Trade Agreements (original)
"A free trade agreement would be very easy to write; you could write it in about three pages: we have no tariffs, they have no tariffs; we have no non-tariff barriers, they have no non-tariff barriers; we have no subsidies, they have no subsidies. It would be a couple of pages."
- Joseph Stiglitz, 2001 Nobel Prize in Economics Recipient
The text below is the original version of my page "Trade Agreements." It was written in July 2015, well before the Trans-Pacific Partnership (TPP) came out. With the TPP's release in November 2015 and my ability to pour over the complete document, my views have changed slightly. Rather than document all the changes, I'm leaving the original page here in its entirely for you to compare, should you care. I absolutely am not trying to hide anything, hence giving you access to my original writing. There is no "flip-flop" with expanded awareness. The most recent version of the my pre-TPP release trade agreements page is available here.
Trade agreements- sometimes called "free trade agreements"- are those political-economic tools that rarely get spoken of yet possess incredible power. Such international deals focus on what should be mutually beneficial arrangements for two or more countries. Why would a company export goods and services if they can make more money locally? They wouldn't, thus trade becomes a matter of tariffs and subsidies, changes in ratios to allow for all parties to enjoy greater economic growth. Trade agreements, like Joseph Stiglitz mentions, should be concise and to the point.1 So why aren't they?
Because that's not how our capitalism works.
Businesses seek to maximize profit, especially when their domestic growth and market reach begins to peak. Looking outside the country is a natural next step in divining new revenue streams. This concept was important decades ago before technology and the internet emerged, back when labor laws and foreign wages were low enough to make sweat shops both desirable and profitable. Why pay American workers fair wage and benefits when you could get poor foreigners to do the same work for a fraction of the cost? To maximize shareholder value, it would be a travesty not to.
But now the world has changed. Countries like China have grown into economic powerhouses which, in turn, has led to increased wages. The internet also played a role, shedding light on international travesty and inhumane conditions- at least, those conditions we'd consider inhumane. Sweat shops are in decline, costs are going up around the world, and thus businesses need new avenues for making money. They need an option which gives them an opportunity for income while also preventing the foreign country from screwing them over. What they need... is a trade agreement.
Unlike treaties, trade agreements have real consequences. Thanks to the World Trade Organization (WTO) and its Dispute Settlement Body (DSB), countries that take part in trade agreements can be forced into compliance. This is vastly different than, say, the Kyoto Protocol where countries can, theoretically, exit anytime they please.2 If a country violated a provision in a trade agreement, a corporation could go to the WTO and seek to have the offending laws or policies of the country changed. In extreme cases, should the offending country not wish to change their policy, the WTO allows the "prevailing" country or corporation to impose sanctions, injunctions, and more upwards of hundreds of millions or even billions of dollars. The United States, for example, imposed a steel tariff in the early 2000's to combat a perceived surge in steel imports. The EU and many other nations filed suit with the DSB, won, and sought to impose a $2+ billion sanction on US imports if then President Bush didn't remove the tariffs in question.3 He did.
What makes these kind of trade agreements worse is that no one ever truly knows what's included. NAFTA is hundreds of pages, other agreements are thousands.4 If you thought working through the Affordable Care Act or the latest appropriations bill of 1,000+ pages was bad, trade agreements can be worse. You have countries and corporations all negotiating for favorable terms, terms that can be enforced into perpetuity. And when I say countries and corporations, I really mean corporations as they are the ones with the expertise in the economic areas in question. Negotiating trade deals for medicine requires drug companies, negotiating for drilling rights requires oil companies with knowledge of drilling, etc. Our politicians are (typically) not experts in these fields. Thus they trust the corporations to work out these trade agreements in favorable terms to the U.S- as expected of an American company.
The ultimate question becomes "why?" Why do we need the trade agreement in the first place if it gives corporations such power? When the idea these days is to maximize shareholder value at the cost of all else, why even bother with a trade agreement that is not represented by labor rights activists, environmentalists, and more?5 Herein lies the problem. The dollar takes precedence. When safety, fair treatment, and anything else that could adversely affects profits come into play, multinational businesses tend to frown upon such intrusion. If a company could save $10 million by dumping toxic waste in an area where it could contaminate underground streams and water sources, they would.6 It's the same reason companies "leave" the US or accept buyout from foreign owners- to pay less in taxes and make more money.
