[CTC] TPP threatens to worsen inequality

[Arthur Stamoulis]

http://www.hilltimes.com/opinion-piece/legislation/2016/02/02/tpp-threatens-to-worsen-inequality/45120

TPP threatens to worsen inequality

The Trans-Pacific Partnership agreement's non-trade rules ensure that those with the most capital now can protect their position, at the expense of economic development opportunities for the poor and the middle class, and of the environment.

By HOWARD MANN <http://www.hilltimes.com/author/Howard%20Mann> | 
Published: Tuesday, 02/02/2016 3:59 pm EST
The release of the Trans-Pacific Partnership Agreement (TPP) last fall has unleashed a heated debate over its costs and benefits—or, to put it more crudely, its winners and losers. But that debate tends to focus narrowly on particular sectors of the economy—the auto industry and farmers, for instance, in Canada. As such it misses an appreciation of the broader impact of the 12-nation agreement, which boils down this: the TPP overwhelmingly favours one set of economic actors—current capital owners, investors and large business—over everyone else.

For all the hype surrounding the TPP, the economic impacts that result from lower tariffs on trade will be modest. There is a growing consensus <http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2016a/Global-Economic-Prospects-January-2016-Implications-Trans-Pacific-Partnership-Agreement.pdf> that the total growth in GDP will represent no more than one per cent, on average, for all participating states, from now until 2030. A more robust study <http://www.ase.tufts.edu/gdae/Pubs/wp/16-01Capaldo-IzurietaTPP.pdf> by Tufts University trade economists suggests far less, with a growth of just 0.28 per cent over 10 years. While this may be a large number in raw terms, nothing fundamental will change.

More important are the non-trade provisions, such as intellectual property and investment. And it is here that the TPP threatens to widen the gulf between different economic classes.

The intellectual property chapter, for example, will provide new support to big pharma and IT firms, through longer periods of intellectual property protection and easier routes to renewing patents through marginal changes technology. These and other provisions will increase the ability of companies to gouge consumers by making it harder for governments to set maximum prices.

And while the investment chapter features language on protecting the right of governments to enact critical environmental regulations, there is a caveat: such measures, including those to implement the new Paris Climate Change Agreement, have to comply with all the provisions of the TPP. In other words, environmental policies are subject to the primacy of investor rights, which are enforceable by private investors against governments through international arbitration.

In addition, essential development policies that are frequently used to increase the economic benefits from new investments are banned by the agreement. Prohibitions on requirements for investors to use local content or support specific research and development will apply to natural resource projects within Canada, limiting the return that these investments deliver to Canadians.

The TPP rests against a backdrop of increasing anxiety over income inequality. According to the Credit Suisse 2015 Global Wealth Report <https://publications.credit-suisse.com/tasks/render/file/?fileID=F2425415-DCA7-80B8-EAD989AF9341D47E>, less than one per cent of the global population controls over 50 per cent of global wealth. By focusing its rules on the protection of existing wealth owners and large businesses, the TPP will exacerbate this trend. Its non-trade rules ensure that those with the most capital now can protect their position, at the expense of economic development opportunities for the poor and the middle class, and of the environment. 

That the TPP should come out so one-sided is not unexpected. The absence of public transparency in its negotiation was exacerbated by the singular access of large industry associations and business representatives to texts and negotiators, including in Canada and the United States.

Canada is expected to sign the TPP this week at a ceremony in New Zealand. But it must still be ratified by Parliament before it comes into force. It is time for Canada to say that this is a deal too far, and insteadseize the opportunity to use the TPP experience as a jumping off point to lead a new global dialogue on the future direction for trade agreements. Trade agreements should and can be instruments to support rather than impede sustainable development.But the way that these agreements are negotiated must change fundamentally if that is to happen.

Howard Mann is the senior international law adviser with the International Institute for Sustainable Development.







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