tv Key Capitol Hill Hearings CSPAN October 12, 2015 12:00pm-2:01pm EDT
wto. i think there is precedent for this. i didn't think about the view is candid agreement in nafta with the us was able to introduce things into both nafta that were multilateralized. i think it was from cafta we got a multilateralized of the wto. that's another possibility you can wait for the just and multilateralized it. and you can also negotiate on separate accord. if we don't have a single undertaking or even if it is a single undertaking you to join piecemeal. ..
of third parties being excluded whether it is rules or market actors. i think one in which country loses market access, but as repeatedly pointed out, for the most part, we exclude agriculture, textiles, a few of my favorite industries, for the most part tariffs are very low. market access is not the biggest deal in the world. with respect to rules on labor standards, if you look at labor standards, environmental standards, i think the u.s. and e.u. are increasing pushing issues already in the "ft" as after the 2007 agreement with the united states. con aggression agreement was very clear you will have all the
agreements whether chorus or have you, we'll have environmental labor standards and that will also be the case. the third and last one will be regulatory. here is where you have a lot of complication. essentially, this is now the first time you might argue the u.s. is now in the drivers seat with respect to global trade negotiations. we did agreements with morocco, bahrain and other important economic actors. that was clearly security element that was not really happening. with respect to regulatory actions, difficult for third parties to join the agreement. regulatory standards in the 21st century will be set by the u.s., number one, and by the e.u., number two, which may or
may not meet interests of 30 parties and global trade in some respects. i will stop there. thank you. >> thank you very much. [applause] >> good morning, everyone. thank you, dan simon, for having me here. i come to this table with two specific perspectives. so i'm not a negotiator. i'm not involved in the ttip negotiations. for the most part based in geneva, switzerland where the wto is based and i come to it from a wto perspective. i am based in switzerland, one of those outsiders, third parties pretty much concerned about it. switzerland has a deal with the e! you but they think this might be undermined by ttip. with six options they have in mind unilaterally what may come out or at least negotiate a side deal with the u.s. the other perspective i have is, i'm a lawyer.
i used to work in the wto legal staff. i'm involved in dispute settlement. i'm a law professor. i litigate wto, fta, and my talk will be somewhat more technical. i will try to keep it understandable. so, this panel really deals with how the wto and ttip may interrelate and thinking about it, i was thinking about this famous paradox of what happens when an unstoppable force meets an immoveable object. this is really very much how i see the relationship playing forward. so, obviously the unstoppable force is fta and ppa being all over the place the immoveable object is very much the wto. people said this is really not a paradox but unstoppable. immoveable object would have to go out of the way and other way around. could be just two ships passing in the night.
basically what i will try to show what we will need to have some type of control over the you know stop of force of tpas and wto level we'll have to make the immoveable object a little more flexible. i will do three things. i will first say why fta movement is pretty much an unstoppable force. i say a few things why the wto is immoveable for the most part. then go through a number of issues by way of conclusion that you will have to address moving forward. so the unstoppable force of tpas, already mentioned there are 300 trade agreements out there. when peaching in this area i was using exam among goal yaw as only -- example of among goal law, only wto didn't have one so far. last year they concluded
preferential trade agreement, japan, track additional outlyer, very hesitant to conclude pta deals. if we had mentioned five offer six years ago there would be e.u.-u.s. pta, this would be a huge game-changer. unstoppable force in terms of what kind of preferential agreements you're talking about. the term is often used, megaregionals. this is no longer the traditional small type, u.s. pta. we have ttip. looking at this from geneva, this is really undermining the wto centrality. a lot of people in geneva are really worried about it. unstoppable force in terms of cona. no longer tariffs, it is rules, investment, services. in 2004 there were only preferential trait agreements. last year there is 127. there is really a force to be
reckoned with. a few points why the wto is a really immoveable object and what sense. a lot of people in geneva excited about what is happening. how wonderful the regime has been. reality last 20 years, very little moved on negotiating side. we all know this. there is a trips amendment not even in force yet because the majorities haven't been achieved. a couple of waivers were enacted. committee decisions ministerial, gpa revision but other than that, we haven't really seen a lot of movement. now why is that? i think most people agree on this. imagine 161 countries. not just a number. also diversity between them. you have now china. russia a part of the membership. many more countries with defacto veto power. the issues that are on the table are far more difficult. no longer tariffs.
it is rules. it is kind of normal that we move to iron out recognizes. as fred distribution mentioned this morning. environmental imperatives and the end of the washington consensus it has become very, very difficult to agree on anything in this multilateral setting. now the wto has been immoveable in a different way. it has really failed to keep any kinds of check or control on preferential trade agreements that have been enacted. there is a committee on regional trade agreements. it has been dysfunctional. it hasn't been able to make decisions either way. there is dispute settlement but somewhat surprisingly in 20 years there has been only one appellate body case looking compliance with preferential
trade agreements and wto rules. agreement between the e.u. and turkey. some people say that all these tpas are consistent but the wto recent studies, i think most people would agree, going in the other direction. there is very interesting paper by a former wto official stating, 60, 70% of ptos are wto minus or not complying with wto rules when coming to conditions. movement in another way i think what vinod was alluding to, the gatt rule book, the fear about pta's is one of discrimination, one of trade diversion. that test if you ask me is really outdated. if you look at an agreement like ttip or tpp, there are some trade diversion potential in there, there is some discrimination, but most of the provisions are hard to implement
on discriminatory platform. so we did some studies looking at korea-u.s., korea, e.u., tpas. it is surprising how many provisions in there by various methods are really extended or have to be extended on mfn basis. just because of technical necessity, if you talk about transparency, because member-states or parties have opted to implement this on non-discriminatory basis. or because of mfn provisions. anything on eye pefor example, needs to be extended on mfn basis. you don't have the tpa exception in the trips agreement. they are included in bilateral investment treaties. so whether you like it or not, a lot of the stuff that is exchanged in ttp or ttip will have to being extended to they are parties also. last element in terms of the wto being immoveable, i get a little bit more technical the appellate
body is open to look at these issues but has been very strict when it comes to tenting, for example, gatt article 24 on tpas or wto rules are strict bringing in plural laterals. you have to have consensus of wto states. in recent cases worked on with guatemala, put a number of breaks in terms of outside agreements influencing wto package making it more adapted to current concerns. where does that lead me in terms of challenges ahead? as i said, i think we will need to find ways to keep ptas, including ttip in check to avoid they go wto minus in major ways. make sure they're transparent for third parties, including developing countries but countries like switzerland. at the same time, find ways to update this wto that is frozen in time.
how can we update the wto? mr. zinc will talk about this. one perspective we need to talk looking at fight between the wto and ptas. this clearly has to become a division of rabe bore. in wto we're stuck with mantra of reciprocal bargains. i was talking to ambassador from developing country i like the trade facilitation agreement but there must be something wrong about it that hurts me. this idea that you can actually have an agreement that benefits both sides doesn't fit the wto mind set. it has been mentioned by several people this morning in the wto we are used to work with hard law dispute settlement and treaties enacted and dispute settlement linked to it. as he was mentioning, i see it. tip a long-term process, not so much a treaty but a process. as much as i'm a lawyer, and like litigation i think weville
to have guidelines, soft law in there to move this forward. two very brief points, yes, two very brief points on more legal issues. what i'm worried about is, double ptas. i mean if ttip, ttp is now included you have nafta, not how do these, not wto or regional trade agreements but different ptas interrelate is becoming a very serious issue. there has been a case on this already, how cafta, relates to the central american customs region. a lot of issues that haven't been addressed head on. last issue, goes to the dispute settlement, more wto plus we have in agreements like ttip more we think about workable dispute settlements in prefer rings trait agreements. do they most -- preferential trade agreements. could they most go to the wto?