Which brings us to the trade agreements of 2015: the Trans-Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), the encompassing Transatlantic Free Trade Area (TAFTA), and the Trade in Services Agreement (TISA). All of these are interrelated, yet different. President Obama is pushing hard for the TPP. Congress decided to fast track it so when the time comes the agreement can be signed off on. "Why?" is the question, especially with the major red flags that have come up in the last few years:
- A Republican Congress who doesn't seem to like President Obama had no problem helping him out on this matter.7
- A Republican Congress who fights for Constitutional rights and protections willingly cedes to not just the President, but a Democrat, their power to regulate trade as defined in Article I, Section 8.8
- The United States Trade Representative (USTR) threatened our Congressional representatives with criminal prosecution if they shared with the public any content from classified trade agreement briefings.9
- The Senate Finance Committee's Subcommittee on International Trade, Customs, and Global Competitiveness gets denied any oversight into the USTR while organizations with less "favorable" track records like the MPAA, Halliburton, Chevron, and PHRMA are given free access to details of the agreement.10
- Wait, turns out a number of companies with TPP access and influence were major political donors. That explains that part.11
- The USTR eventually decided Congress members could review the text, but only in a specific viewing room, without any staffers (who might have knowledge on the subject), and they would not be allowed to make copies or take any notes.12
- When Congressman Alan Grayson took the USTR up on the offer, he agreed that it was NAFTA on steroids, has no reason to be secret, and has a lot of bad stuff in it that he can't tell anyone about because of the secret nature of the negotiations.13
- WikiLeaks is offering a $100,000 reward for a full draft text of the TPP.14
All of these are major red flags, especially when it involves Congress giving up Constitutional authority after being stonewalled for years by the USTR over a trade agreement they know nothing about. The entire secret deal reeks of horribleness. How President Obama, the USTR, and especially Congress have handled this whole affair is a disgrace to what America stands for. In the America I know and love, corporations should not be wielding power that can change governments. And this is precisely what the TPP, TTIP, etc. are allowing. They are putting corporate interests ahead of state interests, ahead of consumer interest, ahead of our unalienable Rights. The only interest that matters is profit. The market, apparently, is God here. It is the American Delusion all over again.
I understand this sounds very hyperbolic. If we had access to the full text, we could view it with fair, balanced, and logical eyes. We do not. But we do have a leaked, consolidated text of the Intellectual Property Chapter of the TPP.15 Intellectual property reform is a topic I feel strongly about. It has been causing more and more problems for America since the mid-90's thanks to constant expansion on monopoly statuses granted, expanded punitive punishments, and new business models that revolve around non-practicing entities. Monopolies are profit makers, vague monopolies that cover large areas of economic development more-so. When companies cannot innovate or compete, preventing others from doing so is the next best solution. Thus, this chapter of the TPP greatly interests me.
