This is a discussion from Reddit, called Explain Like I’m Five:
Alright, let’s kick this one off.
The Trans-Pacific Partnership is a multi-layered deal whose particulars have just been agreed upon by the twelve participating countries. Its stated purpose is to reduce tariffs – taxes on bringing your goods into a country or sending them out – and therefore encourage industry by making it cheaper for importers and exporters to conduct business between these countries. Its other stated goal is to create a set of easy rules that businesses can live by when dealing between these countries.
The TPP is far more complex than that, however. Its subtextual function is to serve as a foundation from which to spread that set of easy rules to other Asian nations, with an eye to preventing China from setting standards among these countries first. The Obama administration is concerned that it’s either “us or them” and that a Chinese-led trade agreement would set rules that American businesses would find problematic.
So what does it mean for you? Let’s assume you are a citizen of one of the participating nations.
• A deal like the TPP involves identifying which tariffs affect market access and competition by creating a market that favors some producers over others instead of letting price, quality and consumer preference decide. For instance, it is very expensive to bring milk in to Canada, so even if you could sell your milk at a lower price, you will have to account for the cost of the tariffs, which will make your milk uncompetitive on the Canadian market. New Zealand and the US both want to see Canadian dairy tariffs lowered so that their milk producers can sell on the Canadian market more easily.
• When the market can decide and the barriers are down, we expect to see open markets offering more products/services than could previously have been made available. Prices should go down for certain products due to increased competition.
• A deal with as many players as the TPP rarely functions on one-to-one trades; instead, each party has a list of things that they want and needs to go shopping around to find ways to get their positions filled – a chain of deals wherein, for instance, Japan pressures Canada on the milk issue so that they can in turn see motion on their own priority, such as car parts. This is why the negotiations have taken so long.
• The TPP wants to standardize rules for trade among its participants, which cover a lot more than just tariffs and quotas. Other issues that have to be considered and negotiated include intellectual property rights and protections; rules regarding patents; environmental and labor regulations. In short, it tries to set standards on how business is conducted, both internationally and at home. It does this because uneven practices can result in uncompetitive market access.
• This standardization is hoped to improve labor and environmental laws across the board, as the need to conform forces countries that have been lagging behind in their standards to catch up with the rest of the group. By setting rules that apply equally to the US as to Malaysia, it is hoped that people will be better off and enjoy more protections in their working environment.
• To that end, the TPP will also have a process in place for what happens when someone breaks the rules – a tribunalwhich will decide based on terms laid out by the TPP instead of following the laws of any one government. This helps ensure that foreign companies are treated fairly and can conduct business under the same standards and with the same opportunities.
Tl;dr the TPP is out to make business between these 12 countries more fair, predictable and even. It should provide more choice in goods and services and more bang for your buck, while making labor standards improve for people outside of North America who may be operating under less protections than a Canadian or American enjoys.
What are some concerns?
• The TPP has been negotiated in heavy secrecy. While it’s easy to see why keeping such a huge deal secret from the public is problematic, it is also reasonable for governments to work on negotiations and come to terms before letting elected officials decide if the end result is in the public interest. It lets others at the bargaining table know that what is said there won’t be changed by a public opinion poll two days later, and it has been argued that such secrecy is therefore necessary to make these meetings work at all.
• The TPP has a scope that concerns many parties as it addresses trade and industry regulations on a 21st century scope – everything from upcoming cancer drugs to internet regulations to, yes, a cup of milk in Canada is all being covered by the same negotiation. It is a reasonable concern to say that the number of issues being covered in the same deal will make it hard for the public to reasonably read, understand and decide on.
• The removal of tariffs provides new foreign opportunities for business, but it also means that industries which rely on a protected domestic market will become exposed. It is not unreasonable to suggest that any given country is trading away the success of industry A for success in industry B, which, if all things are equal, should come down to a zero-sum game. Economics does not, of course, work like that, but it’s still a fair question to examine.
• While supporters of the TPP say that it will encourage countries to improve their standards and reform, those elements are at their strongest during the negotiation – and the heat on issues such as human trafficking and human rights abuses have been sidelined as pressure to secure a deal of any kind has mounted on major nations facing upcoming elections. What should have been an opportunity to engage and demand reform as a condition of involvement in such a major global trade deal has been left by the wayside, a casualty of ambition.
What are the serious issues?
• While the TPP has been kept secret from the public, large corporate interests have had a seat at the table throughout the process. These businesses have an obligation to make as much money as possible for their shareholders. This means that a great many of the deals that form the basis of the TPP have been negotiated with an eye to advantaging those businesses, potentially at the expense of the average citizen.
• “Free trade” as the TPP proposes is nothing new – globalization has already happened, and we are all the beneficiaries. What this deal will offer is not for the average citizen, who might see a few price differences on common products – it is for the large corporate interests who will have more freedom to move jobs and production to areas where it is cheaper to conduct business.
• There should be no such areas within the TPP zone, but part of the negotiation involves exceptions in place specifically to help these companies. The consistent standards that the TPP desires to set? Corporations would like to see those standards lowered – it is in their best interest to have access to a labor, property and capital market where they pay the least amount of money to conduct their business.
• Tariffs exist in part to protect domestic industry – jobs – from the vagaries of a global market. If cheaper US milk is sold in Canada, Canadian milk producers will have to choose whether to sell their own products more cheaply or else close down and go out of business. If it is not possible for these farmers to sell at a lower price and still remain profitable, then that choice is not a choice at all.
• The TPP’s intellectual property provisions, which have been the subject of several leaks, are harsher than existing law, a product (again) of corporate involvement in the deal. They aim to crack down on several ways people use intellectual property, fairly and otherwise, and their scope means there is significant possibility for abuse and harrassment.
• More damagingly, the TPP applies those laws to drugs with an eye to preventing cheaper medicine from being available on the market – products that by rights should be subject to competition as their prices are heavily inflated beyond the cost of production.
• The TPP will offer a method by which companies can attack laws that affect them, suing governments through a tribunal for such offenses as trying to protect youth from cigarette marketing images, trying to protect the environment from dangerous industrial contaminants, or even refusing to pass laws removing or suppressing regulations where beneficial to corporate activity. These are all issues that already happen under various trade deals.
• We, the public, and our elected representatives will not have a great deal of time or means to push back against this trade deal if we dislike it. The text will only be released when absolutely necessary (a period of 60 days in the US) and steps have already been taken to ensure that elected officials cannot muck about with the deal. While this is logical (it would not be fair to negotiate terms and then change them back at home without discussing it), it does mean that instead of being able to debate and dissect we’re committed to an all-or-nothing deal.
Tl;dr the TPP puts local industries at risk, threatens jobs, attacks your privacy, and you may be looking at paying more for important medications (either directly or through your government). It’s being sold as lower prices and better standards across the board, but lower prices are meaningless by themselves – purchasing power is what you really want – and there is no guarantee that standards need to be raised instead of lowered.
Anyone with questions, comments, concerns, let me know here or via PM and I’ll be happy to help.
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