The TPP train wreck

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Robert McGarveyThe reasons for the deep secrecy surrounding negotiations for the Trans-Pacific Partnership (TPP) are becoming clear.

The TPP is a train wreck. Its true intentions are hidden, its impact on Canadian jobs could be devastating and – more importantly – TPP seriously weakens Canadian sovereignty.

While the deal – negotiated between 12 nations including Canada – is being touted as an historic opening of markets in the Asia-Pacific region, curiously there are two major Pacific economies missing from the deal, China and Russia.

And although TPP is being promoted as a trade deal, the U.S. initiated discussions during the Bush administration for security reasons, believing that closer economic integration will strengthen the alliance of free nations in the Asia-Pacific region, who will then be better prepared to counter Chinese and/or Russian aggression.

From the Canadian perspective, the economic consequences of TPP are a bit of a guessing game, but there’s little doubt that it continues the hollowing out of the Canadian economy.

Here are some of the details that have leaked out. There is to be a considerable extension of intellectual property rights, undertaken (it turns out) after extensive lobbying by the pharmaceutical industry. The new rules will strengthen ‘Big Pharma’ and result in much longer delays in the introduction of lower cost generic drugs.

Further, we know Canada has made concessions on its protected dairy and auto sectors that will result in job losses in Quebec and Ontario. Jerry Dias, president of Unifor, Canada’s largest private sector union, estimates that losses in the auto sector alone could be much as 25,000 full time jobs.

Presumably some other sectors will benefit to make up for the job losses but little is known of the details other than the fact that TPP will accelerate the erosion of Canadian sovereignty through its controversial Investor-State Dispute Settlement (ISDS) provisions.

For an example of ISDS in action, consider what’s happening in Australia. Under similar ISDS provisions, Philip Morris, the tobacco giant, is suing the Australian government for harming its intellectual property (packaging images) and for loss of future profits after the government introduced ‘plain packaging’ legislation in an attempt to discourage cigarette smoking.

The ISDS provisions of the TPP give foreign investors rights in Canada not available to Canadian investors and will make it easier for them to launch cases and win them. This is not a theoretical problem; Canada is one of the most sued nations under similar ISDS in NAFTA. Canada has faced 35 challenges through NAFTA and has lost most of them.

The fear is that Canadian governments will become so jumpy that the mere threat of litigation will inhibit them from introducing new legislation to increase minimum wages for instance, or for environmental protection and resource management. (Sixty three percent of existing ISDS disputes in Canada are predicated on environmental and resource issues.)

Taken to extremes, the ISDS could encourage foreign investors to sue local governments which change building codes or alter zoning criteria. On the other end of the scale, Wall Street banks are preparing to use ISDS to protect their business practices. Want to regulate financial derivatives or break up “Too Big To Fail” investment banks? Expect to be sued by the big banks and lose.

If the TPP is to strengthen the union of free nations in the Asia-Pacific region, it must be amended to reestablish the principle of state sovereignty. After all, this important principle was a primary aim of the founders of the United Nations after the Second World War and became a cornerstone of the Free World in its battle against Soviet Communism.

Article 1 of the UN Charter speaks to the “Equal rights and self-determination of peoples” as the foundation stone of global peace. Freer trade is potentially an important step forward, but it is free and self-determining peoples, not litigious investors, that sustain global security.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

Robert is a Troy Media Thought Leader. Why aren’t you?

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