Tag: trade

The Strategic Opportunity and Strategic Imperative of TTIP’s Success

In her Cato Online Forum essay about the strategic dimensions of the Transatlantic Trade and Investment Partnership, Fran Burwell of the Atlantic Council sees both opportunity and necessity in its successful conclusion.  The opportunity comes from – among other things – combining the strength of the transatlantic economies (which currently account for 46% of global GDP) through greater economic integration, which will provide the leverage necessary for the United States and Europe to continue to exert dominance over global trade rulemaking and standards setting.

The necessity of TTIP’s success stems from the threat to Europe (and, thus, to the transatlantic relationship) posed by Vladimir Putin, who is working to subvert the deal.  ”[F]ailure of the negotiations,” Burwell writes, “would be one of the best indications possible to Vladimir Putin and others that the U.S.-European partnership is just rhetoric without the capacity for action.”

Read Fran’s essay here.

Read the other essays published in conjunction with Cato’s TTIP conference last week here.

Pass the “Parmesan-like” Cheese, Please: Will Battle over Geographic Indications Kill TTIP?

The word “daunting” comes to mind when considering the task before U.S. and EU trade negotiators, who are meeting in Miami this week for the 11th round of the Transatlantic Trade and Investment Partnership negotiations, which commenced in late spring of 2013.  If a TTIP deal is eventually reached, the 11th round may only be remembered as part of the early era of the negotiations. Not only are there so many issues on the table, but the number of issues that have drifted from low-hanging fruit to difficult, and from difficult to intractable, seems to be growing.

One seemingly intractable issue is the matter of “Geographic Indications,” (GIs) and what protections, if any, they should be afforded. EU negotiators consider GIs to be intellectual property deserving of robust protection, which includes proscribing use of words like “Champagne,” “Parma” ham, and “Muenster” cheese (yes, GIs could just as aptly signify gastrointestinal issues) unless the product is made in the named region using processes and standards traditional in the region.  It’s a priority issue for the EU negotiators, but the U.S. negotiators aren’t buying it at all.

My colleague Bill Watson has immersed himself in the details of the geographic indications issue and, in his Cato Online Forum essay (published in conjunction with last week’s Cato TTIP conference), describes the conflicting EU and U.S. positions and explains why there is very little room for compromiseBill does offer up some possible solutions, but he’s not betting the house that it will work:

The United States has demands of its own in the TTIP negotiations that are at least as unpopular in Europe as is GI protection in the United States.  American negotiators have been tasked with the near impossible mission of opening up Europe’s market to genetically modified crops and meat from hormone-treated cattle, ractopamine-fed swine, and chlorine-washed chicken.

It may be possible that TTIP could include a grand bargain in which some combination of these agricultural demands are met along with a commitment for stronger GI protection in the United States.  For traditional trade barriers like tariffs and quotas, that kind of bargain would be a welcome outcome and, indeed, is the basic way that reciprocal agreements work to liberalize trade.  

In the regulatory sphere, however, this sort of political horse-trading raises questions of democratic legitimacy and is, in any event, not a way to arrive at well-reasoned policies.  Many regulatory policies that impede market access are motivated by non-economic interests.  And the benefits for foreign producers that stem from changing those policies aren’t going to mollify irate domestic constituencies.  

The tradeoff strikes at the heart of the difference in American and European cultural approaches to agriculture.  It’s difficult to imagine that TTIP negotiators could strike a deal that overcomes the European desire to protect traditional foods and ways of life or America’s ingrained preference for high-tech production and innovation.

Read Bill’s essay here.  Read all of the Cato Online Forum essays here.

 

 

Is TTIP the European Union’s Last Chance to Right the Ship?

Harvard University Center for European Studies fellow John Gillingham doesn’t exactly make the case that the European Union is worth saving, but he argues in his Cato Online Forum essay that a successful Transatlantic Trade and Investment Partnership agreement is essential to its survival. Among last week’s Cato conference participants, Dr. Gillingham was perhaps the most skeptical that the EU would be able to get its act together and achieve success, arguing that TTIP’s fate will hinge less on the deal’s specifics and more on the politics of the EU, which are poisonous.

Put quite simply, the adoption of TTIP, as it is presently conceived by the negotiating parties, would put the EU back onto a course of liberalization, from which it swerved in the mid-1990’s, and thereby bring it abreast of the concurrent globalization process being driven by China and the United States. Within Europe, the Single Market, something only half-complete, would become a reality. State interventionism would be sharply reduced and international competitiveness restored. Will this happen?

