TRIPS: The Story of How Intellectual Property Became Linked to Trade

This is the first part of a seven-part series with Peter Drahos, a Professor in the RegNet School of Regulation and Global Governance at the Australian National University. He holds a Chair in Intellectual Property at Queen Mary, University of London and is a member of the Academy of Social Sciences in Australia. In 2004 he and his co-author Professor John Braithwaite won the Grawemeyer Award in Ideas Improving World Order for their book Global Business Regulation. Prof. Drahos is interviewed by Lynn Fries, producer at The Real News Network. Find the whole series here.

Full text below the break.

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The CETA Trade Pact Will Add to the Groundswell of Discontent

Why We Need More Informed Decision-Making

Servaas Storm and Pierre Kohler

Guest bloggers Servaas Storm and Pierre Kohler wrote the following analysis of the Canada-EU trade agreement for Naked Capitalism, based on their modeling study, ” CETA Without Blinders: How Cutting ‘Trade Costs and More’ Will Cause Unemployment, Inequality and Welfare Losses, ” which was published by the Global Development and Environment Institute (GDAE) as part of its ongoing work modeling trade policy. The study follows earlier modeling on the TransAtlantic Trade and Investment Partnership and the Trans-Pacific Partnership.

Things have changed. Until just a few weeks ago it was easy for economists and trade policymakers to discard the massive waves of protest across European countries against two controversial transatlantic free trade agreements as mere “irrational”, “protectionist” or “dangerously populist” impulses. But not so anymore. About the same time when hundreds of thousands of concerned German citizens took to the streets to protest against the Transatlantic Trade and Investment Partnership (TTIP) and the Comprehensive Economic and Trade Agreement (CETA), a growing chorus of senior policymakers started urging governments to heed the rising discontent, anxiety and economic insecurity among the vast majority of the populations in the advanced world.

Most prominently, in a speech[1] titled “Making Globalisation Work For All” given in Canada on September 13th, I.M.F. managing director Ms. Christine Lagarde stated that many people felt they “lack control” in a “system [that] is somehow against them” and that growing inequalities have “added to a groundswell of discontent, especially in the industrialized world.” Lagarde’s plea for boosting support for low-income workers and reducing inequality came on exactly the same day Mr. Mario Draghi, the president of the E.C.B. stated —in his Premio De Gasperi lecture in Trento, Italy[2]—that the E.U. should pay greater attention to “the demands of those left behind by a society built on the pursuit of wealth and power”, and do more to help globalization’s losers by moderating its outcomes. Globalization has certainly caused dislocation and hardship, as the recent McKinsey report titled “Poorer than Their Parents? Flat or Falling Incomes in Advanced Economies” found: 65 to 70% of households in 25 advanced economies had experienced no real income growth between 2005 and 2014, up from just 2 percent of households with stagnant incomes during 1993-2005. This was known, of course, but McKinsey’s report helped publicize the facts.

The bottom line should be clear: citizens are rightly concerned about the distributional consequences of TTIP and CETA — a concern which policymakers and politicians can ignore only at their own peril.

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“Free Trade” In Trouble in the United States

Martin Khor

“Free trade” seems to be in deep trouble in the United States, with serious implications for the rest of the world.

Opposition to free trade or trade agreements emerged as a big theme among the leading American presidential candidates.

Donald Trump attacked cheap imports especially from China and threatened to raise tariffs. Hillary Clinton criticised the Trans-Pacific Partnership Agreement (TPPA) which she once championed, and Bernie Sanders’ opposition to free trade agreements (FTAs) helped him win in many states before the New York primary.

That trade became such a hot topic in the campaigns reflects a strong anti-free trade sentiment on the ground.

Almost six million jobs were lost in the US manufacturing sector from 1999 to 2011.

Wages have remained stagnant while the incomes of the top one per cent of Americans have shot up.

Rightly or wrongly, many Americans blame these problems on US trade policy and FTAs.

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Fast Track to Financial Instability

Kevin P. Gallagher

In his State of the Union speech, President Obama said he would submit a bill to Congress that would grant him the fast track authority to finalize the Trans-Pacific Partnership (TPP)—a trade pact with Pacific Rim countries such as Japan, Malaysia, Peru, and Chile.  While free trade has brought benefits in the past, tariffs in the world economy are at an all time low and new deals like the TPP offer few new gains in terms of growth and jobs for the American people.

Moreover, deals like the TPP now come with very high risks.  Given that tariffs on goods are so low, these sorts of agreements have rebranded bona fide economic regulations as “barriers to trade,” blurring the distinction between protectionism and measures to protect the well-being of the middle class.

According to the most optimistic economic models, the TPP would only boost U.S. GDP between one and three tenths of one percent by 2025.  This essentially amounts to a rounding error of just over one hundredth of a percent per year over the next ten years.  Even these tiny gains are likely overestimates, given that they assume full employment for the U.S. and all trading partners.

Alongside these small gains, the TPP comes with high costs.  The negotiations are conducted in a highly secretive manner, but leaked text on foreign investment and financial services reveals that the TPP rebrands regulations to protect workers and the general public from financial crisis as unfair barriers to trade.  When signing on to “market access” provisions—a cornerstone of the TPP–nations must “liberalize” regulations that are seen as lessening the profits of Wall Street.

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Will the WTO Fast-Track Trade at the Expense of Food Security?

