[CTC] From Negotiation to Policy: The Power of a Trade Pact

[Arthur Stamoulis]

Congressional Quarterly  WEEKLY
March 18, 2013 – Page 490

 From Negotiation to Policy: The Power of a Trade Pact

By Kate Ackley, CQ Staff

In a luxury hotel half a world away from Washington, lobbyists for  
U.S. corporations and trade groups spent the past two weeks hosting  
elegant receptions and wonky policy discussions while they staked out  
closed-door talks on a trans-Pacific free-trade agreement involving 11  
nations.

The hubbub at Singapore’s Grand Copthorne Waterfront Hotel could, at  
times, have passed for a scene on K Street. In fact, the involvement  
of business interests was driven not only by discussions of tariffs  
and of opening far-flung global markets but also of U.S. domestic  
issues.

Lobbyists view trade pacts such as the evolving text of the Trans- 
Pacific Partnership as a covert tool, a behind-the-scenes way to  
change domestic laws and regulations they find objectionable.  
Agriculture interests, food producers, financial service firms and  
technology and pharmaceutical executives who are closely monitoring  
the negotiations also must defend against competitors trying to do the  
same thing.

In short, trade agreements like TPP can morph into yet another forum  
for U.S. corporate, consumer and environmental interests to fight out  
their domestic policy squabbles on such matters as food safety and  
intellectual property rights under a veil of secrecy.

Although the policies contained in a trade agreement typically don’t  
override federal law, experts in the field say that any  
inconsistencies could result in a trade dispute subjecting the  
noncompliant country to possible arbitration and sanctions. When faced  
with similar challenges, the United States has revised the offending  
regulations and, in some cases, is still considering how to bring them  
into compliance

In one case, Mexico successfully challenged U.S. regulations for  
keeping track of whether imported shrimp had been caught in turtle- 
safe nets. Another challenge from Mexico resulted in changes to  
“dolphin-safe” tuna labeling.

Just last week, the Agriculture Department proposed changing a rule on  
country-of-origin food labeling after an appeals panel of the World  
Trade Organization decided that the rule had had a detrimental effect  
on livestock imports from Mexico and Canada. Such a change could  
result in a tougher labeling rule or, as some industry advocates want,  
a decision to throw out the requirement.

“There certainly have been cases in which the United States has had  
laws related to consumer protection, food safety and consumer  
information that have been challenged at the World Trade Organization,  
and in some of those cases the U.S. has had to make modifications to  
its regulations in order to come into compliance,” says Elizabeth  
Drake, a partner with Stewart & Stewart, which represented the  
National Farmer’s Union and other domestic interests in the labeling  
case.

Fear of Lowering Standards

TPP disputes might follow a similar path and serve as an alternative  
to revamping domestic laws and regulations to change their effect.

“An agreement like the TPP becomes a mechanism for a broad array of  
industry interests to re-litigate policies that they lost when the  
debate occurred in the sunshine of public scrutiny and the open  
congressional process,” says Lori Wallach, director of Public  
Citizen’s Global Trade Watch, who kept an eye on the negotiations  
unfolding in Singapore and whose group opposes the free-trade pact.  
“It can become a backdoor strategy for changing domestic policy.”

That prospect isn’t lost on Congress. Rep. Rosa DeLauro says she is  
worried that food and agriculture interests will weaken the 2010 food  
safety law, which she helped write, while the Obama administration  
continues to implement its provisions.

“It’s my fear,” the Connecticut Democrat says, that “it would mean we  
would have to lower our standards.”

Vessels for Grievances

Congress typically takes up trade agreements under presidential fast- 
track authority, which forces lawmakers to vote up or down on the  
whole deal without being able to amend it. (The president’s fast-track  
authority has expired, but the administration is expected to seek its  
renewal.)

The Obama administration rejects the notion that the trans-Pacific  
talks could gut portions of statutes such as the Dodd-Frank financial  
overhaul, the 2010 health care law or DeLauro’s measure.