i think over time this will change because with to plus elements and ptas but regional trade agreements and dispute settlement mechanisms they have are really dysfunctional in many ways. the cafta case i mentioned was quite interesting to go through. we don't even have clear provisions how to deal with forum shopping, how to deal with overlaps and wto as i said really put a block on look at outside agreements, even agreements that tell you to for example, wto and regional desput trade settlements and i will stop there. thank you. [applause] >> [inaudible] >> thank you. joakim. i want to thank cato, dan and other friends here who have invited me, giving this opportunity to -- it's a wonderful event, very high quality participation.
when i, and joakim has commented about, he started by saying the presumption is ttip will be a success. and when i was hearing various statements today about ttip i was reminded about two years ago when i started working on a project on trying to sensitize india how it is markets will change after ttp and also try to work in the area of standards because of the private standards, value chains and kind of trends we're now seeing for example, in the g7 declaration section on responsible supply chains. we can discuss that separately. but when i was working on that, i heard from everyone, including washington, tpp is not going to happen. as late as may this year. so, i think, the reason it has
happened is, because the country is concerned, recognize the fact that without that, you know, we are talking about really difficulties and costs. without that the difficulties and costs might be even higher. so one has to really expand the scope of what is lost. or what is the cost of doing something and not doing something. and, the other thing, which, i come from, joost talked about the wto and perspective he came with. i have a wto perspective but i i have a larger one. today we're in a world with major interdepend dense and interconnectedness. we're far more dependent on our prosperity than others and developing a highly fragmented world at the same time. one could say this fragmentation is temporary. therefore, like a locomotive what we have here and that is
what history has shown us. but, what i would like to emphasize is, that the earlier we move towards multilaterallization, the better it is for everyone concerned, including the united states or the e.u., and when we have discussed with various officials we discussed about eu, u.s., tpp, china came up a few times but very little concern about all the others because action is in that inner circle, in the list of concentric circles. but the concentric circles are one integrated hub. it is very important to see how to multilateralize it. the second point, even though we're discussing new issues, we're discussing them from the perspective of old ideas like trade. today investment changes the whole manner in which countries
interact. you can have a trade agreement between the e.u. and u.s. and investment from countries which i have excluded, can change the relationship as well as business opportunities. i tell people that this is there is a tpp which klein is negotiate. but this perspective i now just want to get into another aspect. rsep was mentioninged. i think in fact was overestimated. one because it is not going to develop standards which are global standards. second, seven members are already part of tpp. korea has applied. some more, indonesia announced yesterday it is interested in applying. and my assessment is that china is also looking to join that game. so the only country which is
really not thinking about moving on to standards of tpp is india but today there is an editorial in very influential newspaper arguing to follow that course. so the global standard both because they're higher than what rcep will come up with and membership moving on to new agreement will be determined by tppp. ttip will extend it in some ways. the problem that i want to look at, how do we move to multilateralize the results of ttip? ttip is at a very important juncture because something around the corner is waiting to happen with ftpa with china and u.s. both involved in it. one is that there are certain developments which will be negotiated like privacy, investment, competition, policy,
transparency, mechanisms by virtue of the fact they're negotiated between the u.s. and e.u., the rest of the world will have to look at them the kind of disciplines to follow. another is the framework which will come up. and they can be in regulatory initiative as well as sme platform. today sme and jobs is a very major issue in every economy. and we need to have some special efforts to deal with them. so this is going to be the normal process. we need to add to that, the negotiators have to keep in mind the fact that. they have to come up with the system that is inclusive rather than fragmenting or exclusion sorry. mutual recognition, conformity assessment become very important.
after that, we have to also see, so, it is not that t tip itself is going to move into multilaterallization. a special effort has to be made. even more, special efforts have to be made outside the wto itself and inclusion of many of the forums. trade today is no longer just issues which are confidence in the wto. you go to world customs council, you go to ito, you go the ilo, and they're discussing issues which will be part of ttip. far more relevant than what we have today is required and one thing which people often doesn't consider this, that the wto agreements are unilateral agreements in effect because you have a whole structure of different levels of difference
among different members. what makes it multilateral is msn. and what has prevented that is the fear of free riders. if i give something which i'm giving as a liberalization of my market, et cetera to somebody else and i don't get the same kind of thing from the other, so reciprocity but not identical reciprocity, that is not fair. then my producers are actually going to lose out. we have to identify who are the free riders. these key economies we're really concerned about. there are very few. it is not the 151 members that will be limit to multilaterallization but copension concern for free riders. that is the concept which china's name comes up very often
of the interesting thing is my understanding of china's mind set is, it doesn't to defeat itself as benefiting if it is outside of that system. so it is prepared in a major way investment is prepared, it has a side agreement with the e.u. on labor standards. so we are not dealing with the conventional china which we understand. we are dealing with a china which sees interdependence with the rest of the world. investment is going out. trade relations. global value chains. all that is a very essential part of the vision of where the chinese leadership wants the country to go. increasingly beginning to take root in the indian conceptual ization as evident from the efforts they want to make to go into apec.
because that is the preferred route. you have at least two so-called free riders, which, if you, you address their concerns then the process of multilaterallization will become that much easier. how do you address those concerns? even with those two, you have about 160 members. you have only tpp and ttip become, come together. you still will have about 100 members which are out. and as i said, what one has to determine is how to really have a conditional msn and that conditional mfn can be possible if you have transition stage. however you solve japan's agricultural problem or u.s. auto officials in tpp, look at
number of years you have for implementing those agreements. and the safeguards which are along the way. actually those kind of, you need much less than that in wto to make it happen. there are provisions in wto which distinguish between developing nations, which provide you with breathing space and review system to give you what i call manageable situation because the negotiations is manageable discomfort. very few have high comfort levels in that. when you take a look at that, and, you have the kind of developments which i have talked about in regulation or regulatory frameworks and michelle mentioned some of the other international initiatives, there is enough to make a move
towards multilaterallization. there is enough to make potential adjustments. once that happens, we have to address other things which have yet to be addressed. i defer to joakim in terms of his assessment whether the impact will be positive or negative and that's because much of world trade today is affected by private standards and private standards by their very nature are not constant. they keep rising because of various reasons why they come into being. and they are the ones which determine global value chains. it is not mandatory standards. if, if some kind of efforts to bring more predictability, transferability in that process, that will be required later. but, that is a place we'll not
be in if we are unable to not multilateralize ttip. we need to see what is required. some factors from ttip will lead to multilateralization. some effort is required to keep a mind-set which sin exclusive. the wto will have to consider changes and yes, they may feel that now if something, that trade is a zero-sum game especially if you're very poor, you have that feeling but look at the kind of questions with the african leadership is really asking in the trilateral trade initiatives. they basically are asking how do we prepare to link up with the rest of the world which is developing in ways which are very difficult for us to manage otherwise? when you combine with all of this, increasing investment into
developing countries and from developing countries you have an incentive system for moving towards some kind of landing zone where everyone is included in the system, rather than a situation where a number of nations say, hey, i contribute to your prosperity and you are going to keep me out. that is the situation which will really stimulate both those not thinking about this today in the context of tpp or ttip and those who are outside it looking at it with some apprehension. thank you. [applause] >> before i open the floor for questions from the audience, let me throw out two questions. if there are any takers of these. a number of, they touched upon this in terms of, actually all of you did in terms of
non-participants accepting certain terms, maybe not the whole ttip but certain terms in there. the question i have, is, if that's true, what are their incentives and under what conditions will they accept it to make this more specific. >> second question is all of us talked about in some way how wto has to change. we did not mention, none of us actually, the things that are not part of ttip which still requires global solution, meaning fuel subsidies, agricultural subsidies, fish subsidies, none of which are appropriately addressed in any free-trade agreement. are we too gloomy on the role of wto and the niche of wto? the fact there will never be a solution to these things unless it is a global solution? the second link of course is the i.t. if there is an industry truly globalized, are megaregionals
that interesting compared to doing it in wto in sector basis and that would appeal to another niche of wto which they don't have to twist around to survive in the scenario of megaregionals. i want to throw that out as starting point before we go into specifics. do you want to start? >> sure. i agree with you, we're likely to see this development where we have essentially secular agreements taking place, ita, ita-2, and telecom, at same time i really agree you have to handle agriculture and fisheries and so on in the wto it is not clear to me there will easily be a ttip agreement given regulatory issues we have, right? given regulators are not happy about negotiators intruding on their bailiwick i think that is truly problematic. on third party i'm less
optimistic than singh was, that these companies accepting standards put out in ttip. take the question of tpp i say to u.s. trade negotiators, ask the chinese to join it. pp instead of making it like tpp versus r set. they want join tpp because he have so much industrial policy inconsistent with it. pp they simply can't meet the standards. it is not clear to me despite progress in terms of chise leadership opening up their market, the china knows don't have cynical view. one of my students written extensively on the fact that industrial policy in china simply shifted from the national level to the state level. you can do what you want to do with industrial policy in the auto sector at provincial level, state level and not do it at national level. you can still engage in a lot of same industrial policy approaches you wanted to before. the idea somehow we're having
convergence in economic models around free market economics with no state intervention despite what cato want us to believe i don't think it is taking place in china. i'm very skeptical they will go along with some of these ideas. >> i think i agree with the point, the bigger point. we keep talking about china and switzerland, outsiders how they could be left out, discriminated if you look at it from different perspective they are arguably free riders. a lot of provisions in tpas are public goods. public goods you can only give once, transparency, privatization. if i'm in china i get all of this for free without having to give everything. the question is what are the incentives for china or switzerland or outsiders to join these aroundarrangements? you have to go back to tariff issues, government procurement.