To help answer that question, check out the collection of essays from Cato’s TTIP conference participants.

TPP Ends Up with Pleasantly Mild Rules on Biologic Drug Monopolies

The Trans-Pacific Partnership will reportedly include an obligation for every country to provide at least 5 years of market exclusivity for new biologic drugs.  Technically, this counts as a loss for U.S. negotiators, who started with a demand for 12, lowered that to 8, reconfigured 8 into “5+3”, and at the VERY last minute—despite direct calls from President Obama to foreign leaders—were forced to acquiesce to 5 years.  The U.S. pharmaceutical industry says it’s very disappointed, but the outcome is good for the TPP and for consumers around the world.

It’s important to recognize that the exclusivity we’re talking about here has nothing to do with patent protection.  It is not a form of intellectual property.  Exclusivity is a regulatory policy that instructs the Food and Drug Administration not to approve generic, unpatented drugs they know are safe so that name-brand pharmaceutical companies can make more money. 

Those companies say that without a secured return on investment, they wouldn’t be able to invent new treatments.  But that’s what patents are for.  Regulatory exclusivity is a way to bypass the balances and limitations of patent law, which only protects new inventions not all expensive investments.  

They complain that it’s unfair for generic competitors to piggyback on all the expensive research and testing they did to secure FDA approval.  But that’s a problem with the expense of FDA approval.  Either lobby to make FDA approval cheaper or find a way to share costs.  Pharmaceutical companies are not entitled to the benefits they gain from regulatory inefficiency.

Biologics protection was a peculiar issue for U.S. negotiators to be spending so much effort on in the first place.  They spent a lot of negotiating capital trying to secure foreign regulations favorable to one part of one U.S. industry.  That doesn’t further the goal of free trade; in fact, it impedes that goal by diverting energy away from universally valuable efforts to open up Canada and Japan’s markets in agriculture.

The U.S. government may have wasted effort on biologic exclusivity, but at least they failed to hobble foreign countries with excessive drug regulation.  As a bonus, Congress is now free (if they wish—and they should) to roll back the 12 years of protection under U.S. law to something more reasonable.

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Could Airlander Be the Future of Freight?

The airship is making a comeback. Take the British Airlander10, which uses 20 percent of fuel burned by conventional aircraft and can be fitted with solar panels. Airlander can stay airborne for five days while carrying a maximum payload of 20,000 pounds. It is much safer than its 1930’s cousin and can operate in adverse weather. Combined with GPS navigation and tracking, an unmanned Airlander could stay airborne for up to two weeks, carrying cargo vast distances, including hard-to-reach places. The British manufacturer is already working on an airship that could carry up to 100,000 pounds of cargo – roughly equivalent to the payload of two 20 foot containers. A vast fleet of Airlanders moving silently through the air 24/7 could dramatically decrease the cost of transport (they are faster than ships and much more cost effective than aircraft), while connecting places without ports or runways. Find out more about the declining cost of air travel at www.humanprogress.org

 

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A Case for Making TTIP Better for Workers

In today’s Cato Online Forum essay, George Washington University Professor of Foreign Affairs Susan Ariel Aaronson argues that the “TTIP provides an opportunity to think differently about how policymakers in advanced industrialized economies can protect labor rights, encourage job creation, and empower workers.”  After describing some of the concerns workers have about the TTIP and explaining why certain parts of the agreement could serve to undermine labor rights, Susan provides some fresh recommendations for making the TTIP more appealing to workers.

Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.

 

A Skeptical View of the Need for Special Investor Protections in the TTIP

The Transatlantic Trade and Investment Partnership has generated quite a lot of opposition – or at least pockets of very loud opposition – especially in Europe. Among the major points of contention is the matter of investment protection and, specifically, the investor-state dispute settlement mechanism, which gives foreign investors the option to bypass the domestic legal regimes of host governments and go straight to third party arbitration panels with claims concerning domestic policies, laws, regulations, or actions that have a discrimintory effect and adversely affect the value of their investments.

Like my colleague Simon Lester and I, Axel Berger of the German Development Institute is skeptical of the need and propriety of ISDS provisions.  In today’s Cato Online Forum essay, Axel raises some important points and makes a good case for excluding ISDS provisions from the TTIP.  Read it. Provide feedback.  And register for Cato’s October 12 TTIP conference.