Cato on the TPP

November 27th, 2013 at 4:00 pm by David Farrar

The is a libertarian think tank – the largest one in the United States. They are huge supporters of free markets and free trade. So with that in mind this article by Bill Watson on their behalf is worth considering:

The prospects for timely completion of the Trans-Pacific Partnership () trade agreement are looking increasingly bleak. Just as the president was struggling to secure fast track trade negotiating authority from Congress, a barrage of anti- sentiment erupted last week when WikiLeaks published a classified draft text of the agreement’s intellectual property rules. The text was rightly criticized for enabling Hollywood and other industries to improperly influence U.S. and foreign law in their favor.

The first instinct of trade advocates is to be defensive, but this time the criticism actually offers an excellent opportunity: Instead of mumbling unconvincingly about the political power of innovative U.S. industries, free traders should put their collective foot down and demand a stop. Imposing intellectual property rules through trade agreements has become a political liability that serves special interests at the expense of free trade.

I agree. Some of the provisions in the chapter are aimed at preventing free trade, and restricting parallel importing.

Getting intellectual property out of the TPP would increase the agreement’s ability to open markets, improve its chances for passage in Congress, and bring the negotiations back to what they ought to be about in the first place: lowering protectionist trade barriers.

Hear, hear.

Despite being tightly wedded in the U.S. trade agenda for the last 20 years, trade policy and intellectual property policy don’t fit together very well. Trade agreements are useful because they provide an effective but imperfect way to improve U.S. trade policy. By offsetting the political power of protectionist industries with the political power of exporting industries, trade agreements offer the promise of open markets at home and abroad.

But this model doesn’t make any sense for intellectual property laws. Unlike tariff reductions, extending intellectual property rights in foreign markets does not directly benefit foreign consumers. At the same time, there is the potential for harm to U.S. consumers when international obligations make domestic intellectual property laws harder to reform or, in some cases, stricter than they would be otherwise. Using trade negotiations to set patent and copyright policy gives excessive power to industry without any justification.

All good points.

Global rules already exist that prevent piracy or severe regulatory differences. The World Trade Organization imposes minimum standards for patent copyright protection and prohibits discrimination. Intellectual property rules in the TPP, on the other hand, are about things like extending copyright terms from really long to really, really long. Getting Canada to impose a longer copyright term may benefit Disney, but that shouldn’t be a goal of U.S. economic relations.

WIPO treaties are where changes to international intellectual property laws should occur.

You don’t have to oppose stronger intellectual property laws to recognize that they reduce the value of trade agreements. The United States is expending a significant amount of negotiating capital to secure patent and copyright rules at the behest of a narrow set of industries. As the leaked text reveals, U.S. proposals are facing coordinated opposition from most, and sometimes all, TPP partners. What other negotiating goals have had to be sacrificed in order to push these unpopular rules through?

There could well be an agreement by now, if it were not for the IP chapter.

U.S. negotiators can accomplish more in other areas if they stop fighting for detailed intellectual property provisions. Hollywood and biotech are not the only industries hoping that the TPP will secure foreign markets for them. The American dairy industry, for instance, doesn’t benefit if negotiators give New Zealand a pass on milk barriers in order to secure concessions on medical procedure patents. More importantly, consumers in New Zealand don’t benefit either.

Not sure what milk barriers they men – I presume Fonterra?

Most proponents of the TPP wrongly claim that we must have intellectual property in agreements to get enough political support. That may have been true in the past, but times have changed. U.S. negotiators would do well to remember how the Stop Online Piracy Act crashed so dramatically after internet activists got popular opposition to go viral. Good news about how the TPP lowers regulatory barriers for financial service firms operating in Asia is not going to assuage the online masses who think you’re coming to kill the internet.

A common criticism of the TPP has been that the agreement is not really about free trade. It’s time to fix that and remove intellectual property negotiations from the TPP.

Sadly I don’t think the US Government will change its policy.

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10 Responses to “Cato on the TPP”

  1. Warren Murray (312 comments) says:

    Vested interests in the US realised a long time ago that the best way to destroy this initiative is to be involved in designing it.

    Now that the US is on the Committee it can not only protect US companies from imports, it can also frustrate free trade between the other countries.

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  2. virtualmark (1,536 comments) says:

    We should have kept the TPP to a smaller group of nations that were genuinely interested in free trade.

    Then other (more mercantilist) countries like the US could have been brought in in subsequent expansion rounds, on largely a “take it or leave it” basis, once the TPP principles and terms had been set.

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  3. anonymouse (721 comments) says:

    @DPF, Yeah they are talking about Fonterra, essentially many in the US believe that the free pass Fonterra got to get around the Commerce commission’s monopoly restrictions should be reversed.

    see this release from a US senator
    http://www.casey.senate.gov/newsroom/releases/casey-to-us-trade-negotiators-secure-trade-benefits-for-us-dairy-farmers-in-new-agreement

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  4. wikiriwhis business (4,115 comments) says:

    ‘We should have kept the TPP to a smaller group of nations that were genuinely interested in free trade. ‘

    Isn’t the TPP American engineeed and biased ?

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  5. rouppe (980 comments) says:

    Wouldn’t the milk barriers be the subsidies the US dairy farmers get…? That would presumably have to be ended…

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  6. Reid (16,632 comments) says:

    Yeah they are talking about Fonterra, essentially many in the US believe that the free pass Fonterra got to get around the Commerce commission’s monopoly restrictions should be reversed.

    Which is a spurious argument. What do they care about the commercial structure of one player in a foreign market? Why do they care if it’s a monopoly? The answer is, they don’t. But they can’t argue about the tariffs because there aren’t any, so they invent a reason and make it “a necessary precursor to any expansion of U.S.-New Zealand dairy trade in TPP.”

    Wankers.

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  7. Ed Snack (1,925 comments) says:

    Given how much money the Democrats in particular get out of Hollywood (and out of California/Silicon Valley as well) I can’t see this advice being treated with anything but disdain by the administration; for all that it is entirely sensible.

    And as above, I assume that the milk barriers are the US trade barriers to milk products, quite significant trade barriers exist in the US for most agricultural products from outside. Dairy is heavily protected but it can’t hold a candle to the Sugar industry; and the boondoggle that is the Ethanol in petrol scheme is also almost an unbelievably expensive way to shovel money to cronies.

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  8. Fentex (1,014 comments) says:

    Some of the provisions in the chapter are aimed at preventing free trade

    Not merely some but most – as a whole the TPPA is quite the opposite of a free trade deal and anyone interested in expanding free trade for it’s hoped benefits should oppose it.

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  9. projectman (227 comments) says:

    This all seemed to be proceeding well until the yanks stuck their oar in. Am I being unduly suspicious to think they could be endeavouring deliberately to sabotage the TPP?

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  10. simonway (387 comments) says:

    Yeah they are talking about Fonterra, essentially many in the US believe that the free pass Fonterra got to get around the Commerce commission’s monopoly restrictions should be reversed.

    Makes no sense at all, because if Fonterra isn’t an international monopoly! Do the American agricultural giants really have less market power than Fonterra? I don’t think so – America is responsible for more than five times as much dairy production as NZ. If they demand that Fonterra be broken up, NZ should demand in return that all American dairy companies are also broken up so that none of them are larger than the largest NZ producer. That would truly be a “level playing field”.

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