I see a lot of talk these days by the Obama administration about "high standard" trade agreements (e.g., here). They also refer to "21st century" trade agreements, presumably to convey a similar idea.
So what do they mean by a "high standard" agreement? The use of this phrase strikes me as akin to requirements of "fairness" and "reasonableness." Is anyone really against any of this? Is anyone for "unfairness" or "unreasonableness"? Is anyone for "low standards"?
With regard to the particular standards to be included in trade agreements, though, whether someone wants them to be high or low depends on what subject area we are talking about. For labor and the environment, unions and environmental NGOs want them high, whereas many businesses prefer them to be low (or, even better, non-existent). Conversely, for IP and investment, it is business groups that want them high, with unions and NGOs preferring them low (or non-existent).
What I want to know is, what balance does the Obama administration hope to achieve here? I'm pretty sure they would prefer labor and environment standards that are at least as high as in the most recent U.S. FTAs. By contrast, I'm less clear about what they have in mind for IP and investment. Will they push for strong IP protection and investor rights? Or will they pull back? And what about subjects such as food safety and health?
All of this brings me to a letter from a number of members of the House Trade Working Group (a group of Representatives who are critical of existing trade agreements) to USTR Kirk, in reaction to the Obama Administration announcing that it would participate in the Trans-Pacific Partership (TPP) trade talks. (I don't have a link for this letter yet, but will try to find one). [UPDATE: Here's the letter.] As set out in the letter, here are some changes they would like to see in future trade agreements:
Foreign investor rights: We believe the new American trade agreement model must no longer provide extraordinary foreign-investor privileges and private enforcement systems that promote offshoring and allow foreign investors to challenge our environmental, zoning, health and other public-interest policies in foreign tribunals. Many in Congress have expressed serious concern about past trade pact provisions that allow foreign investors to skirt our court system to sue the United States in World Bank and UN tribunals over regulatory polices that apply to domestic and foreign firms alike. In order to ensure that foreign investors do not have greater rights than U.S. investors and firms, the TPP's investment chapter should build off of the progress made in the Australia-U.S. FTA in addressing this congressional concern by similarly not providing for extrajudicial investor-state private enforcement rights for foreign investors.
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.. we oppose trade agreements' establishment of rights for foreign investors to obtain compensation from the U.S government for "regulatory takings" - takings compensation for the costs of regulatory compliance that would not be allowed under U.S. law. We also believe it is critical that any new Obama trade agreement repair provisions in previous FTAs that guarantee a "minimum standard of treatment" for foreign investors by making clear that this standard is limited to guarantees of procedural due process rather than creating new substantive propeliy rights for foreign firms. In addition, the TPP FTA must not include limits on capital controls and other policies countries may need to employ to counter financial and currency crises that have been included in past FTAs.
Access to medicines. The patent provisions of the U.S. FTA with Peru provide a base on which further health-related protections can be built. We strongly believe trade agreements must work to ensure affordable access to medicines, and the Peru agreement addressed several of our long-standing concerns about the way that medicine patent related issues are dealt with in FTAs. Additional improvements, however, are still required. It is imperative that TPP patent rules do not undermine the flexibilities and rights included in the access to medicine polices that were agreed in the 2001 WTO Doha Declaration on the Trade Related Intellectual Property Agreement (TRIPS) and Public Health, a standard which the 2002 U.S. Trade Promotion Authority bill formally identified as a policy goal.
Labor and environmental standards. The TPP FTA should build on the advancements made to the Bush FTAs' labor and environmental terms in 2007 which were included in the FTA with prospective TPP partner PelU.
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In addition, TPP labor standards must require signatories to enforce the core International Labor Organisation's (lLO) standards as set forth in the ILO Conventions.
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Procurement rules. We do not believe it is appropriate for intemational trade agreements to impose limits on the ability of Congress and state legislatures to design stimulus, infrastructure and other government procurement activities that promote the public interest. The old FTA model subjects many common U.S. federal and state procurement policies to challenges in trade tribunals. Included among these policies are: a ban on anti-offshoring, many Buy America policies, and U.S. renewable-energy, recycled content, and other environmental safety requirements.
Services deregulation. It is our understanding that the Bush Administration's initial attraction to the TPP forum was based on these talks' focus on service sector liberalization and deregulation and establishment of new foreign investor rights, including in financial services. Given the worldwide effort to reregulate banking, securities, derivatives and other financial services, including the recent legislation passed in the House of Representatives, no trade agreement with the United States should contain any constraints on the ability of Congress to regulate either foreign financial service firms operating here or the cross-border provisions of financial services.Democracy clause. We believe that FTAs should be entered into only with trading partners that have democratic governments, and, should democratic governance be interrupted, the terms of an FTA be suspended until democratic rule is reestablished. ...
Food safety and agricultural terms. In addition, it will be critical to improve the safety and inspection standards for imported food and products in the pact relative to the past U.S. FTA model. We must also use the TPP opportunity to update FTA agriculture terms that have simultaneously undermined U.S. producers' ability to earn a fair price for their crops at home and in the global marketplace, while also displacing peasant farmers in trade partner nations.
Let me just list what jumped out at me as the most significant proposed changes to existing trade rules:
-- no more investor-state
-- scaled back substantive investor protections
-- expanded labor rights enforcement
-- ensuring that Buy America is not restricted further
-- suspension of the agreement if democracy is being undermined
This last one is particularly interesting given my recent post discussing the difference between FTAs and unilateral trade preferences. It seems that perhaps some elements of EU trade agreements, as pointed to by Lorand Bartels, could now be incorporated into U.S. agreements.
So, getting back to the initial part of this post, here's my question: Which, if any, of these proposed new rules will be part of the "high standards" sought by the Obama Administration?