it is a game-changer. not that they're discriminated victim, in many ways they have become free riders. if you look at tpp and investment chapter there, tpp has 12 countries. we've looked at this. another 10 or 15 you could easily get a critical mass of close to 90% of fdi flows and stocks. you could by adding a handful of countries making plural lateral. that covers critical mass. on topics that must be dealt in multilateral setting, subsidies or other questions, that was the point i was trying to make. so i think i believe it would be hard to do this with all 161. what i would like to see a plural laterals, but in the wto it almost impossible because even countries not part of the plural lateral have to agree this can be discussed in the
wto. i would like to see wto let substantive wto members negotiate rules, issues such as subsidies. the other big thing came out last week, oecd coming out with brand new tax rules. this is 90 countries. that will have huge impact on trade an investment not all 161 countries. we need to find ways to translate these changes that are not wto minus but translations into the wto framework. like i said the appellate body seems to be very hesitant about. they accept changes to the wto only through formal wto amendments or waivers. i think that would be a mistake. >> thank you. thank you. on each of these that are certain concepts which we have touched upon. the key concept is, why is plural rat lal with mfn not
happening in wto? i effectively a multilateral? that is what the wto agreements are all about. it is not, it has not hands because of the difference of opinion between some who would make a critical difference, not being part of the, that agreement. the environmental goods agreement today is being negotiated in wto because the critical minimum and the so-called, free riders are all part of it. ita-2 is being negotiated because because all the free riders or potential free riders are part of it. in that context, a country like india, not part of ita-2 is not part of it. it is still being negotiated. the issue when we see something like tpp or ttip -- actually not
as if a u.s. asking china. china asked u.s., please let me be part of the team. it hasn't happened because u.s. doesn't want to do that before it has the deal. let's see what happens. china stopped asking once it had a bad experience with its tsa application. since 2013 china kept out of the negotiations precisely same reason china was not allowed to enter anything significant in the context of tpp discussions. so the interesting thing is, china actually actually prepared to do far more than what people see it as being prepared. it is conducting state enterprise reform. it's emphasizing environmental standards in a very big way. on labor standards it has moved away. it used to stand with india. it is no longer with india.
i told you it has a side agreement with the e.u. on labor standards. perhaps in the investment agreement with the u.s. it will do something similar. and they have realized that the way to growth is through high value technology. which means iprs this is something i've had detailed discussions with them. they are going to go using high value technology and in order to protect their own investment outside they want to have a strong investment agreement, maybe multilateralize it eventually and start introducing state-of-the-art i.t. technologies. when you see all this, they are not going to, the momentum of these general exchanges so to say, they may be managed in parts of china and then spread over but the change in china does happen like that. it has incentives to be a part rather than be out. the incentives to participate
for others will also be what do i lose out if i'm not a part of it? today with tpp actually being done, it is far more pollable what you can -- palpable what you can lose. there are incentives but they have to be managed. because the countries which are outside don't really have the capabilities in the same way to take on multilaterally and a lot of the wto will not be part initially and they have to be brought up to that level of competence. and on wto central basis the free rider is the issue. the interesting thing in terms of trade liberalization, there was strong movement when india was blocking it and very strong viewpoint, okay, let's all put in our, our, we just give whatever we have agreed together. doesn't matter if india is not part of the deal. the legal structure of wto, if
there is mandate to do something, allows that. you can have difference between two parties. if you are willing to have mfn, you can actually make it part of wto. the reason why it didn't happen was because of the political consequence of this. of the india is trying to work things out domestically, the wto members realized this was the case. ultimately we had trade agreement with india. rather to have it with them rather than without them but today i see a change in perspective where members say fine, this country doesn't want to come with us, let's do it just by ourselves. and we give mfn. that is the way it will go with those that find disincentive to be part of the system.
on the public goods aspect. one is the rules and the promulgation of rules and second is how you actually implement them. implementation is where discrimination will come. if you're disdiscriminated against in pta, you have zero recourse. if you're not a member. these issues have to be multilateralized precisely giving full effect to inclusiveness. that is something we have to keep in mind, thank you. >> thank you very much. i will use the authority to just respond to harsha on private standards where i disagree with you, because it is not part of trade negotiations. i think this is very important issue but the problem is trade negotiators are too afraid of dealing with it. problem you don't want to enter
driven into market driven developments. it is very important issue but i have yet to come across a single trade negotiator to deal with it? >> can i give a short point to that? if you see the g7 declaration, the g7 governments are saying we will monitor implementation of sustainable development social standards in global value chains operated by our enterprises which are located within our territory. the comment, he talked about incorporation by reference. garment through that decklation of june this year has become a party to private standards also in global value chains. so my point is since they impact so much upon whatever global business, however global business is conducted, and if you're already a party through monitoring and insuring that the standards are actually i am i mr. meanted throughout the value chains, you might as well start
talking in any agreement be it fta or multilateral one how to make sense for everyone so that global trade and investment doesn't bear additional costs, what is facilitated further. so that is the point. >> we're still waiting to see that happening in trade negotiations. >> if it doesn't happen, that is the next frontier? that is true. as is coherence. i open the floor, yes, do you have a question here? mike. if you could be so kind to introduce yourself when you're asking the question. >> [inaudible]. i was just wondering if you can
address the problem for all these agreements we're bringing us, i think when we are saying free market, we are seeing free in sense of fairness to all people, whoever interested in particular venture. not free to, whatever you think is a special interest group that do whatever they want is free to them without sort of cost to them. i just wonder, in america, the labor or workers group, they are doing new things, buying things, made in america, not from other countries. so do you think the agreement will be, become sort of special, lower, poverty group or labor working group or some poorer
country, rather than where we see the humanity to support them to invest? that is a lot of -- [inaudible] to invest in something without going through corporate or trade agreement. so i just wonder, can you see any problem that can cost to the privatization or private public partnership? they are most likely, leading and unjust. so would you address those problems? >> just a question, are you districting a question to any particular one in the panel. >> all the panel. you are very good position to solve our global problems. >> okay. do we have more questions? yes we have one here. >> first of all thanks for a very good panel. second, let me just support harsha's point on role of private standards.
