26 Dec 2013

Introduction to the TPP

Conspiracy, Economics, Krugman, Trade 43 Comments

My cousin has been asking me if I’m up to speed on the dangers of the Trans-Pacific Partnership (TPP). I explained to him that Paul Krugman had just declared that the TPP was no big deal, so I assumed it must be awful, but no–I didn’t really know much about it. After reading some of the information he sent my way, I am glad he alerted me to this important issue; I can see why Dean Baker chastised Krugman for his nonchalance, though Baker and I are worried about (slightly) different aspects of it. In this post, I just want to “introduce” Free Advice readers to the TPP, to make sure you know why more and more people are warning about it.

Here’s Wikipedia’s opening description:

Since 2010, negotiations have been taking place[9] for the Trans-Pacific Partnership (TPP), a proposal for a significantly expanded version of TPSEP. The TPP is a proposed trade agreement under negotiation by (as of August 2013) Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.[10]

The TPP is intended to be a “high-standard” agreement aimed at emerging trade issues in the 21st century.[11] On November 13, 2013, a complete draft of the treaty’s Intellectual Property Rights chapter was published by WikiLeaks.[12][13] This and other leaks have drawn criticism and protest of the negotiations from global health experts, internet freedom activists, environmentalists, organized labor, advocacy groups and elected officials, in large part due to the secrecy of the negotiations, the expansive scope of the agreement, and controversial clauses in the drafts leaked to the public.

The website The New American has a lot of good coverage of the TPP, but this essay from August 2013 is the single best one that gets one up to speed on some of the essential concerns. Here are some key excerpts (bold is mine):

The USTR [U.S. Trade Representative] “Fact Sheet” cites as evidence of its transparency efforts the number of consultations it has held with its selected trade advisory committees and privileged “Civil Society stakeholders.” It states, for instance:

Over the course of the TPP negotiations, USTR has conducted more than 147 meetings with the trade advisory committees. Since June 11, 2010, USTR has posted 110 TPP documents to a website for cleared trade advisors to review and provide comments.

This transparency boast actually exposes a dangerous feature of the TPP process: The TPP documents are not available to the average American citizen, only to “cleared trade advisors.” And who are the “cleared trade advisors”? According to the USTR, these are “representatives from industry, agriculture, services, labor, state and local governments, and public interest groups.” But, apparently, that does not include elected representatives of the American people, since members of Congress have been forced to plead, and threaten in order to get a peep at the secret TPP texts.

For instance, Senator Ron Wyden (D-Ore.), the chairman of the Senate Finance Committee’s subcommittee on International Trade, Customs, and Global Competitiveness, requested copies of the TPP draft documents but was stonewalled by the USTR. When Senator Wyden threatened to propose a measure in the Senate that would force transparency on the proc­ess, the USTR agreed to grant the senator a peek at the documents, though his staff was not permitted to see them. This type of secretive process has no legitimate place in our system of government, and it obviously puts Congress at a distinct disadvantage in the TPP process, since the real work of examining the detailed legal texts normally falls to congressional staff members who are often experts in particular areas of domestic and foreign policy.

Wyden spokeswoman Jennifer Hoelzer…pointed out, “An advisor at Halliburton or the MPAA [Motion Picture Association of America] is given a password that allows him or her to go on the USTR website and view the TPP agreement anytime he or she wants.”

As just one example of the enormous dangers that are lurking in the hundreds (or thousands) of pages of still-secret texts, consider the leaked TPP draft text on intellectual property that would threaten Internet freedom — as well as American sovereignty — with new TPP surveillance requirements. As The New American reported last year, the leaked document would mandate that TPP member nations enact regulations that require Internet service providers (ISPs) to privately enforce copyright protection laws. “Current U.S. law,” noted The New American’s Joe Wolverton, “specifically the Digital Millennium Copyright Act (DMCA), would be supplanted by TPP Article 16.3. This provision in the TPP draft document paves the way for a new copyright enforcement scheme that extends far beyond the limits currently imposed by DMCA.”

