Although negotiations over the Trans-Pacific Partnership have been secretive, a Senate Finance Committee hearing Tuesday shed light on the extent to which it could hamstring regulators.
US Trade Representative Michael Froman told committee chair Orrin Hatch (R-Utah) that the Obama administration is pushing for “protection against data localization requirements.”
The issue, which Hatch brought up specifically with respect to the financial services industry, could hinder governments’ ability to enforce rules, critics fear, though Froman said the USTR is proposing it to obviate the need for “the construction of redundant infrastructure.”
“This is a key part of our TPP negotiations,” he said. “We are making progress in that area. We hope that will set a new standard for bringing trade rules into the digital economy.”
Froman also reiterated the point to Sen. John Thune (R-S.D.), who said he was worried the TPP would not have any kind of roll-backs for localization requirements. Thune said it was “a serious concern” of his, with respect to “US banks and insurers.”
“We are continuing to pursue our efforts to put disciplines on localization,” Froman commented.
Last year, one of the biggest corporate lobbying groups in the country, the US Chamber of Commerce, and 36 other interest groups lobbied all dozen countries negotiating the TPP and urged them “prohibit data localization requirements,” according to Politico.
As The Sentinel reported last year, critics of another trade deal, the Trade in Services Agreement, noted that the move to undermine such laws could have a significant impact on regulation enforcement. University of Auckland professor Jane Kelsey and Public Citizen digital rights advocate Burcu Kilic said that enforcing consumer, labor and environmental protections is already a challenge “where foreign firms can minimize their local legal presence and capital backing.
“Governments can and do seek to make regulation more effective when there is a local presence,” Kelsey and Kilic added.
Amid growing disquiet creeping into the Democratic Party mainstream over trade liberalization and the effects it has had on middle class incomes and federal regulations, the White House has been keen to argue that the TPP is different from prior agreements.
Administration officials have described it as a “high standard” deal, and Froman said, in a letter obtained by The Sentinel, that the USTR is seeking to avoid “abuses” that were contained within settlement mechanisms of prior agreements.
Democratic critics, including Sens. Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wis.) and Ed Markey (D-Mass.), have attacked that platform–a court open only for investors to file lawsuits against governments–as inherently abusive.
Froman continued the outreach campaign on Tuesday, claiming that the TPP would differ from the North American Free Trade Agreement because it would contain stronger labor and environmental protections.
It would not, however, attempt to resolve currency manipulation, Froman admitted—a concession that caused both Republicans and Democrats to criticize the administration.
“I’m disappointed in your response to Sen. Grassley, that that won’t be part of the TPP negotiations,” Sen. Chuck Schumer (D-N.Y.) said, referring to a question on currency manipulation asked by Sen. Chuck Grassley (R-Iowa.).
But claims about “high standard” negotiations—lack of currency manipulation clause notwithstanding—are not open to scrutiny by lawmakers and independent experts. They have been prevented from seeing the TPP draft—the so-called “bracketed text”–and Froman could not even unequivocally confirm that the agreement would be released to the public writ large before being signed by President Obama, as The Sentinel reported earlier Tuesday.
Whatever the case, observers should soon know more. In his opening statement, Froman noted that “the end of the negotiation is now coming into focus.”
