Jul 28, 2016 - 1:30pm

With All This TPP Talk, It Is Time to Bust Myths

Senior Vice President for International Policy

Former Vice President, Asia and acting head of Asia of the U.S. Chamber of Commerce

To its critics, the Trans-Pacific Partnership Agreement (TPP) is no mere trade agreement, crafted to level the playing field for U.S. workers, farmers and companies seeking to tap growing export markets. Rather, it is a nefarious plot to sacrifice the health and safety of U.S. citizens, overturn U.S. laws and regulations, and subvert U.S. sovereignty. What are the facts?

Myth #1: The TPP Cedes U.S. Sovereignty to an International Commission

Nonsense. Far from surrendering U.S. sovereignty, the TPP was negotiated according to legal requirements established by Congress in the Bipartisan Congressional Trade Priorities Act of 2015, some of which are summarized here by Senate Finance Committee Chairman Orrin Hatch. This law (and consequently the TPP):

  • Provides that any provision of a trade agreement inconsistent with U.S. federal or state law will have no effect;
  • Confirms that U.S. federal and state law prevail in the event of a conflict with a trade agreement;
  • Affirms that a trade agreement cannot prevent the United States or the states from changing law in the future; and
  • Confirms that the administration cannot unilaterally change U.S. law.

The TPP would indeed establish a commission, but it would have no powers to alter the agreement. Composed of representatives of each TPP government, the commission would meet periodically to discuss its enforcement. There’s bipartisan agreement that our trade agreements aren’t worth the paper they’re written on if they aren’t enforced: Making enforcement a reality is the sole aim of the commission.

Myth#2: The TPP Would Undermine Regulations Protecting Health, Safety and the Environment

False. On the contrary, the TPP text explicitly protects and supports “regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety and the environment.” It further states that such actions shall not be viewed as “indirect expropriations” subject to arbitration under the agreement’s Investor-State Dispute Settlement (ISDS) provisions. Critics of the TPP describe ISDS as something novel and exotic when in fact arbitrators are charged with upholding the same kind of fundamental rule of law protections that appear in the U.S. Constitution. ISDS has been included in approximately 3,000 investment treaties and trade agreements over the past five decades. These neutral arbitrators have no power to overturn laws or regulations; they can only order compensation. And the kicker? Of the grand total of 17 disputes that have been brought against the United States over the past 50 years, the United States has won every time.

Myth #3: The TPP Only Benefits Large Corporations

Incorrect. Approximately 98% of the nearly 300,000 American companies that export are small and medium-sized enterprises (SMEs), and they account for one-third of U.S. merchandise exports, according to the U.S. Department of Commerce. For these smaller firms, trade agreements can be hugely important. For example, many of the countries where the United States does not have a trade agreement in place have already implemented agreements with other countries. In this context, a multinational corporation may be able to serve a market that levies steep tariffs on goods from the United States by sourcing from its affiliates in other countries; America’s small businesses have no such luxury. In addition, non-tariff barriers such as licensing fees, testing costs and other burdens that may be minor irritants to a large firm can be show-stoppers for smaller companies. The TPP eliminates many of these barriers. SMEs will also benefit from specific requirements to provide easily searchable information on tariffs or other measures that affect their ability to export successfully.

Myth #4: The TPP Will Break the Internet

Untrue. The TPP strikes a careful balance between content and service providers. Innovative companies from the creative or “content” industries — think of Hollywood studios or Nashville’s music industry — support the TPP, as do internet companies such as Google, Facebook, Amazon, and others. The e-commerce chapter of the TPP is truly groundbreaking: It prohibits governmental efforts to force companies to turn over source code, establishes the principle of technology neutrality, and bans the forced localization of data and tariffs on digitally transmitted goods. For U.S. startups and large companies alike involved in e-commerce, digital media, or digital services, the TPP establishes rules and protections needed to support rapid expansion and growth opportunities for U.S. innovators in the TPP countries and beyond.

About the Authors

About the Author

Senior Vice President for International Policy

Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy.

About the Author

Former Vice President, Asia and acting head of Asia of the U.S. Chamber of Commerce

James Fatheree is the former Vice President, Asia and acting head of Asia at the U.S. Chamber of Commerce.