defacto today, in a lost sectors government mandated market access is dependent on compliance with private standards and they're being followed. this is not just an issue of private nature anymore. it is issue about governments increasingly designed regulations in order to make private standards more important than they are. the question i would like to ask the panel, i would like to put it in somewhat provocative terms, now, if the point is, to use sort of the political tailwind from megaregionals or ftas to in order to i can shake the wto system into action, isn't it favorable that ftas, megaregionals, whatever you want to call them, going to be as much trade diversions as possible? you will build into the system that will change the political calculation in those countries that so far either refused or
ignored global trade globalization because status quo is politically more favorable to them? so, judging by the history, how global or multilateral gatt type of success have been created, it wasn't so much about trying to deal with protection or obviously protectionism existing between different countries? much more an issue about trying to take away preferential and risk inventory effects that exist through various types of existing economic agreements. you can go back to the kennedy round and role of creating common market in the e.u. and sort of political coalescing effect it had on the united states and others to move forward with a global trade
agreement. uruguay round, national, very strong political effects that these trade diverting initiatives had on building fear among other countries that if they if these initiatives were not going to become eventually a wto system it would create a lot of trade diversion. from a political, economic view should we make the agreements as much trade averse as we can? >> i would start with the second question, if no one disagrees with that, since i was also a panelist. i think there is a mix-up, depends on who. the political correct answer is no. realty of noth tore is -- negotiator is yes. i used to be a negotiator. the problem impasse in wto has huge coat lateral damage, with
poorer countries, ltcs. they're not hijacking the system or preventing progress. as harsha pointed out rather small group incapable of moving forward. why would you devise a agreement adds to already heavy burdens on their shoulders which does have a direct toll? this makes a lot of sense if you think you can engineer a direct effect on one developing country as opposed to another one. it is however very difficult to do so without having huge collateral damage which happens to be the majority of the wto memberships which have collateral damage by the locking. that is my view on the issue. >> i would like to raise one issue. there is all this enthusiasm for both megafts and sector agreements. what we really want to do is sector tradeoffs. the real problem is developing countries rightly complained there has not been agricultural liberalization in rich
countries. i heard a former wto economist which i will not mention his name or her name, said bluntly, wto and gatt is tilted against developing countries. i think in many respects that's right. if you look every time there is liberalization, there are exceptions. textiles where developing countries were successful. we have a whole history of voluntary export restraints, as soon as you became competitive in some sector they were imposed by europe and united states and other country as well. sound great. i do political commenting. sound great to beat them into submission through trade diversion. reality i don't think that is really in some sense equitable. i think and we're practically, probably bill not be very clear rules set up by the e.u. and u.s. it will be hard to get. mo on regulatory standards and finance a lot of these issues. on other issues they may not agree on issues like
agricultural and the like. i will not say who is more protectionist, u.s. or e.u. we're in mass drought in california, they're still growing rice in the imperial valley which is a desert. there is clearly some protectionism in the united states. i don't see how those problems will be addressed. even if they cut a deal in the megafta how will that multilateralize into the wto because essentiallying a cult could be excluded. >> on private standards, i think creative lawyers, i'm one of those, argue it is already covered on tpt. -- tpp governmental standards you could go after and international standards that need to be some of that covered. on frederick's point i think you're spot on. there is less trade diversion i would say because the new deep every ptas saw less of pressure for others to join in. i don't see this as a problem.
i think it is wrong to think everything needs to be multilateralized. there are certain issues that will never be agreed upon by 161 countries. in if you look at e you, we have multiple speed. euro countries provisions apply to subset only. why on earth should the wto stick to its single undertaking? it just doesn't make any sense. >> yeah, thanks. thanks. it is very important for what joost just said. that is the only way you can multilateralize. wto gave up on single undertaking in 2011 ministerial meeting. so the structure is open. in terms of what you talked about, whether there is incentive to make as diversionary as possible, i actually think depends on which agreement you're talking about.
if it is the tpp, not the trade diversion to as culture to affect the non-members. more to the attract members to be part of a deal through agreement specific dellment of value chains. development of value chains. they said it will create much better conditions for value chains amongst us. to agree to certain kind of disciplines which otherwise would not be as attractive. but in t pip i think both u.s. and e.u. would like others to follow the system which is now the system which they would like to emphasize in order to create a fair and level playing field in terms of subsidies to state enterprises, in terms of standards on the environment and labor. so that the so-called
competitive neutrality conditions are maintained. and if that is the case, they have to balance the issue which you talked about, and greater acceptance by those who are the objective of that entire system. and therefore, i expect there to be some kind of a mechanism for this to be extended to include others. professor did advise that to ttip negotiators which i think is good advice to keep in mind. on the other hand, as far as multilateralization is concerned, when we think of multilateralization, we have to think of the core and then the rest.
and there are systems like reference paper in telecom, et cetera, which are recommendations agreed. so you can see whatever is agreed in ttip as recommended package. people coo schedule eight than is possible under the wto legal system. there are many ways it could be done provided the free rider problem is addressed. >> i will leave everyone a question they're not supposed to respond to now but think about it. the presumption of this panel was how do we make the systems compatible. we were all arguing. are there certain things in ttip should not be multilateralized? i leave that question to you. i have announcement by organizers. the luncheon and interview is held on the second floor or second level in the george m. yeager conference center up the spiral staircase. restrooms which is very
important information heading for lunch, restrooms on the second floor on the way to the lunch. look for the yellow wall. look at the -- i would like to thank the panelists and organize is. [applause] >> break now for lunch in the day-long forum or transatlantic trade. we'll bring you back this afternoon on domestic policies and their impact on international trade. gets back here live on 1:55 here on c-span2. congress is on a 10-day congressional break. there is news though.
texas tribune is reporting that u.s. congressman bill flores, monday he intend to seek the gavel of the united states house of representatives. in an evident mail circulated to some of his fellow house republicans flores stated his plans. we draw from the race if wisconsin congressman paul ryan elects to run for speaker. ryan said he doesn't want the post. many in his party are calling for him to run. read theories of the story at texas tribune.org. a break in our coverage of a cato institute forum on international trade. while we wait for this to resume. we will go back earlier today to bring you opening remarks as this discussion was getting underway. >> it has been quite a week for trade policy with the announcement last week of the completion of the tpp. it has been a quite a year for trade policy 15 years i've been at cato, this has been the most bubbling of years. we'll see where it all leads.
but the ttip has long presumed upon conclusion of tpp or success of tpp that was predicated on passage of trade promotion authority. so those steps have been taken. i think we're about to embark on really robust debate in the united states about the ttip. the debate has been going on in europe. i think maybe the europeans are a bit frustrated that the american negotiators and american public have been a little bit sidetracked or focused on other issues. but, i think people are ready for this. they are ready to start talking about this. there are 235 people registered to -- 345 people to attend this conference. i think some have slept in. they will be here at some point during the day i hope. as evidence of the importance of this issue, c-span is here and c-span will be broadcasting this live today and recording it. if any of you plan to leave
early, i want you to know in advance your boss and colleagues will know. they will see it. they will find out. please stick with us. so now that tpp is done, and this debate is about to happen, we wanted to sort of lay the table, what are the issues? there is a lot. this is complex. we want to talk about some of the traditional trade negotiating issues on the table. as well as broader complexities, geopolitics. what does it mean for multilateralism, for wto. there has been a lot of debate about that. we'll bring some of that to the forehere today. some people want to understand what the regulatory coherence is all about. this is said to be the source of the largest gains from a successful ttip. but doesn't look like a whole lot of progress has been made or there has been a whole lot of accord how to proceed. so we're going to do a deep dive
on regulatory coherence issues at end of the day. people ask what are the economic models all about and are they important? we're going to have an event session on that towards the end of the day as well. but you have the program, the information is available out in the lobby. also, participant in the conference asked to write essays. we're publishing 1500 word essays about any ttip topic. we're publishing them on our website and we'll continue to do that through next week. next week is the 10th round of ttip negotiations in miami. so we're going to sort of carry this over into that point. just one other housekeeping remark if anybody is inclined to tweet anything going on here, use the hashtag, catottip. that will be memorialized and
people can chime in from all over the world. i will introduce the person that will set the table on issue. you know sean donilon. he is excellent journalist. he understands economics keenly. i use that word keenly talking about english publication. he is writes cogently in fair and balanced manner. sean is the world trade editor at "the financial times." that is ultimately the transat lactic newspaper. . .
