Brightling confirmed, that any of these recommendations are unlikely to be enacted given that all 12 signatory countries would have to agree to any changes.

This inflexibility of the legislation concerns Dr Weatherall.

“The basic problem here is lock in,” she says.

“The level of detail that is going into these texts, the level of interference with domestic law making and domestic policy is very significant.”

This interference with domestic law is particularly relevant to the investment chapter, also leaked by Wikileaks, which includes highly controversial investor-state dispute settlement clauses. These clauses would allow foreign companies to sue the government if their future profitability is jeopardised by legislation.

“Investment clauses raise really fundamental questions about democracy,” Dr Rimmer says.

His key concern is that fear of litigation may limit the ability of governments to best legislate for their citizens. We’ve already seen one such lawsuit in Australia when cigarette giant Phillip Morris used an investment clause in Australia’s trade agreement with Hong Kong to challenge our plain packaging laws.

It is difficult without the text to ascertain whether Australia will be better off under the TPP. Signs from the US aren’t promising. David Rosnick, writing for the Center for Economic and Policy Research, argued that the long-term losses there could be, “25 times greater than the potential gains”.

The TPP, in whatever form it may emerge from negotiations, will be a watershed for Australia as it will inform our engagement with our region for the coming decades. The absence of China and Indonesia is particularly significant.

Pursuing the TPP, rather than seemingly more economically beneficial trade deals like the Regional Comprehensive Economic Partnership, may prove to be short-sighted.