from Renewing America

Trade in Services: WikiLeaks and the Need for Public Debate

July 2, 2015

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WikiLeaks has done it yet again, releasing in an extraordinarily timely fashion many of the latest negotiating texts from the Trade in International Services Agreement (TISA), just in advance of a meeting of negotiators next week. Their sources, it has to be said, are impressive. I worked many years ago as a reporter for the newsletter Inside U.S. Trade, where one of our goals, in the pre-digital age, was to encourage leaks of trade negotiating positions. But, with the exception of the Clinton administration’s proposal for the NAFTA labor and environmental side agreements in 1993, we rarely got our hands on the texts themselves.

The new leak also gives me a chance to re-engage on the issue of how to understand the material that has been made public. Several weeks ago I criticized some groups claiming that the leak of the TISA texts “exposes secret efforts to privatize and deregulate services.” I argued that the negotiations are primarily about ensuring transparency and non-discrimination in regulations so that foreign competitors are treated fairly -- which I argued would be a good thing for the United States -- instead of a disguised effort to promote privatization and deregulation. For this I was taken to task by Deborah James, director of international programs for the Center for Economic and Policy Research, and coordinator of the Our World is Not For Sale global network.

The TISA negotiations are an effort by 23 countries, accounting for more than 70 percent of the world’s trade in services, to write new rules in an area that has been stalled at the multilateral level since the end of the Uruguay Round negotiations two decades ago. The goal is to expand trade in services among a smaller group of mostly wealthier countries that believe it to be in their interests to do so. The leaked texts are bracketed negotiating documents, with the brackets reflecting the still large areas of disagreement among countries. So any conclusions about the final outcome have to be tentative ones.

My enthusiasm for the services talks starts with the current U.S. position in global trade. The United States last year ran a $737 billion deficit in trade in goods, and a $232 billion surplus in trade in services. Critics of trade agreements have rightly noted that they have done little to help the U.S. trade balance, and may have made it worse. Services are an area of U.S. advantage, and in theory opening markets in these sectors should help the U.S. economy by boosting exports of these services.

But services are complicated because the primary trade barriers are in the form of regulations that prevent foreign-owned companies from offering their services. Many countries reserve sectors like telecommunications, package delivery, internet services, legal services, insurance and banking all or in part for domestically-owned providers. Sometimes there are sound reasons for doing so, and sometimes the reason is to protect monopoly profits at the expense of consumers in these countries. Curbing discriminatory regulations that do the latter is to be applauded, while curbing the former could weaken the ability of governments to pursue important national goals like consumer safety or universal service. The trick is figuring out which is which.

I will acknowledge, as James argued, that there are certainly companies that would quite happily use the TISA negotiations to weaken regulations they dislike. I was spurred to take a closer look at the submissions to the U.S. Trade Representative’s Office solicited in advance of the negotiations. Most of the corporate recommendations I looked at were focused on opening the door to greater competition, but there is no question that at least some companies would love to use the talks to weaken perfectly legitimate regulations that hamper their profits. Wal-Mart, to use a particularly egregious example, wants an agreement that would prohibit any restrictions on the “size, number or geographical location” of their stores, and wants to end merchandise restrictions, including the sale of pharmaceuticals and tobacco. The TISA negotiating documents recognize a general right of countries to “introduce new regulations on the supply of services within their territories in order to meet public/national policy objectives.” Restrictions on tobacco and/or drug sales to protect the health of citizens would seem to fall pretty clearly under that language. And in the United States and many other countries, local zoning laws empower governments to restrict the "size, number and geographical location" of different sorts of retail outlets. If the governments participating in the talks -- including the United States -- are not resisting Wal-Mart's demands, they should be.

But I continue to object to what seem to me to be bizarre readings of the negotiating texts. For example, one of the new texts leaked relates to the “movement of natural persons,” often known as Mode 4. Some countries – not including the United States – appear willing to make commitments that allow employees of foreign service companies to work temporarily abroad in connection with the delivery of those services. These would by and large be fairly highly-educated and skilled workers. One good example (though India is not part of the TISA negotiations) would be the thousands of Indian computer services staff who come to the United States on L-1 or H-1B visas to work for outsourcing companies like Infosys and Tata. There is a legitimate debate over whether encouraging this sort of temporary skilled migration is a good thing for the United States and other countries. But instead the WikiLeaks release was accompanied by an analysis written by Tony Salvador of a group called IDEALS in the Philippines, who claims instead that the negotiating proposal was “cynically drafted” with the goal of denying basic labor rights to low-skilled migrant workers. Try as I could to decipher this claim, I have no idea what he is talking about. There is another similarly odd analysis that suggests that if TISA is enacted, my hometown of Vancouver, Canada – one of the first places in North America to legalize medical marijuana, and a city that is struggling to regulate it properly – would be flooded with foreign marijuana providers demanding the right to set up shop wherever they please.

As I said in my previous blog post, I think WikiLeaks has done a great service by liberating the TISA negotiating texts. What all of us should be able to agree on is that these and other trade negotiations should be carried out in the full light of public scrutiny. Congress, having now given President Obama trade negotiating authority, is likely to face an up or down vote on the TISA, and lawmakers need to be as fully informed as possible. While I believe the aim of the talks is laudable – to increase competition and lower prices for consumers – the negotiations do raise real issues about the proper line between domestic regulations and commercial freedoms. These are big, important questions, and not ones that should be resolved by government negotiators operating in secret.

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