everybody knows sean and likes to talk to him, and i'm happy he is here to chat with us. a couple other points. besides o'the time "some of his work appears in other newspapers, including the "los angeles times,"" "christian science monitor"." he is a graduate of boston university with a degree in enter national relations and yet still writes very well. i'd like you to help me in welcoming sean to the podium. thank you. [applause] >> thanks a lot.
i will beg your forgiveness, as dan said, i am just off a plane so if i get my -- start talking about the imf or bps, the tax measures that were passed or approved in lima or start talking about emerging markets you'll know i've got the wrong set of notes here. the ttip is, for those who follow me on twitter, you know it's sort of an unhealthy obsession, as it is for some of you as well. something i've been following for the last two years, clearly is an immense project. i just thought i'd -- i think it's a really interesting time in ttip because we're in that kind of uncomfortable middle period, i think it's -- we're
somewhere in just before the halftime whistle goes, and i think it's valid -- it's a good time to step back and think about where we are. that's what you're doing today. i thought i'd offer four not entirely random thoughts about ttip here and this is how i think about it and also the conversations i have with my editors who constantly say, when is this thing going to get done? is it going to get done? and should we -- what should we be writing about this? and i think it's -- i'll start with really point one, which is i think it's important to remember -- and i think this sometimes gets lost in the discussion -- of the details that ttip is still a valid endeavor. it's a big valid endeavor.
worth stepping become and thinking this is a tread relationship as important as it gets the world today. something like $800 billion worth of trade or more last year. and also it is about the future of trade agreements, and really that issue of regulatory coherence, that tangle of regulations that business complaints about, and the nontariff bay barriers we have been writing about. in business, i think increasingly -- this is not a phenomenon of the last year or two -- this is our transatlantic nowdays. the multinational corporation which once was an american or european corporation, that was reaching out across the world,
is now entrees leg a translattic -- increasing lay transatlantic one. i also think the valid endeavor is -- goes beyond the bilateral of the transatlantic relationship and really it's thinking of it in the context of the wto, and global trade liberalization efforts and the tpp. i heard of the noodle bowl theory of trade, all these sgas would create a tang of noodles i'd like to patent the rafow lee their of trade, or the dumpling theory of trade. we're seeing a series of regional arrangements being
written or negotiated and that some day they will become the great lasagna that is the global multilateral deal. i'm patenting that. and i think that's a long-term project. but clearly when you talk to people in the u.s. administration, part of the reasoning behind the launch of tpp and also ttip was about getting something happening in the realm of trade liberalization, and moving beyond the kind of paralysis that you have now. so i think that's an important context. our ttip is also a geopolitical agreement, i would argue, and that's part by because of my background in international relations.
but i think the geopolitics are as valid for ttip as they are for tpp. people taught about tpp in the context of china. i think ttip is equally valid in that context, particularly with what is happening in russia and ukraine. so i would -- these are to me the three big pillars of why this remains a valid endeavor. the second point i think about, a great question from my editors which is, okay, this is big, can they actually get it done? and if so, when? and when you're in the daily news business, this sometimes turns into a sometimes depressing conversation. i think the question -- the answer that i offer my editors is, yes, it will get done.
but probably not anytime soon, and that may not be the answer that some people in business and others who have a shorter horizon of thinking may want to hear, but i do think that increasingly in my mind, it's hard to see this getting done during the obama administration, and that raises all sorts of interesting questions. i think they're going to try to get it done. clear live they are trying to get it done. mike and cecelia agreed to accelerate the negotiations. but really everything has to go incredibly smoothly to get even close, and as one senior official involved told me when we talked after the meeting recently, really what we're laying out in front of us just
gets us to the mid-game, and i think that is something that is important, especially in the context -- i use tpp as a reference pound. tpp for those of white house cover it, it's been a joke that this thing has been in the end game for two years if ttip is only just getting to the mid-game. we have a long road ahead there. there's a couple of reasons why i think this will struggle to get done in the obama administration. one is the complexity of the deal. a lot of the conversations feel like they're only just getting started, even though it's been two years. i think that's interesting. the other point is i think for the u.s. administration the tpp is going to take a lot of energy to get through congress in the next -- to close to get the text
out, to sell politically, the administration is really going to be focused on that over the next year or so. i don't think it's a zero sum game, and clearly the folks at ustr have argued for a long time they can walk and chew gum at the same time, but there's a question of attention and political pressure as well. one thing you have seen in tpp is a building urgency over the last two years for most of the last six to nine months, if not year, the tpp negotiators have been meeting weekly essentially, and intercessional agreements. they've been on the phone, been closing a few -- especially the u.s. and japan negotiators, have been on the road constantly for most of the last year. so, i don't see that in ttip right now.
i may me missing something but i just don't see that accelerated schedule there. i think the other point is that the political timeline ahead is getting very interesting. i don't think in 2016 ttip is going to draw quite the opposition or the heated debate that tpp is here in the u.s. for obvious reasons. but i'm not sure that in the context of the antitrade rhetoric we're hearing on both sides, in both parties right now, that even a deal with europe will be immune to that or some kind of blowback. there's an argument that putin's new syrian endeavor and his other adventurism in ukraine and
so on could help make that joe opolitics case in the congress, but then there's also -- i was think about this on then plane but not that long. i wonder what donald trump would make of ttip. if tpp is a disaster, what would he think of ttip. and i could -- i came up with some fun quotes that sort of imagining him speaking them, and then i switched off and moved on to something else. but clearly there's potential grist there. but i think 2017 is the more important year in terms of the political timeline. this guesses into why i don't think it will get done in the obama administration as well and that has more to do with european politics rather than here domestically. you have three monumental votes in europe in 2017, and that is
the german election, national election, french presidential election, and i think equally importantly, the uk referendum on whether or not to be in the -- remain in the eu. in each of those elections, i would expect ttip will be an issue that will be vigorously debated. there were 150,200,000 people in the streets of berlin on saturday, protesting against ttip. that tells you that certainly there are people who feel strongly about this in germany. angela merkel has been treading very carefully on this, mark gab grill and her coalition partner even more so arguably, but across europe there are now 3 million signatures on a petition against ttip. and that's starting to become a
big number. i also think that sort of vocal opposition is bleeding into a broader skepticism about ttip that i hear from some of my colleagues, who are asking me as europeans as much as economic journalists, but also hear from others in the quiet center now. i think that is really important. i also think the leaders in each of those elections or votes is politically savvy enough to know that there is a risk for them in this debate. i think the third random thought is that the barriers or stumbling blocks are just not going away, and in fact, they're arguably multiplying in
different ways. we long talked about the snowden effect on data and the discussion there, the kind of how it adds to the suspicion across the atlantic, particularly in germany. i think that is still there. i also think the safe harbor decision we saw recently from the top court in europe is not technically part of ttip but it's emblematic of a broader suspicion there. i think that's -- brought a suspicion but also a sort of combination of jealousy and angst that you see in europe now when it comes to the issue of innovation and technology companies, which i think is really interesting and i think will shadow the talks. gmos in, the decision by the european commission earlier this year to allow member states to opt out of any decision is important. it's a recommendation, not a firm decision, but clearly tells you a lot about the european
commission and how they'll handle the politics elm isds. i can't believe i've gotten this far without mentioning isds, the investor state dispute settlement mechanism and all of the heat around that. i think there is a view in brussels that they have come up with a solution with a recent proposal for a wholesale rewriting of the system. i think only have to look at the u.s. chamber of commerce's incredibly rapid response to that, negative response to that proposal, to see why that may be more difficult than the europeans think in terms of the negotiations. it has two main points as far as i can tell. the creation of an international court with sitting judges to hear investment cases. sounds a lot like ixid to me, a
multilateral institution that will hear these investment disputes. clearly ixid among opponents is a poisoned brand so europeans want to come um with something entirely fresh. the second thing is an appellate function for investment cases that would allow governments to go before a panel of sitting judges. i think both fit in very much with the european idea that the answer to a problem is often to set up a new institution. i don't think that goes down so well, particularly in places like this. and here in washington more broadly. there's myriad other questions out there that are building of this big questions on whether financial services will be included of not. these should have been answered some time ago, i would have thought. that said, i did say, yes, think
this is going to happen, and that brings me to my fourth and final point, and that is both sides want it to happen at the political level, certainly. so, what has to change for it to happen? and i think that is something that the negotiators on both sides have been thinking about a lot and were discussing during that recent meeting. i'm knock sure they've got all the answers, but the -- clearly something has to happen to get some kind new momentum behind ttip. i think the first thing is a recalibration of the endeavor. is this the big catch-all agreement that a lot of its advocates have thought should it be that?