The Electronic Frontier Foundation pointed out the TPP threat to Internet freedom:

Private ISP enforcement of copyright poses a serious threat to free speech on the Internet, because it makes offering open platforms for user-generated content economically untenable. For example, on an ad-supported site, the costs of reviewing each post will generally exceed the pennies of revenue one might get from ads. Even obvious fair uses could become too risky to host, leading to an Internet with only cautious and conservative content.

The net effect would be to squeeze out the smaller, independent ISPs, further cartelizing our communications and news media, and eventually wiping out the burgeoning alternative Internet-based news media.

I’ll be returning to this topic in the future, but I wanted to at least make my readers aware of the controversy. The Obama Administration is seeking to restore “fast-track approval” powers on this, which would allow an up-or-down vote on the whole TPP without discussion of its individual components.

As a final point in this introductory post, let me say this: The problem with these “free trade” agreements is that some critics rely on centuries-old protectionist fallacies; they are afraid of “cheap imports.” Anyone familiar with Bastiat understands why such worries are misplaced.

However, those of us who believe in genuine free trade shouldn’t trust government officials when they title something a “free trade” agreement. It doesn’t take years of backroom negotiations to reduce tariff rates. No, something is really fishy with this TPP and other such deals.

43 Responses to “Introduction to the TPP”

  1. Matt M (Dude Where's My Freedom) says:

    Yep. Everyone who has even spent a few minutes thinking about economics understands that you don’t need government agreements to create free trade. The only thing governments can do to trade is restrict it.

    • Philippe says:

      not in the real world, because in the real world governments have to enforce or sanction the enforcement of the ‘free trade rules’ established by these so-called ‘free trade agreements’.

      • Major_Freedom says:


        Matt M’s argument is that such “enforcement” is not needed to create free trade. Free trade is created through individuals voluntarily entering into trade agreements.

        These “free trade agreements” are not in fact free trade agreements at all, but rather government agreements on how to control other individuals in how they trade and what they trade, and how to split the loot they steal. That is the real world “free trade agreements.”

        • Philippe says:

          do you ‘believe in’ intellectual property rights? Because that’s what much of the controversy around this TPP is currently about.

          loot and steal blah blah.

          • Bob Roddis says:

            I do not believe in “intellectual property rights” except perhaps for trade secrets. Anything else is a monopoly grant from the government. We can argue about whether such is necessary but it sure ain’t “property”. Perhaps under Ancap, such rights could be contractual.

            • Tel says:

              The only natural intellectual property rights are secrets. Of course government can and does create unnatural rights on a regular basis, whether that’s a good or bad thing depends on a number of points:

              [1] If there is a genuine Tragedy of the Commons, property rights can help solve that.

              [2] If the property right is structured in a way that minimises overhead, that’s preferable.

              [3] Property rights should only be implemented where they have strong democratic support.

              In the case of [1] I think there’s very little real evidence that any Tragedy of the Commons exists in Intellectual Property areas.

              As for [2] the Copyright stuff is not too bad, but other areas like Patents and various genetic rights, breeders rights, etc are an absolute nightmare. No one even knows who owns what, nor why.

              Finally with [3] there seems to be minimal public support for the IP industry right now. People just shrug and copy stuff, and they don’t care.

            • ThomasPaineRN says:

              I agree whole heartedly with the Free Market and the right of two people to enter any agreement they want, as long as it does not infringe upon the freedom of others.
              But the theft of intellectual property is just as real as theft of a physical item.
              Billy Joe the manufacturer makes widgets and has a physical item which can be physically protected.
              Timmy Joe spends years of his life, and thus lots and lots of money, developing a new computer program which will change how widgets are manufactured. This is not a physical item. It is an intellectual one. One which has been developed at a cost and has value. One worth buying to widget manufacturers everywhere.
              Now, if Timmy Joe takes some widgets from Billy Joe without paying for them, he can be prosecuted for theft. Billy Joe is protected by the law.
              But if Billy Joe steals the computer code from Timmy Joe in order to improve his widget manufacturing, and, thus, to make more money from his improved product, he is totally in the clear because “no intellectual property rights” exist?
              Nope. Wrong. People who spend their time, life’s blood, and money to develop a program, or anything else that does not exist in the physical realm, deserve to be protected from theft just as much the guy who makes a physical product.

