Obama Faces Backlash
Over New Corporate Powers In Secret Trade Deal
WASHINGTON -- The Obama administration appears to have almost no international support for controversial new trade standards that would grant radical new political powers to corporations, increase the cost of prescription medications and restrict bank regulation, according to two internal memos obtained by The Huffington Post.
The memos, which come from a government involved in the 12-nation Trans-Pacific Partnership free trade negotiations, detail continued disputes in the talks over the deal. The documents reveal broad disagreement over a host of key positions, and general skepticism that an agreement can be reached by year-end. The Obama administration has urged countries to reach a deal by New Year's Day, though there is no technical deadline.
One memo, which was heavily redacted before being provided to HuffPost, was written ahead of a new round of talks in Singapore this week. (Read the full text of what HuffPost received here. Note: Ellipses indicate redacted text. Text in brackets has been added by a third party.) Another document, a chart outlining different country positions on the text, dates from early November, before the round of negotiations in Salt Lake City, Utah. View the chart here. HuffPost was unable to determine which of the 11 non-U.S. nations involved in the talks was responsible for the memo.
"These are not U.S. documents and we have no idea of their authorship or authenticity," a spokesman for the Office of the U.S. Trade Representative said. "Some elements in them are outdated, others totally inaccurate." The spokesman declined to specify which parts were outdated or inaccurate.
The Obama administration has been leading negotiations on the international trade accord since 2010. The countries involved in the talks include Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
One of the most controversial provisions in the talks includes new corporate empowerment language, insisted upon by the U.S. government, which would allow foreign companies to challenge laws or regulations in a privately run international court. Under World Trade Organization treaties, this political power to contest government law is reserved for sovereign nations. The U.S. has endorsed some corporate political powers in prior trade agreements, including the North American Free Trade Agreement, but the scope of what laws can be challenged appears to be much broader in TPP negotiations.
"The United States, as in previous rounds, has shown no flexibility on its proposal, being one of the most significant barriers to closing the chapter, since under the concept of Investment Agreement, nearly all significant contracts that can be made between a state and a foreign investor are included," the memo reads. "Only the U.S. and Japan support the proposal."
Under NAFTA, companies including Exxon Mobil, Dow Chemical and Eli Lilly have attempted to overrule Canadian regulations on offshore oil drilling, fracking, pesticides, drug patents and other issues. Companies could challenge an even broader array of rules under the TPP language.
New standards concerning access to key medicines appear to be equally problematic for many nations. 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.
"The positions are still paralyzed," the December memo reads, referring to the Financial Services Chapter. "The United States shows zero flexibility."
Previously leaked TPP documents have sparked alarm among global health experts, Internet freedom activists, environmentalists and organized labor, but are adamantly supported by American corporations and the U.S. Chamber of Commerce. The Obama administration has deemed negotiations to be classified information -- banning members of Congress from discussing the American negotiating position with the press or the public. Congressional staffers have been restricted from viewing the documents.
This story has been updated with a comment from the Office of the U.S. Trade Representative, and to specify that prescription drug flexibilities under Obamacare are provided to state boards.
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