PHM-Exch> Fwd: Model trade deal? the new CP TPP

[Claudio Schuftan]

From: Jomo <jomoks at yahoo.com>



Jomo Kwame Sundaram

KUALA LUMPUR, Malaysia, Feb 26 (IPS)  - In early 2016, the Trans-Pacific
Partnership (TPP) Agreement -- involving twelve countries on the Pacific
Ocean rim, including the USA -- was signed in New Zealand. Right after his
inauguration in January 2017, newly elected US President Donald Trump
withdrew from the TPP, effectively killing the agreement as its terms
require the participation of both the US and Japan.

Almost comprehensive, but hardly progressive
On 8 March 2018, the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) will be signed in the presence of
outgoing Chilean President Michelle Bachelet. After that, six countries
must ratify the deal for it to take effect.

Twenty-two of the original TPP provisions will be ‘suspended', leaving over
a thousand others intact. The 22 provisions have only been suspended,
apparently to enable Washington to easily re-embrace the essentially
US-drafted 6500-page TPP Agreement.

The CPTPP will include several changes to the TPP, but will otherwise
incorporate it. Besides the investment agreement, several onerous
intellectual property and other provisions will be suspended. Some ‘side
letters' can exempt some TPP11 countries on some matters. But otherwise,
many of the most onerous TPP provisions remain.

The CPTPP Preamble can guide interpretation of, but not contradict, let
alone override problematic TPP provisions. Meanwhile, some countries will
remove all their tariffs on products from other CPTPP parties while others,
such as Japan and Canada, will not.

Taking the widely criticized secrecy of such negotiations to a new extreme,
no details of the ‘zombie agreement' will be released until after its
signing. Despite promises to "engage with various stakeholders to get their
views and feedback", most signatory governments have not conducted
inclusive public consultations about the new agreement.

Already, TPP11 proponents have resumed chanting the mantra that the
US-drafted TPP is a ‘model trade deal for the 21st century', seemingly
oblivious of global economic transformations of recent decades and their
implications.

Privileging foreign investment
Meanwhile, CPTPP privileging of foreign investment from TPP11 countries may
well perversely encourage businesses to incorporate abroad as they will be
better able to make demands on the government than they can currently do as
nationals.

The CPTPP enables non-TPP11 firms with branches in TPP11 countries to use
it to their advantage, e.g., investor-state dispute settlement (ISDS)
provisions will allow investors from other TPP11 countries to sue the host
government, in a special international tribunal, for unlimited compensation
and compound interest.

As firms incorporated in other TPP11 countries may also enjoy lower taxes
and other incentives, the recent trends of greater outward than inward FDI
may well accelerate. China, India and other emerging market economies are
already struggling to cope with such ‘roundtrip' FDI through offshore tax
havens, and there is little reason to believe smaller TPP11 developing
countries will fare better.

Lower interest rates abroad in recent years due to unconventional monetary
policies, such as ‘quantitative easing', have enabled highly leveraged
foreign portfolio investors to increase their ownership of the corporate
sector in many emerging market economies.

Capital account liberalization has enabled net capital outflows despite
sometimes inducing temporary episodes of massive inflows into emerging
market economies. With greater external vulnerability the inevitable
consequence, when such portfolio investment inflows are inevitably
reversed, capital account management measures may be needed, but disallowed
by the CPTPP.

Begging for US participation
In their efforts to justify it, CPTPP proponents have again greatly
exaggerated trade benefits while ignoring the two US government studies --
by the Department of Agriculture's Economic Research Service and the
International Trade Council – both projecting very modest gains from the
TPP, despite including the US then.

After the ‘Brexit' referendum and Trump's election in 2016, the mixed
consequences of trade liberalization are increasingly recognized, replacing
the naive claim that globalization would lift all boats. Nevertheless,
CPTPP advocates still dismiss research doubting the problematic assumptions
of the modelling projections they rely on.

Meanwhile, US President Trump has already announced that he "would do TPP
if we were able to make a substantially better deal". Judging by his
administration's new demands in the ongoing North American Free Trade Area
(NAFTA) renegotiations, this would presumably involve even stronger
pharmaceutical patent protection and greater US corporate control of
international e-commerce.

The TPP11 countries are likely to give in to US demands. With very modest
prospective trade gains from the original TPP, US withdrawal has made the
gains from the CPTPP even more paltry, making the TPP11 desperate for US
participation. For Japan's government and some others, the TPP will draw
the US back into a stronger anti-China regional coalition.

Hence, the TPP11 are so keen to bring the US back into the TPP that they
are likely to accede to Trump administration demands. By joining the TPP on
revised terms, ostensibly ‘putting America first', Trump can thus ‘prove'
that he is a much better negotiator than his predecessors, especially Obama.

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Visit this story at http://ipsnews.net/2018/02/model-trade-deal-con
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