          • Matt M (Dude Where's My Freedom) says:

            That might be what the “controversy” is about (probably because IP is a statist’s favorite distraction, to get libertarians to argue with each other and ignore what the government is doing), but that’s NOT what a “free trade agreement” is all about.

            Free trade agreements are all about quotas and tariffs. Government arrangements to RESTRICT trade, not to free it up. If the government wanted free trade to exist, it would simply shut down all of its customs houses and trade bureaus and other such things. Trade would happen naturally between consenting individuals. That’s what free trade IS.

            • ThomasPaineRN says:

              No disagreement. I wasn’t attempting to defend the gov’t definition of “Free Trade.” I was only addressing the idea of “no such thing as intellectual property,” which, of course, is an argument made by someone who only makes things with their hands.
              I agree that gov’t doesn’t “Free” anything, and certainly not trade.
              Ever notice that the government names things by whatever it wants you to believe about it, not what it actually does?
              Names have become a primary propaganda avenue because so much of the population doesn’t read (or think) past the name.

          • Major_Freedom says:

            No, I don’t “believe in” IP, if by “believe in” you mean do I support shooting at people if they refuse to stop using their minds and their private material property to produce and sell goods.

            The TPP is about looting and stealing from those who through justified competition compete with others who, through their coolaborating with the governments, claim to be ultimate owner of other people’s minds and private property.

          • Gamble says:

            The other day I was thinking back about a movie I watched. I quickly stopped myself because I was stealing. It made me wonder just how much of my brain belongs to other people.

            Fruck no I don’t believe in the current definition of patent, copyright and IP.

            • Major_Freedom says:

              It’s only stealing from Universal Studios if your roommate offers you $1 if you make a home video reenacting the film, and you…dun dun duuuuuun…accept it.

              You see, that $1 that your roommate…uh…”owns”, actually belongs to Universal Studios. You would be stealing from them if you accepted that $1. Your roommate would probably be in trouble too, because they gave that dollar to you without the permission of Universal Studios.

              • Bob Roddis says:

                Come on, MF. Without our important IP protections (and government education), how would Hollywood continue to produce five part gargantuan blockbusters based upon comic books? There would be no “art” without IP.

              • Major_Freedom says:

                And how would drug manufacturers continue to make profits producing and selling depatented drugs….um…without IP?

          • Ken P says:

            At the very least IP longevity needs to be greatly shortened. The current copyright duration in the US (life of author plus 70 years) is ridiculous.

      • pearl says:

        “Free trade rules” ??? You make the point so effortlessly. Free trade needs no “rules”. Only when govt cronies collude to redefine the meaning of “free” can such absurdities as “free trade rules” exist, and they always spell profits for the well-connected and hardship for the rest of us.

      • wisdumb says:


        “free trade rules” is an oxymoron.

        And, there is only one world.

    • david taylor says:

      This is the typical obama open door policy. He has been working on giving away the things Americans have died for. The other thing that p sses me off is the senators who are sending out e-mails stating what all they have done.
      I have a question. Obama is said to have known an=bout the fact that if you like your doctor, no you can’t keep it. Where have all of our so called representatives been. Do you mean that they didn’t read the bill that was passed? If they read the bill why didn’t they tell their people about it?? Now they want to talk about what they have done. I would rather talk about what they didn’t do.

      • Major_Freedom says:

        “Do you mean that they didn’t read the bill that was passed?”

        I can assure you they didn’t.

        The Obamacare law Congress voted on was a massive 1,900 pages (2,700 pages according to some authorities). This law was dumped into the House only days earlier.

        Had these “representatives” been the board of directors of a private corporation, they would almost certainly have been subject to lawsuits from the shareholders, if not criminal penalties.

      • Matt M (Dude Where's My Freedom) says:

        I can’t imagine a single American who knowlingly/willingly died for import quotas and tariffs.