“Only Congress changes U.S. law, period,” Carol Guthrie, spokeswoman  
for the U.S. Trade Representative, wrote in an email, “and only  
administrations, in consultation with Congress, change U.S. policies  
and regulations.”

Lobbyists and representatives of several corporations deny that the  
trade talks could be an opportunity for U.S. policy do-overs.

One longtime lobbyist and expert in trade pacts calls the legislating- 
via-trade-deal route an “unusual strategy.” He says that companies and  
other groups weighing in on negotiations are more likely to use their  
muscle to raise other countries’ standards so that they are in harmony  
with those of the United States.

But the complex nature of the TPP negotiations coupled with the reach  
of those countries involved with the United States — Australia,  
Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore,  
Vietnam and, perhaps in the future, Japan — fuel speculation about the  
deal’s eventual impact on the policies of individual countries.

David Thomas, the Business Roundtable’s vice president for trade, says  
the TPP agreement “creates an opportunity to sort of knit together a  
regional free-trade area that can allow companies to more efficiently  
do business across those countries as well as within those countries.”

There is precedent for trade-driven changes to U.S. laws. When  
Congress two decades ago passed the Uruguay Round Agreement Acts,  
transforming the General Agreement on Tariffs and Trade into the World  
Trade Organization, lawmakers approved a change in patent law that  
extended market exclusivity for U.S. products from 17 years to about  
20 years. Trade and patent law experts say the change harmonized U.S.  
and international patent laws and benefited, in particular, big  
companies that file patents in multiple countries.

The North American Free Trade Agreement that Congress approved in  
1993, “downwardly harmonized” federal rules for interstate trucking,  
says Mike Dolan, the legislative representative who handles trade  
policy for the International Brotherhood of Teamsters, which  
complained about NAFTA provisions giving Mexican trucks access to U.S.  
highways.

“The free-trade lobby,” Dolan says, “uses these trade deals to enact a  
kind of domestic regulatory agenda that they can’t get otherwise.”

Inside Track

With the TPP talks, an immediate concern for Dolan is the “Buy  
American” policies that give preferential treatment to U.S. goods in  
federal procurement contracts. Negotiators could give that same  
preferred status to goods made in the 10 other countries.

Several senators late last year spelled out their Buy American  
concerns in a letter to President Barack Obama. Ohio Democrat Sherrod  
Brown, who signed the letter, has been a critic of pacts such as the  
Central American Free Trade Agreement and says he wants to use his  
position on the Finance Committee, which has jurisdiction over  
international trade matters, to illuminate the otherwise secretive  
process of trade negotiations such as the TPP.

“Corporate CEOs often have better access to information on trade  
negotiations than Congress does,” Brown says. “These trade agreements  
are often good for large corporations and not so good for American  
workers.”

Rep. Zoe Lofgren, a California Democrat and free-trade supporter who  
backs the TPP generally, is especially concerned about what might be  
in the copyright provisions of a deal.

Lofgren opposed legislation aimed at curbing online piracy — known by  
its acronym, SOPA — which was backed by the movie industry and other  
sectors that rely on copyright protections, because it would, she  
said, hamper Internet freedom. Technology giants such as Google Inc.  
led a lobbying and grass-roots effort in 2012 that derailed the  
legislation. Movie executives and other content providers, she says,  
have looked to trade pacts such as the Anti-Counterfeiting Trade  
Agreement as a back channel to resurrect some of SOPA.

“In the past, there have been efforts by Big Content to get in a trade  
agreement what they could not get through the Congress,” Lofgren says,  
noting that ACTA had stalled.

Lofgren says she warned U.S. Trade Representative Ron Kirk, “Look at  
what happened to ACTA. ACTA went down because of a perception that it  
was delivering SOPA-like rules to the Internet. If there’s overreach  
in the TPP, the entire trade agreement could go down just as ACTA went  
down.” (Kirk stepped down March 15.)