there were people when i was based in london who would talk about ttip as the beginning of a transatlantic -- basically a growth of the european union across the atlantic could and would become a single economy across the atlantic. i'm not sure that ttip, given the current challenges, will get you there. that may be a good long-term goal but it's not where this is a heading. i think particularly with what its happening in the e. u. and the suspicion of the eu itself and its role. i think that's one point of recal base. so do -- recalibration so doow focus on something that focus' terrifies, services-maybe some government procurement lines? do you trend the regulation -- turn the regulation project into a longer term project?
people have talked about ttip, i think there's two lines that immediately come to mind with ttip. one was the, let get this done on a single tank of gas. that's gone away. the argument now is perhaps we're with an electric car instead of a gas-guzzler, and after vw, certainly not a diesel. the -- but i think there's people -- lorenzo was making this point a year or more ago that there's a kind of early harvest deal to be had and that regulation, given its complexity, should be viewed as a longer term project. i think there's -- when i talk on -- or listen or ask questions on regulation, it's still striking to me how much the question of regulation on things like food and auto safety and so on is a kind of a mars and venus thing, and i'm not sure you
solve that in a trade agreement kind of immediately. the second point is to really accelerate negotiations. i think right now, we will see next week an exchange of new tariff offers. this is only the second exchange of tariff offers. it's telling. it's been two years, the first one didn't go well, they both agreed to set a 97% threshold, and turn this into a negotiation over the remaining 3% of sensitive tariff lines. but if you're going to go into closing mode in 2016, you need to be meeting more quickly than they are planning to at this point. so, tariffs offers next week and then a procurement offer in february that are -- already takes you into the spring almost. i think the second point is european leaders need to handle the politics better and they need to be braver if they want
to get this done, and i haven't seen any signs of that, particularly from the european commission, which i think has been a much more political animal under -- than it was under mr. baroso. when cecelia took over, started thinking of her as engaging in the rope-a-dope maneuver. i'm goes to listen, listen, listen, to all the opponents and then try and wear them out that way. i don't think that's worked. clearly. we saw that on saturday in berlin. i think -- this may be a provocative point -- americans need to be better in the context of the negotiation at proving their european-ness, which is
not a comfortable admission for some parts of the policy here. but i have been away for 17 years and just come back, and i'm struck by how america has changed in a number of ways, and how the traditional narrative on the different economies and how we regulate has changed elm think the vw example is a great one. upends the narrative that somehow europe is greener than the u.s. when it comes to cars. i think the food culture change here is remarkable. the idea that mcdonald's is now deciding not to use any antibiotic treated meat or any hormone-fed chicken or beef, is important, and it's important in the context of ttip because these are exactly the sort of things that european consumers think about when they think
about ttip, the same as chlorinated chicken. so i think i'll stop there. i'll let you chew on that idea, on that chicken, if you want, or the freedom fries if you prefer. i'll stop with that point. you have a really interesting day ahead of you, and an interesting point in this negotiation. i think this deal is going to get done. but i really do think some things have to change in the dynamics for it to get done. thank you. [applause] >> i think dan wanted so introduce the next panel but he disappeared. is he coming back? okay.
[inaudible conversations] [inaudible conversations] >> all right. sean, that was an excellent overview of the issues we're going to get into in an exchange here. please take your seats if you're on the panel. come on up. so, this session is supposed to go from 9:00 to ten past 10:00. it's going to be a conversation. the original point -- the original idea was to have a bunch of chairs up here and like a sunday morning talk show, but i think there was some complications with the number of
ear mics so more like an academic setup. but the purpose here is to talk been the issues. there are lots, ace sean just gave you a taste. there's a lot of complexity but i'd like to us be able to do here is to debate some of the issues, to at least address some of the issues. there are lots of them. i want you to leave this session with the sense that there are some complicated issues that might be difficult to resolve. maybe it would make sense to take them off the table. maybe it would make sense to compromise in some other way. i would like you to have an understand ago of the major offensive and defensive interests of the u.s. side, the european side, and gate sense of where things stan going into the ttip round next week. so a couple years ago, paper came out by the atlantic council which i've always liked because
it identifies about 28 or so issues that are on the table. they produced the results of a survey where they asked trade experts on both sides of the atlantic which issues are the most complicated to resolve and which are the most important, and i they plotted them. the x-y axis, and the most difficult to achieve and most important to a successful outcome were up in the top right quadrant. i'd like to get into them here. obviously trade agreements deal with tariff reductions. agricultural protection. gmos. sanitary measures which are prominent. regulatory coherence. a whole panel devoted to that later. labor and environmental standards. and intellectual property
appreciation, data protection, a lot of issues. let me also note that there's a slight programming change. yana was supposed to be with us. she is coming later. she has some issues getting across the atlantic. so phil levy volunteered to help us out. thank you, phil. i want to ask a question. if have 12 questions here but i'm going to ask a question and direct it to one of the panelists, he or she can start with an answer, and then others can chime in. when we exhaust or -- when it's time to move on i'll ask the next question. the first question i have is for frederick. frederick ericson. and by the way, all of their bios are in your packet. but really quickly, frederick ericson from brussels. seles from the afl-cio, majorie
from the chamber of commerce, susan from george washington university. frederick, what do you consider the most important issues to a successful outcome for the ttip and what do you consider to the be the most difficult to solve. >> i think it's the same issue and sean brought the attention to it and that's the united states could become the 29th 29th member of the european union. that's a benefit that it is going to come out from this. if you want to show your increasing europeanness you should take longer holidays, which following the european model, and please, don't take away the illusion our environmental cause is more environmental thon yours. that's the kind of ambition
we'll have for what we're going to do with ttip. let me just say a couple of words on that issue from the viewpoint of thinking through the economics and political economy of it all. i'm not sort of desperately happy with the obsession that lot of people have about estimating the potential gains s and losses by using a model that aren't capturing some of the key benefits that come from trade. i'm sort of complicit to that myself in terms of these study with some regularity, but i think the -- ttip itself has to be put in its broader context, and that context is largely we are seeing an end to 25 years of globalization as we knew it, an to end the idea that constant
expansion of the principles of economic liberalism is going to par western economies, deregulate economies at home and that sort of deregulation will have very strong effect on what happens externally between countries. i have four books coming out in a while, been sketching sort of a different see norow right now, which is that we move from the past 20 years of corporate globalism, g. the fact that globalization was so heavy, powered by big and global corporations and their trade linkages across the world. so we are moving from that into a period which i think is going to be more characterized by global corporate temp -- corporatism in the sense we are seeing revival of ideas about linkage between business and government. we are seeing a revival for
discriminatory and esteems protective -- sometimes protective views of regulation that can manifest effort in everything from sort of skepticism towards different deals, for instance, fisa, or bidding for -- or ge bidding for a french company, can't remember the name right now. and sort of how the politics around these deals came to be very sensitive and very controversial. we're seeing in today's financial times, an interview with the ceo of barclay's bank who is making this case for a european champion in investment banking, feeling that american investment banks are getting too competitive. that is the sort of all-time
government interference in economy that we're seeing and it's going to sort of garnish companies and governments to become most closer, sometimes with a crony type of regs. that's the context i see, which translates itself into a new type of scenario for global trade where trade is going to grow far my slowly in the future thanked did in the past 25 years. are going to see re-orientation of the structure of trade, partly because asia, emerging markets have developed to that point in the economy where they begin to integrate much more regionally than they do globally. there's strong a glom -- agglomeration which takes away the benefit that the american economy and the european economy could thrive on.
