You are on page 1of 7

Effect of the currently negotiated Trans-Pacific Partnership if United States would adopt it and if the Philippines would first

adopt it through American influence?

Introduction The Trans-Pacific Partnership is a free-trade agreement whereby foreign corporations are given rights and privileges by participating countries to encourage investment and global business. The threeyear-old Trans-Pacific Partnership talks, now involving 12 nations, are aimed at lowering trade barriers across a wide range of sectors in 12 Pacific Rim counties. 1 This includes Canada, the United States, Mexico, Peru, Chile, New Zealand, Australia, Singapore, Malaysia, Brunei, Vietnam and, most recently, Japan. It is said that the corporate powers granted in the TPP can take priority over domestic laws on environmental health and safety, and labor and citizens rights. Aside from these , multinationals can claim that those domestic laws hamper free trade and sue member countries for millions of dollars. It appears that TPP is in many ways an attempt to revive the stuck expansion of the World Trade Organization. The TPP aims not to just wipe out tariffs on goods and services, but also address the supply chain in areas including labor conditions, governmental procurement, state-owned enterprises, intellectual property and environmental protection. The TPP would affect the core of a countrys business model, Caixin, a Chinese financial news outlet, if ever a conclusion is reached.2

Effect if U.S. adopts TPP President Obama announced his intention to participate in the Trans Pacific Partnership (TPP) in Novermber 2009 and is one of the main pillars of the Obama Administrations ambitious second-term trade agenda and is focused to its plan of boosting U.S. economic growth. It aims to support the creation and retention of high-quality American jobs by increasing exports in a region that includes some of the worlds most robust economies. The large and growing markets of the Asia -Pacific a are key destinations for U.S. manufactured goods, agricultural products, and services suppliers, and the TPP will further deepen this trade and investment. 3 The TPP started out as a trade pact envisaged by Brunei, Chile, New Zealand and Singapore. It was transformed in 2008 when the U.S. expressed its interest . Since then, the TPP has expanded to 12 members.4 It is said that if U.S. adopts the TPP, it would suggest an increased American presence in Asia, which would be a challenge to China. For the next years, there is a real danger that Beijing and Washington will find themselves in a crisis that could quickly escalate to military conflict.
There are no sources in the current document. 1 There are no sources in the current document. http://www.ibtimes.com/trans-pacific-partnership-tpp-tradeagreement-you-should-care-about-1425468 2 http://www.ibtimes.com/trans-pacific-partnership-tpp-trade-agreement-will-force-chinas-hand-domesticeconomic-reforms 3 http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/united-states-trans-pacific-partnership 4 http://www.ibtimes.com/trans-pacific-partnership-tpp-trade-agreement-you-should-care-about-1425468

The Economic Benefits to the U.S. from the Trans-Pacific Partnership The Trans-Pacific Partnership (TPP) negotiations are the only other trade negotiation to which the U.S. is a party. The TPP has the potential to be the building block for a wider Free Trade Agreement of the Asia-Pacific Region (FTAAP). In 2011, the TPP countries had a total GDP of $17.8 trillion, of which almost 85 percent comprised the U.S. economy (see table 1 below).

U.S. exports to current TPP members were worth approximately $105 billion in 2011, and imports were valued at $91 billion. This shows that the U.S. had a trade surplus with current TPP member economies of almost $14 billion (see Table 2 below).

These trade flows represent approximately 5 percent of total U.S. trade. Economic modeling estimates that the benefits to the U.S. from the TPP will be $5 billion in 2015, rising to $14 billion in 2025. However, the economic benefits are likely to be larger as this figure does not capture the impacts from investment liberalization under the TPP. Yet, the economic benefits for the U.S. from concluding the TPP negotiations with the current members will be limited by the market access the U.S. already has under its existing free trade agreements with Australia, Chile, Peru and Singapore. Moreover, already low U.S. tariffs on imports limits the gains to the U.S. since the main benefits from trade liberalization accrue to the country liberalizing its trade. .5 The US also stands to grow its services trade under a TPP agreement. There is limited data on services trade with Brunei, Peru and Vietnam but for the other five TPP members U.S. services exports in 2010 were $28.9 billion and services imports were $13.5 billion, leaving the U.S. with a services trade surplus of $15.4 billion. Including Canada, Mexico and Japan in the TPP would lead to the TPP covering US services exports worth $148.3 billion and services imports of $76.4 billion. The gains to the U.S. from these countries participation would also double. And should the TPP evolved into an FTAAP, the gains to the U.S. in 2025 would increase to around $70 billion. The TPP would also increase opportunities for growth for American small business exporters. As a starting point, the TPP will increase U.S. GDP and exports, and these benefits will increase as more countries join. In fact, under a FTAAP, U.S. exports of manufactured goods are expected to increase by almost $120 billion and services exports are expected to increase by almost $200 billion.6 Disadvantages to U.S. if it adopts TPP Lori Wallach of Public Citizen has written several articles warning about the dangers of the Trans-Pacific Partnership. According to her review of TPP, foreign firms would gain the follow privileges:

Risks and costs of offshoring to low wage countries eliminated Special guaranteed minimum standard of treatment for relocating firms Compensation for loss of expected future profits from health, labor environmental, laws (indirect or regulatory takings compensation) Right to move capital without limits New rights cover vast definition of investment: intellectual property, permits, derivatives Ban performance requirements, domestic content rules. Absolute ban, not only when applied to investors from signatory countries