- With regards to patents, the US opposes allowing patents to be cancelled/revoke/nullified if said patent is being used in a manner determined to be anti-competitive.16
- The US opposes making available for public inspection any patent application promptly after the expiry of 18 months from its filing date or... its priority date unless the application has been published earlier or has been withdrawn, abandoned, or refused.17
- With regards to previous approved pharmaceutical products, the US proposes at least a three year market exclusivity in other countries that would market the same or similar pharmaceutical products.18
- With regards to previous approved pharmaceutical products, the US proposes up to 12 years of exclusive protection for new biologics in any country part of the agreement after the new biologic is first marketed.19
- The US opposes allowing other countries to adopt or maintain measures that discourage vexatious or unrealistic proceedings as a result of patent exclusivity.20
- The US supports copyright protection up to 100 years after the author's death.21
- The US proposes eliminating the retransmission of television signals (whether terrestrial, cable, or satellite) on the Internet without the authorization of the right holder or right holders of the content of the signal.22
- The US supports locking in DMCA-like anti-circumvention clauses across all countries involved.23
- The US supports making willful violation of the anti-circumvention clauses for "commercial advantage" a criminal act.24
- The US feels that anti-circumvention protections trump and are independent of existing copyright laws of participating countries.25
- The US realizes certain exceptions could be made for violating copyright protections, but also feels that such exceptions should not undermine the legal protections or remedies an author might have in connection to their work.26
- The US wishes to take the Supreme Court's idea of induced infringement on patents (which was tossed by the Court in 2014)27 and apply it to copyright for determining liability.28
- The US proposes making ISP's and websites liable for secondary copyright infringement based on their user activity (ie, if I post a link to a video that's copyrighted on a website, the website owner could be held liable for secondary copyright infringement).29
- The US proposes making ISP's and websites liable for secondary copyright infringement if the site/service in question could be used for copyright infringement.30
Based on the above points and other equally confusing parts of the text (seriously, try reading it), it's clear to see that the authors have no concept of how the internet works nor do they care about benefiting humanity with cheap and effective medicines. The idea that our unalienable Rights would be so infringed upon by tough intellectual property protections is disgusting. Intellectual property, according to our Constitution, is about promoting the progress of science and the useful arts; compensation and the ability to profit are absolutely not conditions for such government granted monopolies. We are betraying ourselves, betraying the very ideals America stands for by even pursuing such anti-free-market-capitalist legalities. Not only do we bind ourselves, but we, as the greatest nation on the planet, the model for world behavior and world action, are telling other countries that our profit, our corporations, and our lobbyist influence are superior to our laws, our government, our Supreme Court, and our people. It says that we want to go against what our Constitution says and give power over our entire economic model as it relates to internetworked technology to corporations that seek to do nothing more than maximize profit.
This is disgusting and absurd. More and more as details come out regarding this trade agreement, support for it everywhere in America dwindles... unless you're a business that seeks easy money through government granted monopolies. If you don't care how expensive medicine costs are, if you don't care that such an agreement could destroy the internet as we know it, if you don't care about betraying the ideals of the Constitution, then yes, you probably still support this agreement.
And I haven't even tackled the Independent State Dispute Settlement (ISDS) portion.
As I partially explained in the section on intellectual property, businesses and Congress don't understand technology. They fail to realize how the internet works. The concept of a browser debugger or network traffic capturing software eludes them. Consider the references above regarding anti-circumvention. This destroys the concept of fair use for copyrighted works, something we currently have codified in law. It also would ban the tools used for circumvention which could destroy current exemptions that protect data privacy and exemptions that are used for computer security research.31 The TPP text could theoretically allow these, but the wording used implies that "commercial advantage" is more than just making money; an institution that circumvents protections on security software to find vulnerabilities might be criminally punished for doing so under this international agreement. Small words like those create an entirely new potential which goes beyond what any reasonable society should allow.
Consider as well the portion regarding ISP's and website/service liability for secondary infringement. This simply is not how the internet and computers work. A computer copies data. The internet works by copying data from one or more computers to the computer/device requesting said data. Copying is the basis of data transfer. Unlike the physical world where copying a book or painting results in a physical duplicate in part or in whole, copying in the digital realm involves the transmission of bits (0's and 1's) that form bytes (8 bits per byte) that form words (4 bytes per word) which form the basis for 32-bit operating systems (8 bytes for 64-bit systems). You usually need the entire file before conversion to image/audio/video occurs on your computer. Streaming content is, of course, different.
Because of how computers work, infringement is possible by anyone at any time. Every modern web browser provides a browser debugger that developers can use to look at HTML, CSS, network calls and more. Such helps developers fix problems with websites, much like other diagnostic tools might help a car repair shop diagnose chip errors. But this also tells users how to download images off a site, what the URL is for a video that might be loaded/streaming, and more. If you go to vimeo.com and look at the network traffic for any video page, you can get the mp4 source for any video which you can then save down to your local computer.32 Does that make Google (Chrome), Microsoft (Internet Explorer/Edge), Apple (Safari), Oracle (Opera), and Mozilla (Firefox) all liable for secondary infringement? If search engines index content automatically without any real user interaction, does that mean all search engine or any automated indexing functionality results in secondary liability? Does the very concept of peer-to-peer networking become illegal even though there are very real benefits to non-infringing uses? If a browser is open source like Konqueror, do all contributing members become liable for secondary copyright infringement?