>> i just want to pick up on the point you made earlier about the united states becoming the 29th european state. does anybody else on the panel share that view, that the ttip is the completion of columbus' con -- conquest of north america? temperature there other perspectives? what are the big issues and the stumbling blocks? >> good morning. if i may add to frederick's excellent remarks, i feel a little bit differently. i see it as not only -- well, i see it as really not being about trade but rather about governance, not only competition of governans model tuesday the u.s. and the europe and also between a western model and a chinese model or a western model and perhaps an asian model. i think they're not the same so i make that distinction. seems to me weep wore talking about new issues, such as
regulatory coherence, and new sectors, such as information flows, that's really much more than trade, and it's to me about governance when the united states moves from focusing on specific human rights such as labor rights to a broader conception of including human rights. we have learned something from the european model. so it seems to me ttip could set -- if you buy some of the things that policymakers have said about it in terms of setting -- creating 21st 21st century trade agreements and setting got standards and building blocks, i think those metaphors are useful and also a little bit scary, but i think we need to be honest about what this really is. >> just to jump in there i don't buy many of these metaphors myself. i think we're looking at actually pretty standard type of
free-trade agreement negotiations -- the result will be a standard type of free trade agreement that we have seen in the past years. topped off with infusions here and there that hopefully can at least plow some new ground in terms of dealing with regulatory issue, but the idea that has to be sold to public bat 21st 21st century agreement, creating a single market across the atlantic. i think they don't think this is going to happen. that just leads me to my conclusion of what i was going to say, which is that i think this is an agreement that at least in europe is going to be sort of won or lost on its capacity to generate more growth, more jobs. that's the politics of it. if we're going to end up in an agreement that has only small
benefits to that quest, then i think you're going to see all the thorny problems. whether it's chlorinated chicken or what have you. if you want to go for the big benefits you have to run with the stream with what you have seen on estimates of growing. go into sectors that can deliver huge scale benefits by taking away tariff and taking away some trade restrictions. you need to think about services, data, and how you can sort of use the trade agreement itself to throw some friction into global trade policy in the sense that you -- you really want an agreement here, which can at least for the future divert trade in the sense that you push countries like china
and india and brazil to become far more favorable to a western type of model of these issues. so, if you find that sort of combination, it is going to be fairly good agreement. i don't think we're going to have higher hopes for going beyond that. >> you just alluded to the geopolitical arguments. is it about security or is it about writing the rules of trade before china and india do and is that important? >> think it's both economic's the geopolitics. i'll take the bait a little bit on the 29th state. that links into this with the gee joe politics. -- geopolitics, we saw this in tpp and seeing this in ttip. i you want to have success in tackling a difficult trade agreement, you can either make
progress on very thorny issues or expand, and tpp did that for quite a while. supposed to conclude in november 2011 when the u.s. wag hosting aipac. it didn't. how do you show success? bring in mexico, bring in canada, bring in japan. now you know we're successful because we're getting bigger. if you look at europe, they have been having their own debate with the north versus the south, the eurozone issues. one of the major elections is -- what will the british decide they're role in europe is to be. one way of sort of strengthening is expand, get involved in something bigger. not perhaps so far as actually bringing the united states in as a member, but it looks that way at bit. it's an expansion project. it's a tightening of ties. the problem we see in all of these instances is that brings its own complexities. on tpp, yes, it's nice that japan is there but now we have a few new difficult negotiations.
but when you ask about be geopolitics of this, it's important to have a strong europe. we'll talk about this more this afternoon. for a whole range of issues and challenges you want to have a strengthening, and the thought is, this is the kind of thing that can bolster. as frederick said, having some growth, having more jobs would cure many of europe's ills and make everyone feel better not just whatever agreement you reach but just the union itself and serve as a bolstering that way. that was -- there was no shortage of venues for the u.s. and europe to address economic matters. and that's part of what the challenge of ttip is. they've been addressing the all wrong you have the transatlantic where they were doing bilateral. so if you wanted to tackle
chlorinated chicken there were opportunities. this way is a big agreement. to reinforce not only is europe intact but this bond between the u.s. and europe, which obviously is shaken through a number of events over the last decade or two. you sort of advertise that's stronger, which is great so long as it works. >> celeste? >> hi. i think we're missing the point a little bit here in that there's not that much room to grow through a traditional trade agreement. through all the rounds of gap, through the wto, through the fact that the u.s. and the e.u. have pretty low beyers, it's tariffs, regulatory barriers and the idea of ttip is just achieve astronomical growth and grow out of as state and grow out of the great recession because we'll get rid of the barrier against
chlorinated ching -- chicken or beef, thatn't born out by the data. the data shows the growth you'll achieve is a little more than a round error. that doesn't appear to us to be enough of an advantage of the ttip to really live with a lot of these other things that working people are pretty concerned about, and with the ttip agreement, it's not really, oh, we're going to move to london because that's a great offshoring platform to get back to the united states but it is a lot of these questions about isbs, about who is going to have the final say over regulations, how we structure our economy, and if this a new form of global corporatism, working people are very concerned that there's going to be even more corporate power in the new form of globalism because it was really not advantageous to working peopling under the current
guise. >> doesn't it depend on what the rules are and how we -- where we liberalize what the terms are? i've spoken -- i've questioned global governance agreements. susan mentioned it as well. but is there a good agreement? can it spawn great savings for business that can be passed on in the form of new investment to create jobs and lower prices and things like that? >> absolutely. and i think there are two main questions there. one is the transparency with which it's negotiated. if working people and other members of civil society are locket locked out of the room but everyone knows the big corporate lobbyists are maybe not in the room but have the best access to negotiators and most influence of the rule that are written, those rules won't be written in a way that favors workers. secondly, businesses achieving more efficiencies is terrific in
a vacuum, but it cannot be argued based on current economic models that that's automatically going to be shared with workers. what we see, and not just in the united states but in the u.k. and germany and mexico and south korea, is that workers are getting a smaller and smaller share of national income, and particularly as productivity goes up, workers' incomes are not rising. this is problemcratic if the rules don't address that kind of concern, that workers can prosper as the companies prosper, then you'll see continuing skepticism and doubt about the ttip as you saw in germany on saturday. >> i just want to ask a question to follow up on this. you have this vivid ideas are workers are locked out of the room. you have mechanisms like labor advisory councils. i know from time to time the obama administration speaks with organized labor. do you feel there's not useful communication, that the current model doesn't work to give
workers a say? >> it's not really about communications so much as about influence and balance of power. there are labors of -- amongst the 600 or so advisers. about 30 of them represent labor. so just numerically you don't have a fair representation in regards to the number of workers in america versus the number of businesses in america. but more important than the numerical representation is the impact, the influence, and the effect, and certainly the obama administration has a very open-door policy. we present issues, we have meetings, they take our phone calls, but in terms of our proposals translating into what to put down on the negotiating table and at least trying for the things that we're asking for, we don't see it. >> i'll -- let me just sort of contest that idea a little bit.
globalization trade deals deliver benefits for the economy when they expose economies to more competition. that's the main driver of gains from global trade and from trade agreements. the problem we have had for the past 25 years we haven't seen any sort of trade agreement that's been able to push that competition much, which is why bearing this in america and europe when productivity was accelerating, we had more investment, had a big boost in trade volume. at that point you saw take-home pay for workers in a -- doesn't matter where they worked and how they worked, salaries were going up. ever since then we've been declining trend for productivity and as a consequence, pay hasn't increased that much.