A spokesman for the Motion Picture Association of America declined to  
comment, referring questions to the USTR and the U.S. Chamber of  
Commerce, which led a delegation to Singapore.

Richard Bates, senior vice president of government relations for Walt  
Disney Co., says movie studios would like to see in the TPP the same  
level of protections for intellectual-property rights as are included  
in a congressionally approved free-trade agreement with South Korea.

One entertainment industry executive, who declined to speak on the  
record because of the sensitivity of the talks, says allegations that  
content providers are trying to get SOPA policies into the TPP deal  
are “scare tactics.”

On the flip side of this debate, some content providers and  
entertainment industry lobbyists say that technology companies are  
eying TPP as a way to weaken existing intellectual-property laws. Not  
surprisingly, both camps are watching the unfolding negotiations with  
immense interest. “Generally,” says one lobbyist familiar with the  
issue, “the approach in the United States to these trade agreements  
has been to get other countries to adopt stronger intellectual- 
property rights so our movies, our products, aren’t ripped off around  
the world.”

Lawmakers gave corporate interests a say in trade talks in the Trade  
Act of 1974, which created industry trade-advisory committees that  
give feedback on relevant issues to trade negotiators. AFL-CIO  
President Richard Trumka has the same privilege.

“The purpose of a trade agreement is to help the U.S. economy,” says  
one entertainment industry official, who was not authorized to discuss  
the talks. “The U.S. exporters have an important role to play in  
understanding what the barriers are.”

This lobbyist added, though, that openness in negotiations often falls  
victim to the “horse trading” that goes on behind closed doors to  
arrive at a final deal.

Potential Complications

The secrecy of the deal-making may well provide lobbyists with an  
opportunity, but it can just as easily get in their way.

Because the draft text of any agreement is secret, lobbyists with the  
best access to officials on the inside must be careful to not reveal  
too much in public while also figuring out how to press their cases.

In Singapore, for example, the USTR hosted a “stakeholder engagement  
event” on March 6, at which business and other interests had “the  
opportunity to raise questions and share views directly with  
negotiators and other stakeholders,” according to the USTR website.

Such out-in-the-open discussion is not the only way to try to  
influence the deal, however. The American Chamber of Commerce in  
Singapore hosted a March 8 reception for diplomats and outside  
interests in the grand ballroom of the hotel where negotiations were  
being held.

Corporate representatives also book suites where they can huddle with  
their counterparts and with government officials. Even public interest  
groups get in on the lobbying: Wallach of Public Citizen said that  
during a previous TPP round in New Zealand she took to standing  
outside, in the rain, trying to persuade negotiators to chat about her  
concerns.

Catherine Mellor, a trade policy expert with the U.S. Chamber of  
Commerce, says the group regularly keeps in touch with the USTR’s  
office, administration officials and members of Congress. But the  
negotiations offer a potentially one-stop opportunity for face time  
with foreign officials too.

“We do meet with the foreign negotiators,” explains Mellor, whose  
subtle accent in a reminder of her Australian roots. “A lot of these  
companies have real-market examples of why these policies are needed.”

Banking-industry insiders say privately that the talks may be an  
opportunity to clarify “international, cross-border applications” of  
the “Volcker rule” in the Dodd-Frank law, which restricts banks from  
making speculative investments and is much maligned by the industry,  
one banking source says.

High stakes ensure that business will be engaged in future deal-making  
on trade, even when negotiators rebuff their input. “They might  
publicly say they don’t want this, but they might give in if they need  
something else,” says Mark Grayson of the Pharmaceutical Research and  
Manufacturers of America. Industry groups hang around so “they know  
you’re there, in case they have some questions.”

FOR FURTHER READING: Changing dynamics on congressional trade policy,  
2008 Almanac, p. 6-18; World Trade Organization approval (PL 103-465),  
1994 Almanac, p. 123; NAFTA approval (PL 103-182), 1993 Almanac, p.  
171; Uruguay Round approval, 1993 Almanac, p. 171.
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