GDAE’s Timothy A. Wise and Jeronim Capaldo wrote the following op-ed for Al Jazeera, based on Wise’s work on the WTO’s conflict over food security (see articles hereherehere, and here) and Capaldo’s work on the exaggerated gains from trade facilitation (see articles here and here). See GDAE’s other work on the WTO.

Timothy A. Wise and Jeronim Capaldo

The General Council of the World Trade Organization begins a two-day meeting in Geneva today, with India and other developing countries threatening to block implementation of an agreement on trade facilitation. They would be justified in doing so.

The potential gains from that agreement, reached last December in Bali, Indonesia, are vastly overstated, and they flow primarily to rich countries and private sector traders. Meanwhile, the United States and other developed countries have made little effort to resolve the legitimate demands that developing country food security programs be exempted from archaic stipulations of the WTO’s Agreement on Agriculture (AoA).

India has threatened to withhold its support for trade facilitation, which would effectively scuttle the deal in the WTO’s consensus-based process. The Indian government charges that there has been no serious movement on a re-tabled proposal from the so-called G-33 group of developing countries (which now includes 46 nations) to renegotiate parts of the WTO’s agreement on agriculture so that government efforts to buy and distribute food to the poor are not treated as illegal agricultural subsidies.

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Trans-Pacific Partnership: Another Trade Liberalization Scam

John Weeks, Guest Blogger

The gathering pressure for Congress to “fast track” the Trans-Pacific Partnership (TPP) demonstrates yet again that trade liberalization is one of the few aspects of economic policy about which there is agreement across the mainstream of the political spectrum, in both the United States and Europe. Almost all conservative commentators endorse it with gusto, for centrists it is an article of faith, and even many progressives accept it implicitly by their criticism of industrial country protection.

The neoliberal ideologues sell it by bestowing the label “free trade,” which is allegedly reached by repeated measures of “trade liberalization.” No matter that the TPP has little to do with trade and everything to do with setting loose capital on a global scale. Well tested and demonstrably disastrous in the North American Free Trade Association, this liberating of capital includes 1) global extension of corporate patents under the moniker “intellectual property rights,” 2) shifting enforcement of those patents from national governments and courts to ad hoc international tribunals, and 3) prohibiting as “protectionist” measures protecting labor rights and the environment.

This is not “freer” trade, but re-regulation of trade to entrench corporate profit making. However, if you call it freer trade, you can sell it to the public. In order to discredit this corporate sales pitch, I have to drive a stake through the heart of the Free Trade dogma that is the ideological justification for neoliberal globalization.

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TPP Would Deepen Income Divide

Roger Bybee, Guest Blogger

Those at the top have never done better,” President Obama ruefully acknowledged in his January 28 State of the Union speech. “But average wages have barely budged. Inequality has deepened.”

Yet, moments later, Obama heartily endorsed the Trans-Pacific Partnership (TPP), which as drafted directly reflects the demands of “those at the top” and would, if passed, severely intensify the very inequality spotlighted by the president. The TPP would provide transnational corporations with easier access to cheap labor in Pacific Rim nations and new power to trump public-interest protections—on labor, food safety, drug prices, financial regulation, domestic procurement laws, and a host of others—established over the last century by democratic governments. The nations currently negotiating the TPP—which together comprise nearly 40%of the world economy—include the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Among them, Malaysia, Brunei, Mexico, Singapore, and Vietnam, are all notorious violators of labor rights The TPP’s labor provisions are far too weak to begin uplifting wages, conditions, and rights for workers in these nations.

As with NAFTA, the TPP will benefit U.S. companies relocating jobs to low-wage, high-repression nations, argues economist Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR). This would also exert strong downward pressures on the pay of U.S. workers, “Most U.S. workers are likely to lose out from the TPP,” Weisbrot says. “This may come as no surprise after 20 years of NAFTA and an even-longer period of trade policy designed to put lower- and middle-class workers in direct competition with low-paid workers in the developing world.”

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America's Proposed TPP: Buyer Beware

Kevin Gallagher

Despite President Barack Obama’s charm offensive in the region, Pacific nations are well-advised to remain wary of the U.S. government’s position on the Trans-Pacific Partnership agreement (TPP).

If U.S. trade negotiators got their way, the Pacific Rim would reap surprisingly few gains — but take on big risk. Until the United States starts to see Asia as a true trading partner, rather than a region to patronize, it is right to hold out on the TPP.

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America’s Proposed TPP: Buyer Beware

Kevin Gallagher

Despite President Barack Obama’s charm offensive in the region, Pacific nations are well-advised to remain wary of the U.S. government’s position on the Trans-Pacific Partnership agreement (TPP).

If U.S. trade negotiators got their way, the Pacific Rim would reap surprisingly few gains — but take on big risk. Until the United States starts to see Asia as a true trading partner, rather than a region to patronize, it is right to hold out on the TPP.

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Obama’s Visit and the TPPA

Martin Khor

Uniteed States President Barack Obama will be in Malaysia soon. Among the issues on his agenda will be the current status of the Trans Pacific Partnership Agreement (TPPA).

It is an opportunity to clarify with the President himself what the chances are that the TPPA will be approved by Congress, once a deal is reached.

Of concern is that the Congress will only pass the TPPA if it has a clause disciplining countries that are “currency manipulators.”

This concern is especially serious since a recent influential report cited Malaysia as one of the two TPPA countries that qualified as “currency manipulators.”

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