but the functional income distribution between labor and capital is stagnant or it's been flat, bearing the volatility for 30 honor years. it's not that labor itself is taking a hit, and that capitalists feasting on he carcasses of labor. you have growing income inequality because skills are rewarded than other types of skills which workers are not seeing pay go up as much as in the past. but in order to shift to a different type of economy that can expose more economies to more competition and to trans -- transmit new technology and innovation at a faster pace. then we need to return to trade agreements again and to find trade agreements that have the capacity to achieve that. >> do you --
>> the data the world gathers from the federal reserve bank, said that labor shares of income is down in compare sob to the past. so we are maybe looking at different data. i think you talked about the standard economic models for trade agreements, not accounting for everything, and part of what they're not accounting for is the movement of capital. so it's not just that u.s. producers are being outcompeted by an import sector. that's that whole factories are shutting down and moving and companies are deciding we're going to produce overseas where it's trooper and export back to the united states and that's quite different than the traditional model we're both making wine and whoever is better aft it should be the one that exports it. not only that but we have also seen a concentration of capital since this era of trade agreements, more mergers, more acquisitions, less competition. so if we're talking about becoming more efficient and having more competition we have to look at the effect of trade
agreements on that concentration and what that does not only to consumers but to workers who are trying to sell they're labor on the market place. >> susan wants to chime in and then i'd like to ask marjorie about business' perspective. we're talking about labor a lot. >> seems like we're talking fleet different things that are clearly related. one issue is what is happened to the share of labor in terms of globalization, and is-are trade agreements the proper place to address that problem given labor's declining influence. so that's one. and i don't knee where we all stand on that. it would be interesting to seem the second thing is, does labor have influence? i would argue, labor has tons of -- it's seen, it's certainly havered you loan testify labor rights positions as they evolved over time. certainly congress has to some extent tried to meet them, as has various administrations. so the question is why is that
not working to help labor? we come back to the first question. then the third issue is the process. how do we negotiate a trade agreement, who is in the room, is the process considered transparent and accountable? which seems to be an issue we should talk about at another time but clearly is a very important issue because it's an issue about trusting governance, and if governance agreements, as i call them, are becoming ever-more influential and ever-larger with more countries and more sectors, how we do it is important as what we include in there. i'll shut up now. >> marjorie, i'd like to ask you about business and how focused is the chamber and business on ttip and what types of problems and issues can ttip resolve for u.s. business and -- here as experters and u.s. multinationals in europe. >> thanks, dan, very much, and
thanks to cato for organizing this. i did rib dan a little built about the fact we're having this very interesting conference on a federal holiday, but clearly enough people are interested in the topic that the room is nearly full. so, kudos to you for bucking the trend and going ahead and having us all here first thing in the morning. let me start by asking, how many people in the room start from the premise that ttip is or can be a good thing? show of hands. cool. and how many of you start from the premise that under no possible circumstances could it be a good thing? all right. there's one honest guy in the back. >> come join the panel. >> so, -- golly, where to begin. the chamber has been a long-time -- first off, let's
back up and realize that the chamber, yes, it represents a lot of big beens but -- 95% of our members are small and medium sized enterprises. so the notion for starters the chamber is only about representing big business is a bit disconnected from the reality of our membership. business is painted as -- i don't want to say the devil but business is painted negatively in this conversation about ttip. and the practical reality is that when you're talking about negotiating trade agreements, why are we negotiating trade agreements? we're talking about trying to liberalize the free flow of goods, trading goods and services and investment flows and agriculture wherever we can. and by definition, business has a stake and a fundamental role
in why these negotiations are happening. workers have a fundamental role in them as well, because they're employed by business. the notion there is a dichotomy between what business wants and what is in the interests of workers and consumers, itself strikes me as it's an unfortunate dichotomy. i think frankly what you see happening in europe right now in terms of the mass demonstrations, wasn't just in berlin but in amsterdam as well. i was in "the hague" last week, and i can tell you that dutch officials are growing increasingly concerned about the trends in their country as well. i think that debate you -- -- i'll come back to your question in a second. the debate you see going on in europe is much larger than what may or may have not be included in this particular negotiation. it's much more fundamental conversation about the role of business in society, and frankly, it's a much more
intensive dialogue that is happening in europe right now. i think that at some point we'll get around to having that conversation. i think now that tpp is -- the negotiatings have concluded, we'll start to see more of that conversation. the chamber has been an advocate for these negotiations even before the negotiations were negotiations. we began in, i think, 2010-2011 with our friends at some of the -- some of the think tanks in europe to look at the potential benefits deriving from a comprehensive agreement. initially looking at just the benefit of tariff reduction, and from there the conversation grew to one about what could be the benefits extending beyond tariff reductions? and the notion being quite frankly that in the absence
of -- or the relative paucity of monetary and fiscal options available to promote job cozy growing, that trade liberalization might in fact -- should in fact be part of the solution. so, we have been advocating for this for a long time because we do see the opportunity for greater growth in trade and in investment flows. practical reality is, as many of you know, because we're talking about in many instances multinational corporations, much of the trade that goes on between the u.s. and europe is intra-company trade. something like 40% of the trade that goes on across the atlantic is intra-company trade, which means the companies are paying duties twice for goods flowing back and forth. i'm sorry but that just creates unnecessary costs in the economy. i do think when it comes to
regulatory cooperation, people talk about coherence. i'm talking about cooperation and coherence. our member s do see significant opportunities there. you have to stop and ask yourself, why, if european and american air safety agencies can deem airworthy an airbus in europe and allow that to be flown here in the u.s. and have a boeing aircraft deemed airworthy by the faa and therefore flown without being retested in europe, why is it, if we can do that, we have to have -- why is it -- i dope note if it's mattel -- why do they have to make two different versions of a baby rattle? because the standard in europe and the u.s. is different on the level of decibels that the rattle can make next to the baby's ear. >> marjorie.
can i interrupt? this issue is a big issue and it's identified as the source of the greatest gains and the european left likes to talk about it a race to the bottom of u.s. standards and the u.s. likes to talk about global governance and he can eating to these ridiculous economy squashing standards. we'rely there's a middle group. you identified rattle. seems that business should do a better job getting out in front and coming up with example after example of products where two sets of standards or regulatory schemes need be complied with. that achieve the exact same safety or environmental or labor protection goal, whatever it is. are you -- >> in fact we are. it's interesting you ask that question. there's no doubt about it. especially in europe, business hasn't done enough to articulate the benefits of this -- these negotiations. in the u.s., i would say we're
doing a better job but we're doing it in an environment where nobody is really listening yet. let's face it. the attention span of the american public is fairly limited. and to the extent people are thinking about trade right now, if they're think can about it it's all, they're thinking about tpp, and i think that the conversations that we're going to be having about trade over the next number of months, a we saw over the summer with tpa, being in effect a referendum on tpp and we will now have going forward with tpp is a different asset of circumstances nice relationship between the u.s. and the asian countries with whom tpp has been negotiated is fundamentally different than the relationship between the u.s. and europe. now, should the business community being doing a better job here? you bet. do we need to get more information out there? you bet. i'm not spending enough of misday -- in fact this is my day job -- trying to make the case
for why improvements in regulatory cooperation, whether it's sectoral or it's a broad framework for dialogue is important. i need to do a better job of explaining why you do need an effective investor state dispute settlement mechanism in an agreement where there ills the i the name of these negotiations, the i is for investment and where investment plays such a significant, in fact an overwhelming role in the bilateral relationship. i yes, i think there's more that business should be doing. think it's always more difficult in some respects to make the argument, if you will, sort of straightforward business argument for why this agreement is needed, when you're faced with what i would describe as more fundamentally emotional arrangements. it's easier to raise people's
concern about things like -- i'm sorry if have to come back -- chlorinated chick oregon race to the bottom on regulation or lack of transparency, number of fundamental concern that derive, i think can from something that extended far beyond what really whats it the ttip negotiation and has more to do with the base rickol of business in society. >> thank you, marjorie. you touched upon a hot-button issue, isds, as an issue that we at cato and the chamber don't see eye to eye on. axle has commented quite a bit about it. written about it. axle, would you maybe share with the audience your specific on isds, why it's problematic, what you think of the recent proposal for the permanent court? share your thoughts. i think a lot of people here have thoughts so this could be a good debate. >> sure. thanks very much for the