        … maaaaaaaaaaaybe Abraham Lincoln…

  2. Tel says:

    Like the guy at the airport says, “If you have nothing to hide, you have nothing to worry about.”

    Funny how these deals always have something to hide. Always.

    • skylien says:

      I am sure this is a matter of national security..

    • wog1 says:

      But none the less whether or not you have something to hide you are always treated like you are the guilty one.

    • Major_Freedom says:

      I wonder how using their own logic against them would work:

      “I will not tell you for individual [nix national] security reasons.”

      Or how about

      “I invoke the Individual [nix state’s] Secrets Act.”

  3. Tel says:

    The net effect would be to squeeze out the smaller, independent ISPs, further cartelizing our communications and news media, and eventually wiping out the burgeoning alternative Internet-based news media.


    A similar thing happened in Australia where the government decided to roll out a National Broadband Network which was going to take over (by force where necessary) all last-mile communications and some long distance communications. Then they got together with the ACCC (a supposedly “independent” tribunal which is just yet another branch of government but can fool some of the people some of the time) and set things up to favour the large incumbent communications companies at the expense of small business.

    The guy who owned and ran Internode, Simon Hackett, who also wrote the explanation linked above, eventually gave up and sold his company to a larger competitor. Eventually Hackett ended up working for the government on the NBN instead of running his own private company. For some reason, a lot of Australians are happy with the way those things happen around here. The previous ALP government managed to get incredible levels of expectations amongst the party faithful about how the NBN is going to be bloody brilliant.

  4. Keshav Srinivasan says:

    Bob, off topic, but speaking of topics you said you’d return to in future, what happened to your discussion of the Infinite Banking Concept? I still had some questions that I asked you about in prior posts, like whether a whole life insurance plan would make sense if you have no bequest motive.

  5. Daniel Kuehn says:

    Advice and consent by telepathy I guess.

    Do you know the typical gap between negotiation and putting it before Congress? I honestly don’t – genuine question.

  6. Sheffner says:

    Wait! There’s more! HuffingtonPost has more (Dec. 8th) on other aspects of IP. Sample quote:
    “The Obama administration is insisting on mandating new intellectual property rules in the treaty that would grant pharmaceutical companies long-term monopolies on new medications. As a result, companies can charge high prices without regard to competition from generic providers. The result, public health experts have warned, would be higher prices around the world, and lack of access to life-saving drugs in poor countries. Nearly every intellectual property issue in the November chart is opposed by a broad majority of the 12 nations. The December memo describes 119 “outstanding issues” that remain unresolved between the nations on intellectual property matters. The deal would obligate nations to develop many standards similar to those in the United States, where domestic prescription drug prices are much higher than costs in other nations.

    Also according to the December memo, the U.S. has reintroduced a proposal that would hamper government health services from negotiating lower drug prices with pharmaceutical companies. The proposal appears to have been universally rejected earlier in the talks, according to the memo.

    Australia and New Zealand have medical boards that allow the government to reject expensive new drugs for the public health system, or negotiate lower prices with drug companies that own patents on them. If a new drug does not offer sufficient benefits over existing generic drugs, the boards can reject spending taxpayer money on the new medicines. They can also refuse to pay high prices for new drugs. The Obama administration has been pushing to ban these activities by national boards, which would lock in big profits for U.S. drug companies. Obamacare sought to mimic the behavior of these boards to lower domestic health care costs by granting new flexibilities to U.S. state agencies for determining drug prices.

    The U.S. is also facing major resistance on bank regulation standards. The Obama administration is seeking to curtail the use of “capital controls” by foreign governments. These can include an extremely broad variety of financial tools, from restricting lending in overheated markets to denying mass international outflows of currency during a financial panic. The loss of these tools would dramatically limit the ability of governments to prevent and stem banking crises.”

  7. Matt Perry says:

    Bob, this is a great intro!

    Just a heads up. I think you may have an extra closing in you post somewhere – or you may be missing one. When viewing on a rss reader, all content below the first Wikipedia blockquote, and all of your following comments appears as its within that quote. Its as if it never closes quote. That may affect other devices – or just mine 🙂

    Fortunately, I can still tell your words apart from the others 🙂

    Thanks for all you do and please delete this message!

