By EOI Board Member Stan Sorscher
The Trans-Pacific Partnership (TPP) is probably the most important trade agreement you’ve never heard of. Sometimes described as our “21st Century trade agreement,” its terms are being negotiated in secret by 11 countries, big and small, arranged around the Pacific Ocean.
As the TPP takes shape, we see that it’s really the old NAFTA model, built from the ground up to shield global businesses from public debate, public policy, and public regulation. The 14th round of talks took place in September, in Leesburg VA.
At the meeting, Pat Ranald, a researcher from the University of Sydney in Australia, told a remarkable story about cigarette packaging. Smoking causes about 15,000 excess deaths, and costs Australia over $30 billion per year. In response, Parliament passed a “plain-packaging” policy, requiring all cigarette packages in Australia to have plain brown designs, with no advertising. We’ve had similar rules for decades that prohibit cigarette smoking, cigarette advertising, and liquor advertising on television.
Global tobacco companies challenged the plain packaging policy in Australian courts. The Australian High Court decided that the regulations were a legitimate policy in response to a significant harm to public health. The tobacco companies are reframing their challenge, taking the issue to an international trade tribunal. The basis of the trade complaint is simple. National courts may believe that governments have a duty and authority to promote public health. Trade tribunals have a different priority – maximum possible trade.
Trade tribunals say it this way. Governments can create ‘any [public health] rules they want,’ as long as the rules don’t affect trade; as long as the rules have no effect; as long as the rules don’t work.
Recently, a trade tribunal struck down Country of Origin Labeling for meat. The point of labeling meat is that consumers might prefer meat from countries with strong food regulations, and they might avoid food from countries with poor health records in their cattle industries. The tribunal said countries could make ‘any labeling rules they want,’ as long as the rules don’t affect trade. To be trade-legal, the labels may not change consumer choices.
You may remember the voluntary labeling on cans of tuna fish – dolphin safe. A trade tribunal rejected that arrangement. Trade tribunals say that policies may not differentiate, based on the manner in which a product was made. Meat is meat, tuna fish is tuna fish, baby formula is baby formula, a cookie is a cookie. If a regulation actually affects consumer decisions – if it works! – then it is prohibited by the trade agreements.
Public policy doesn’t work that way in America, Australia, New Zealand or any other Western democracy. We have clean air and clean water, because it DOES matter how products are made. We expect safe food and drugs, because is DOES matter how those products are made and marketed. We have safe airline operations and we trust our doctors and hospitals because it DOES matter how those services are provided.
I talked informally with a negotiator from New Zealand about balancing investor interests with the public interest. We share our approval of fundamental labor standards in America and New Zealand. But he looked at me and declared, “No country in the world would let the International Labor Organization tell them what their labor laws should be, would they?” He said it so forcefully, that I immediately imagined a nest of unaccountable, faceless bureaucrats, with dubious backgrounds, writing minimum wage laws for Idaho.
God no! What country would forfeit its sovereignty like that! My heart sank. Then he stopped for a moment, lowered his eyes, and said, “But, …. that’s exactly what we’re doing right now, for investor interests, aren’t we?” Yes. That is exactly what he and the other negotiators were doing. They were giving authority to unaccountable tribunals to give investors the upper hand over public interest.
Of course, I wasn’t asking for a miserable unaccountable process for labor rights. He had pushed those words into my mouth. I would be happy with a practical, functional, democratic, accountable, open political process that fairly balanced public and private interests. I certainly don’t need one side to vanquish the other.
Balancing interests is exactly what democratic policy-makers do every day in city councils, state capitals, and national legislatures around the world. It’s politics. Done right, it’s good politics.
I got a second version of this argument from a distinguished-looking fellow who was openly skeptical about the role of civil society in global trade.
He said, “If civil society gets into this, regulators could do anything! They could insist that all cars be blue!” He was a diplomat from the US State Department, and he seemed genuinely concerned that unaccountable regulators would run amok; fixated, in this instance, on car paint.
I told him, first of all, I had no interest in granting regulators unlimited authority to paint cars blue. Seriously, I could NOT THINK of circumstances where regulators might insist that all cars be blue.
However, I could easily imagine a legitimate circumstance where regulators might want to make all cigarette packages brown. Almost everyone in the room knew about Pat Ranald’s presentation. He stopped arguing, and I think he considered, in that moment, what a proper trade policy might look like.
Nobel-prize laureate Joseph Stiglitz calls our 20th-century agreements “global governance without global government.” They are designed to push civil society and the public interest OUT of the picture. The results are predictably bad, inequitable and unsustainable.
What features of a 21st-century trade policy will raise living standards in Chile, Peru, Malaysia, Singapore, Vietnam, Canada, Mexico, Australia, New Zealand, Brunei AND the United States – ALL the TPP countries? What policies will protect the environment; provide safe food, clean water and clear air; give poor countries access to medicine; establish prudent financial regulations to prevent ruinous market failure; help workers and communities share in the gains from trade; raise living standards in Peru and New Zealand, AND make buckets of money for global companies around the world?
Obviously, such a 21st-century policy would recognize the legitimate fundamental interests of civil society and write balanced protections into the language of trade agreements. That would be good policy and good politics.
More To Read
November 27, 2023
Apply by January 5th, 2024
November 21, 2023
This one is personal.
November 9, 2023
What can we really learn about taxes, wealth, and policy from the behavior of one person?