Based on the wording of the text, yes. Further evidence is found in the news with how organizations like the MPAA wish copyright law to be. In addition to what I previously discussed about intellectual property abuses, the MPAA wants digital transmission internationally to be bound by import/export rules and, thus, wants to censor the internet by blocking websites it deems infringing (note- websites it deems to infringe) from being accessible in America.33 Think the Great Firewall of China but American and based on abusive copyright protections that go against what our Constitution and founding fathers spelled out.34 Technology, innovation, fair use, public domain, and more are affected by the TPP and these other agreements because they are so broad in scope, so counter to how the built-in sharing requirement of computing that they put the potential for infringement in everything connected to a network. If CNN links to an article which links to a court order which includes an image of the cover to Action Comics #1, CNN could be liable for copyright infringement.
The chain of constant checks required for linked content is impossible to keep up with. There is absolutely no way to monitor everyone's internet connection and make sure everything that gets transmitted over the internet is 100% legitimate under all possible intellectual property rules. That file named "HarryPotter.docx" may or may not be copyright infringement depending on the contents. Looking at the contents would be a privacy violation, especially if it was a corporate document. Not only that, but hundreds of hours of video are uploaded to YouTube every minute, making it mathematically impossible to check every video on YouTube let alone every video on the internet for copyright infringement. Furthermore, even if there was a way to automate video checking, such automation has no idea if "HarryPotter.docx" is authorized fair use, let alone if the contents infringe. This system as being codified in the TPP just will not work.
If you're curious, at $150,000 per infringement with one potential user transmission counting as an infringement (remember that "making available" is considered infringement) and every site that accepts user comments, every forum, every service that implements a link to other content being potentially liable, the total amount of damages that could be awarded is.... more than all of the money in existence on planet Earth, easily surpassing $1 quadrillion.
One of the claims by supporters is that the TPP will not change US law. Congress and the Supreme Court will still be in charge. Unfortunately as the agreement currently states, such is not the case. Congress and the Supreme Court become bound by the agreement and any dispute settlements brought against America. In May of 2015, the country of origin labeling for beef, poultry, and pork was repealed by Congress because the WTO ruled that such a US law violated global trade rules.35 Other countries already face hurdles because of the TPP and similar trade agreements.36 Even the recent Supreme Court decision of Kirtsaeng v. John Wiley & Sons, Inc. which allows for resale of goods bought internationally (hurray first-sale doctrine) would be reversed based on proposed TPP texts.37
Which brings us to the most talked about portion of the TPP, TTIP, and similar agreements: ISDS. Dispute settlement has been around for decades, even before NAFTA, but what makes the TPP different is the broadness of the provisions, especially in the realm of intellectual property. The TPP labels intellectual property as protected "investments," which means that even denying a patent on a drug could lead to ISDS suits against a country for "loss of profit." Canada faced such a suit from a US company recently. Eli Lilly sued under NAFTA when Canada invalidated two of its drug patents.38 They asked for $500 million in expropriation, an obscene amount given the circumstances.39 Their drug "investment" would be considered denied in Canada and, thus, expropriations could be awarded. That's millions of dollars of taxpayer money and a real possibility if the US faces any such suits. Our nation would, too, if we wanted to make real changes to our existing laws, changes that benefit all Americans. Like I mentioned in intellectual property reform and healthcare reform, such changes could benefit everyone with lower costs, less monopoly duration, and helping bring government spending down tremendously if they were enacted... but such changes would be impossible under the TPP and similar agreements.
But, let's assume for a moment that the trade-offs would be worth it. We're being told that the TPP, TTIP, etc will create job and raise incomes for everyone.40 Is this really true? If such agreements create millions of new jobs and bring in hundreds of billions in new revenue that goes towards raising wages of all Americans- from those in poverty to those in the 1%- maybe these trade-offs would be worth it. We don't have any real analysis of the texts here in America because of the secret nature preventing oversight and review to see how claims hold muster. America is built on a foundation of distrust; it began with government but now it's evolved into distrust of overly-powerful corporations as well. With the corporations running the show on these agreements, how do we know they will do what they claim they will do?
