Submission of the Isocracy Network to the Joint Standing Committee on the Trans Pacific Partnership

Introduction

A Joint Standing Committee on Treaties be appointed to inquire into and report on the Trans Pacific Partnership Agreement (TPP) ("the Treaty") between the Government of Australia and the Governments of: Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States of America and Vietnam, associated side letters and proposed Australian notification on tobacco control measures. The first chapter of the Treaty provides for parties and definitions.

The following submission is made by The Isocracy Network, an incorporated association in the state of Victoria (A0054881M) ("the Association"). The submission was written by Lev Lafayette with contributions from Dean Edwards, Daye Gang, and Steve Spirgis.

As a matter of general principle, the Association supports the principles of free trade and comparative advantage, supporting the elimination of tariffs, the facilitation of supply trades, enhancing conservation, and raising living standards [1]. At points where conflicts occur, priority must be given to the latter points of raising living standards and enhancing conservation. To do otherwise would to place ideal positions above concrete reality. We urge the committee to expressly acknowledge this.

The Association is also in favour of public debate and transparency, especially in the formulation of public policy of such an enormous importance. The twelve countries involved a collective population of approximately 800 million and is currently responsible for 40% of world trade. The introduction of the Treaty can be in no way described as having satisfied the requirements of the formulation of public opinion. That in itself is sufficient reason for the Treaty to be deferred.

Tariffs and Rules of Origin & etc

The second chapter refers to "National Treatment and Market Access for Goods" and seeks to remove custom duties (article 2.4 of the Treaty). It is almost universally recognised that tariffs represent a reduction in the opportunities of comparative advantage, has administrative and compliance costs, and deadweight losses incurred through the reduction of trade. Whilst neoclassical models apply such a consideration under perfect competition, real markets do not operate under such an ideal [2]. Certainly the model does not take into account externalities or differing Pigouvian taxes rates between importing and exporting countries [3].

The Association generally approves the principle of continuing movements towards the abolition of tariff barriers with the provision that if negative externalities are insufficiently accounted for in a country of origin then they can be applied at at the importing country. It is important to realise that if this is not applied then countries that impose social taxes for pollutions (etc), ironically reaching a state closer to perfect competition, will be at a disadvantage to those that do not. It is surprising that the Treaty fails to note this, and again this provides evidence in itself for the Treaty to be rejected.

The third chapter ("Rules of Origin and Origin Procedures") determines under what conditions such preferential tariff treatments would apply. Eligibility is established if it is wholly-obtained or produced entirely by TPP parties or meets Product Specific Rules of Origin (or PSRs). The Association supports transparency in consumer choice and recommends that Rules of Origin also require explicit statements of production, origin of raw materials, and contents on all products.

Intellectual Property

The Intellectual Property chapters establishes a common set of rules on intellectual property restriction and enforcement for the TPP region. The rules seek to commercialise intellectual property rights, thus creating an economic interest in goods that can have no productive benefit. In most cases (especially in software), what is deemed intellectual property rights actually refers to the restriction in the availability of a good or the provision of a good in a damaged form. For this reason the Treaty ought to be rejected.

Notably the Treaty places no prohibition on the development of software patents. As there is no boundary between mathematical algorithms and software, and mathematical equations and laws of nature already exist, then no idea expressed in software, should be subject to a patent as they represent a discovery rather than an invention. Conversely however, state machines themselves are patentable [4]. Indeed, allowing software patents is contrary to the provision of public welfare.

Health

As a related issue, the provisions in the Treaty encourage the extension of intellectual property restrictions, which in turn will generate high healthcare costs, acting an effective tariff, and costing lives. The Treaty will require member countries to extend existing patent monopolies, preventing and delaying the release of generic alternatives. The Treaty also expands the circumstances on which new patents may be approved as modifications to existing medicines. The Treaty will restrict competitor generic drug producers from using existing clinical data, compelling generic drug producers to undertake duplicate trials to re-establish existing scientific findings. This costs and procedure will deter generic drug companies from producing medicines, extending the period before generic medicines becomes available, once again, costing lives.

For these reasons the Association believes that the Treaty ought to be rejected.

Labour Rights

Chapter 19 of the Treaty considers Labour issues, restating support for existing provisions from the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998), even though Treaty signatories are already members. This includes freedom of association and the right to collective bargaining, the abolition of child labour, discrimination in employment, and minimum conditions of work. It is noted that these standards are be introduced and interpreted on a country-by-country basis with little in the way common requirements, as such creating a competition to provided the lowest minimum level.

Furthermore, the history of free trade deals for the past twenty years, whilst often promising labour market regulations and improvements, have demonstrably failed to deliver. Since 2008, the U.S. Department of Labor has accepted five claims against countries for possibly violating labor commitments in trade agreements; only one has been resolved, against Peru [5]. There is little in the Treaty that suggests that there will be a notable improvement in this regard, with the the Treaty's authority, the Labour Council and and signatory Contract Points, are insufficiently empowered to suggest that there is much reason to believe that the Treaty will provide improved conditions for working people. As such the Association believes the Treaty should be rejected.

Environment

Chapter 20 of the Treaty covers environment issues, "to promote mutually supportive trade and environmental policies; promote high levels of environmental protection and effective enforcement of environmental laws; and enhance the capacities of the Parties to address trade-related environmental issues, including through cooperation". The Treaty does not however, set a sufficient number of common standards for environmental protection or even a common trading environment for carbon credits (for example), except in cases where signatories are already members of existing Treaties (for example, the Montreal Protocol on the protection of the ozone layer, 1987, the International Convention on Ship Pollution, 1978 etc). It is particularly notable that in this chapter the Treaty does not even mention 'climate change'.

On a positive note, the Treat does include common provisions for marine capture fisheries to prevent overfishing. Whilst important, similar common standards could have been introduced for other areas of environmental consideration. As such is certainly insufficient to support the implementation the Treaty itself.

Conclusion

The Association supports internationalism, the breaking down of borders in favour of common standards among all people's. As such we are in favour of a Trans-Pacific partnership.

But as this particular Treaty fails to sufficiently provide for free and fair trade, fails to provide for open scientific investigation and maximum distribution of information goods, puts the health of individuals at risk through restricting medical discoveries, and provides insufficient protection for labour and the environment, this Treaty as a whole is recommended for rejection.

References

1] Summary of the Trans-Pacific Partnership Agreement, Office of the United States Trade Representative, 2015
https://ustr.gov/about-us/policy-offices/press-office/press-releases/201...

2] Kenji Fujiwara, Pareto-improving tariff-tax reforms under imperfect competition, International Review of Economics & Finance Volume 31 (May 2014), Pages 12–20

3] Taiji Furusawa, Keisaku Higashida and Jota Ishikawa The Canadian Journal of Economics / Revue canadienne d'Economique, Vol. 37, No. 2 (May 2004), pp. 445-458

4] Ben Klemens, Software Patents Don't Compute, IEEE Spectrum, 2005
http://spectrum.ieee.org/computing/software/software-patents-dont-compute/

5] Will The Trans-Pacific Partnership Improve Labor Standards?, International Business Times, October 5, 2015

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