Ms. Wallach opines that U.S. multinational corporations have the goal of imposing on more countries a set of extreme foreign investor privileges and rights and their private enforcement through the notorious investor-state system. This system elevates individual corporations and investors to equal standing with each TPP signatory countrys government- and above all of us citizens. This would enable foreign investors to skirt domestic courts and laws, and sue governments directly before tribunals of three private sector lawyers operating under World Bank and UN rules to demand taxpayer compensation for any domestic law that investors believe will diminish their expected future profits. 7

5 6

http://www.brookings.edu/research/testimony/2012/05/16-us-trade-strategy-meltzer# Ibid 7 http://economyincrisis.org/content/the-trans-pacific-partnership-would-destroy-our-national-sovereignty

This new trade agreement will also place domestic U.S. firms that do not do business overseas at a competitive disadvantage. Foreign firms under this trade pact could conceivably appeal federal regulatory and court rulings against them to an international tribunal with the apparent authority to overrule our sovereignty. This would constitute a judicial authority higher than even the U.S. Supreme Court that could overrule federal court rulings applying U.S. law to foreign companies. 8

Effect if Philippines would adopt it first due to American influence Thailand and the Philippines have expressed interest to join the TPP at any time. Although trade deals have potentially huge effects on the economy, environment, and food sovereignty of communities throughout these 12 countries, the TPP negotiations are being held in secret between unelected government officials and representatives from more than 600 of the worlds most powerful corpora tions. Among the possible advantages of the TPP once it has been adopted by Philippines through American influence are the following:

The TPP has the potential to form a building block for Asia-Pacific regional economic integration. It is in Philippines interests to be involved in order to shape the direction of the initiative. Regional rules of origin will provide new opportunities for Philippine exporters to tap into global supply chains. The TPP could provide additional market access for goods and services into the markets of existing FTA and future TPP partners. Inclusion of Investment and Financial Services chapters in the TPP could provide improved opportunities for Philippine financial services providers by mitigating barriers, such as foreign restrictions on capital and investment flows. The TPP provides a framework for engaging with countries with which we do not have an existing bilateral trade arrangement. For example, there is potential for better access for dairy products and mining services through the TPP.9

However, there are some possible risks that have been posed for the adaptation of the TPP. These are as follows:

1. TPP will undermine Sovereignty and Democracy Iit is said that trade agreement is misleading for it is in truth an expansive system of enforceable global government. Only two of its 26 chapters actually cover trade issues, like cutting border taxes (tariffs) or lifting quotas that limit consumer choice. In reality, most of the deal would impose one -sizefits all international rules to which the Philippine government and local law must conform. This includes
8

Ibid.

https://www.dfat.gov.au/fta/tpp/

limits on the Philippine governments right to regulate foreign investors operating here and control our natural resources and land use. It is therefore violative of what the Philippine Constitution provides in Article XII section 10 and 11. Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixty per centum of whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.10 TPP also would provide preferential treatment to foreign banks and other firms operating here. The pact would subject the Philippines to the jurisdiction of two systems of foreign tribunals, including World Bank and United Nations tribunals. These foreign tribunals would be empowered to order payment of Philippine peso taxes to foreign firms if Philippine laws undermined the foreign firms new special TPP privileges. 2. TPP Threatens States Rights The agreement undermines the freedoms established by the Philippine Constitution, which reserves many rights to the people or the government. TPP would require the government to force the different Philippine regions to conform to 1,000 pages of rules, regulations and constraints unrelated to trade from land use to whether foreign firms operating in the Philippines can be required to meet the same laws as domestic firms. The Philippine government would be required to use all possible means including law suits, and cutting off local government funds to compel compliance with TPP rules.

10

http://www.gov.ph/the-philippine-constitutions/the-1987-constitution-of-the-republic-of-the-philippines/the1987-constitution-of-the-republic-of-the-philippines-article-xii/

3. TPP bans Buy Philippine It explicitly prohibits both Buy Philippine and state-level Buy Local programs. UN and World Bank Tribunals Would Replace Philippine Courts theInvestment chapter would submit the Philippines to the jurisdiction of international tribunals established under the auspices of the United Nations or World Bank. It would shift decisions over the payment of Philippine peso taxes away from Congress and outside of the court system established by Article VIII of the Constitution to the authority of international tribunals. These UN and World Bank tribunals do not apply Philippine law, but rather international law set in the agreement. These tribunals would judge whether foreign investors operating within the Philippines are being provided the proper property rights protections. The standard for property rights protection would not be those established by the Philippine Constitution as interpreted by the Philippine Supreme Court, but rather international property rights standards, as interpreted by an international tribunal. 4. TPP Cedes a huge portion of all Philippine Land to Foreign Control It would subject to the foreign tribunals judgment all contracts between the Philippine government and investors from TPP nations including subsidiaries of Chinese firms with respect to natural resources that a national authority controls, such as for their exploration, extraction, refining, transportation, distribution, or sale; to supply services to the public on behalf of the Party, such as power generation or distribution, water treatment or distribution, or telecommunications; or to undertake infrastructure projects, such as the construction of roads, bridges, canals, dams, or pipelines, that are not for the exclusive or predominant use and benefit of the government.11

Conclusion: The TPP could be a vehicle for further economic integration of the participating countries in the AsiaPacific region. The new rules and disciplines in areas such as state-owned enterprises and regulatory coherence in addition to the more traditional rules on goods, services, investment and intellectual property will ensure that economic growth in Asia remains market orientated, largely open and nondiscriminatory. However, the TPP is a direct threat to Philippine national sovereignty, the Philippine Constitution and Philippine-owned businesses. TPP would destroy Philippine jobs and our independence. It would have a negative impact on jobs, the safety of our food, Internet freedom, our right to Buy Philippine, and our laws.

11

http://www.citizenstrade.org/ctc/wp-content/uploads/2012/06/tppinvestment.pdf

You might also like