Europe offers us a possible solution, at least with the TTIP. Several studies have been conducted related to the TTIP and their possible effect on the European Union.41 Most of them claim that participating nations will see a greater GDP increase through the removal of non-tariff boundaries like patent enforcement restrictions. They also claim real per capita income (ie, what you and I would make at our jobs) rise upwards of 13% in some measurements.42 And unemployment would decline as well because 2 million new jobs are possible under the conditions that have been dissected in the TTIP.43 Doesn't sound too shabby, does it? A 13% raise and more people working around the world. Pretty good, no?
When you look at the studies and see how they arrive at those numbers, it brings up serious doubts. It also ignores the other problems it causes in the rest of the world. In all of the studies referenced earlier, third world countries and developing nations suffer. Because the benefit to the US and EU is so great, countries in Africa or elsewhere in the world would see higher unemployment, lower wages, and lower GDP.44 "That doesn't concern me," you might say. Except that increased poverty and struggle is what leads to malignant culture where violence and terrorism is born out of the need to survive.45 Growing the middle class in Africa and around the world is incredibly important as a foreign policy issue. The TTIP and other agreements seem to stomp on that in favor of immediate profits.
It also is impossible to say how those profits will be distributed. The studies in question seem to use an averaging mechanic, meaning a relatively equal distribution of money brought in to all parties. America, we should know better than the believe that. How many times has a CEO taken a multi-million dollar bonus instead of giving all works a raise or bonus? Thinking that a US corporation making an extra $100 million a year will distribute even 25% to their labor force is wishful thinking. Furthermore, when we look at the possible revenue sources, the TPP, TTIP, etc focus heavily on intellectual property, which means additional revenue without needing more jobs. The growth of the labor force thus remains purely speculative.
Finally, we need to consider what it means to remove non-tariff barriers in the US. In 2009, Congress passed the American Recovery and Reinvestment Act which included a provision for "buying American;" public buildings and public work projects funded with the stimulus money were required to use iron, steel, etc produced in the US. Well, the US and Canada after Canada complained that "buy American" was too protectionist.46 Now, the TTIP wants to incentivize companies to not buy American; public procurement that seeks "Made in America" would be free to use "Made in Europe" resources and materials instead.47 "Made in America" and "Made in Europe" become equivalent from a legislative and material requirement standpoint. This matters because if raw materials like iron, steel, etc can be purchased cheaper from a non-American country, the TTIP et al. will allow it, even with American taxpayer dollars.
What it all boils down to, America, is whether we value the profits of these corporations above our country's needs. There is no way drug costs will be lowered under the TPP which means the ever increasing costs of healthcare will continue to strain our budgets. No one wants to cut programs because we have to pay for expensive medicine resulting from piss poor government foresight (a very real problem). Likewise on one wants to see the internet become a Big Brother cesspool of nothingness due to ridiculous IP requirements placed upon service providers and content creators. US courts are the judge for IP issues, not companies rent-seeking with monopoly-like power that transcends national boundaries. GDP may rise but studies show that the income inequality problem would likely worsen not just here in America but all over the world. Corporations cannot be the most powerful and important thing in the United States of America. The people are. All people.
Thus, I wholeheartedly oppose these agreements and, if elected President, will immediately withdraw the US and USTR from all negotiations concerning them. The millions (or billions) in taxpayer money already spent negotiating will become a write-off well worth not having such poor laws to abide by.
(1) See Making Globalization Work for a transcription of the Carnegie Council event Stiglitz spoke at.
(2) See Canada under fire over Kyoto protocol exit. The Kyoto Protocol was a treaty designed to reduces carbon emissions (amongst other things) in an attempt to fight global warming.
(4) See this North American Free Trade Agreement pdf for NAFTA in digital form. The Uruguay Round of multilateral trade negotiations which "resulted" in the WTO are thousands of pages.
(5) NAFTA had a number of these "gotcha" provisions crafted to favor business in part due to environmentalists not having a stake in the matter. See NAFTA's threat to sovereignty and democracy by Public Citizen for a list of cases pertaining to Chapter 11 of the agreement. Even when cases are somewhat frivolous in nature, like Methanex v. United States, it costs taxpayers millions to defend.