  8. podunk1 says:

    If an egg is laid by a snake, what do we think we’ll get after we “buy into it”, incubate it, and it hatches?

    Anybody remember Dodd-Frank, Freddie, Fannie, too big to fail swallowing anything too small to survive, and $9 trillion debt? What about the reform with zero fed & homeland bank deposit rates churning in the treasury and global bank lust funds blossoming in … China.

    Remember outsourcing… until there is nothing left to outsource, except accumulated wealth, because the “global” US corporations moved our productive resources and technology to China (etc.) where the union is the state and the state has no reason regulate itself because all is essentially owned by the state

    Is it coincidence that $1 gas becomes $3 because the president and OPEC compliant nations will not .allow citizens to access their own vast US energy resources?

    Could the insider Mau fan .(he hag with twitchy tongue & lips) have influenced our leader to follow the trail of Communist China?

    Beware of what is bought into. If it’s over 5 pages long, remember Obamacare as you would Pearl Harbor or Mau’s purge.

  9. Thelma says:

    Michigan City, IN – Gibberish; too many laws, rules, regulations all tied up in linquistic gibberish costing us continual millions trillions soon, gazillions imposing taxes fines penalties up the wazoo or as Jeff Foxworthy has written: this has become a “Country Founded by Geniuses, now run by Idiots.”

  10. Enopoletus Harding says:

    I don’t support the TPP -the secrecy of the negotiations make me wary of the proposed agreement already- but over 90% of the CFR do. http://www.people-press.org/2013/12/03/section-6-views-of-council-on-foreign-relations-members/12-3-2013-58/
    This makes me predict that even in this politically polarized Congress, the TPP is likely to pass in some form.

  11. Anthony Alexander says:

    Sounds like what has been going on for several centuries….governments wanting to CONTROL…….

  12. Jacob Steelman says:

    Government is a criminal enterprise. So whenever government representatives get together with other government representatives and together with representatives of other organisations or companies then a criminal project is in the works – money and individual freedom is about to be stolen by violent means (@ the point of a gun). The more secret the criminal project, the greater the crime.

  13. Kaity says:

    Thank you so very much for this article, and all the comments are an education much needed.

  14. Sam Geoghegan says:

    I think it’s trade agreements like this, plus punitive aspects of the WTO and EU pressure on surrounding countries, that have forced Putin to announce a new economic union. But that’s another story.

  15. Major_Freedom says:

    After consultation with his wife, Krugman is now informing us that Bitcoin is evil:


    Take that Hitler.

    • Major_Freedom says:

      The irony is that Krugman quotes DeLong arguing how gold is better than Bitcoins.

      Isn’t that hilarious?

    • Bob Murphy says:

      MF I think you should drop the “After consultation with his wife.” Any guy who is / has been married knows not to judge.

      • Major_Freedom says:

        Says the internet’s King Krugman Kritic. 🙂

    • Tel says:

      Underpinning the value of gold is that if all else fails you can use it to make pretty things. Underpinning the value of the dollar is a combination of (a) the fact that you can use them to pay your taxes to the U.S. government, and (b) that the Federal Reserve is a potential dollar sink and has promised to buy them back and extinguish them if their real value starts to sink at (much) more than 2%/year (yes, I know).

      Ummm, “buy them back” with what exactly?

      Is that what the “yes I know” is all about? The fact that the entire concept is ridiculous, and he knows, but we all laugh along.

    • Matt S says:

      “Ummm, “buy them back” with what exactly?”

      By them back by selling its assets (bonds mostly).

      I would guess the “(yes I know)” has to do with the inflation of more than 2% (why this is the magic number I don’t know), because we all know we have had inflation of more than 2% per year many times.

      • Tel says:

        By them back by selling its assets (bonds mostly).

        Dumping bonds at a loss and crashing the entire bond market? Naaa, they won’t be doing that.

Leave a Reply