(6) Ibid. In the case of Metalclad v. Mexico, a US company bought a Mexican company, Coterin, and sought to expand a hazardous waste transfer station into a toxic waste processing plant and landfill back in 1993. Coterin- prior to being bought- was denied permits by the Mexican local authority because of the potential for sinkholes coupled with underground water sources that could be contaminated. When Metalclad bought them and was denied, it invoked NAFTA dispute settlement seeking $90 million. The NAFTA tribunal ruled in their favor of Metalclad saying the Mexican federal government misled the company, going so far as to say they were required to hand-hold Metalclad through all levels of government, ie asking the federal government to meddle in the affairs of state and local.
(8) See our Constitution. Even though the President has the power to negotiate treaties, trade agreements which deal with the nation's revenue stream must go through Congress.
(10) See Wyden To Obama: Hollywood Shouldn't Know More About TPP Than Congress. Note this article is from May 2012. That's how long these problems have been around.
(13) See I Saw The Secret Trade Deal.
(16) See http://keionline.org/sites/default/files/Section-E-PatentsUndisclosed-Data-TK-TTP-IP-Text-11May2015.pdf, Article QQ.E.3 Option 2. Only the US and Japan oppose this. .
(17) Ibid, Article QQ.E.11.
(18) Ibid, Article QQ.E.16.
(19) Ibid, Article QQ.E.20.
(20) Ibid, Article QQ.E.20.
(22) Ibid, Article QQ.G.ZZ.
(23) Ibid, Article QQ.G.10.
(24) Ibid, Article QQ.G.10.
(25) Ibid, Article QQ.G.10.
(26) Ibid, Article QQ.G.10.
(27) See Supreme Court shoots down two more rules put in place by top patent court. Inducement is not direct infringement, but rather says (in part) that if something could be used in an infringing way, such counts as infringement.
(28) See http://keionline.org/sites/default/files/Section-E-PatentsUndisclosed-Data-TK-TTP-IP-Text-11May2015.pdf, Article QQ.G.13
(31) See DMCA Exemptions to the Prohibition on Circumvention for exemptions and when they were enacted.
(32) Using Chrome as an example, visit https://vimeo.com/channels/staffpicks/135798920 and open the browser debugging tools before you click play. With the tools open, click play and then look at the Network tab. Find the network call to the .mp4 file, click on it, and look at the Headers tab. It should give you a URL like https://s.vimeocdn.com/vimeo-prod-std-us/video/402356288.mp4?token=55cb9a57_0x308e9ba5187a452126e3f95efbd00fd596fd7117. That is a direct link to the video that you can open up and save to your computer.
(36) See John Key admits New Zealand's drugs bill will rise, EU dropped plans for safer pesticides after pressure from US, and Guatemala Resists 'Monsanto Law' Required As Part Of Trade Agreement With US for examples. The last one relates to an earlier trade agreement, CAFTA-DR (Dominican Replubic-Central American Free Trade Agreement), which puts "seed sovereignty" into question.
(38) See The Dangers of TPP.
(41) In no particular order:
- The Trans-Atlantic Trade and Investment Partnership – A Challenge for the European Union?
- Transatlantic Trade and Investment Partnership - Who Benefits from a Free Trade Deal?
- Macroeconomic Potentials of Transatlantic Free Trade: A High
Resolution Perspective for Europe and the World
- The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and
(45) Ibid. Our existing NAFTA partners, Canada and Mexico, are posed to see 7-9% drops in real per capita income based on the TTIP analysis. See chart below, taken from the study. This is very important from a culture standpoint, especially with Mexico. The current thinking today is that gangs and drugs in Mexico are a real problem. They are, but why are they? Because of the money they bring in compared to other means of making a living. Mexico's economy doesn't need to face such adversity. If household income dropped 7%, people already just barely getting by could seek out more malicious means of survival, including drug trade/trafficking/production. Cartel membership as a source of income could be more tempting. Countries in Africa suffer the same dilemma as family members may embark on less "legitimate" avenues in order to provide for their loved ones. Understanding the impact of economy on culture is very important.
(46) See Canada-US Agreement on Buy American.