tv Politics and Public Policy Today CSPAN October 30, 2015 5:00pm-7:01pm EDT
>> okay. >> we only have one real good opportunity to improve this relationship and it's ttip and we've been looking at it for 20 years and trying to do low-hanging fruits and sector-specific stuff. but these haven't had a significant influence on our relationship. now is the time to improve it. so, we need to take the time to do it. >> okay. i've been a little bit surprised with evolution of financial services as they are discussed in ttip or not discussed in ttip, you know, with europe and the united states being the two largest providers of financial services in the world, some sort of harmonization might make sense and i think that's been the european position. if i understand treasury secretary liu he's not at all been enthused about having discussions with the nasty europeans -- i'm putting words in his mouth. but what -- what -- what's the
state of play there? jim, are you following that? >> well, a bit. i'm not -- probably not as expert as some others are on this. but certainly i think you're right that the -- because we are two such gigantic financial markets, the opportunities in liberalization there or harmonization are tremendous. the benefits that flow from that are probably as large as anything you could think of in the entire ttip agreement that would flow from that. in the united states the reluctance on the part -- and i think we should be doing it. i think the reluctance in the united states is the passage of dodd/franks and nobody wants -- it's too new, nobody wants to tamper with that, nobody wants to tinker with that. i think it definitely needs some tinkering with, but nobody really wants to deal with dodd/frank and the secretary of treasury, this is a little bit of a turf battle, the secretary of treasury saying that's our area. trade negotiators don't get into these financial services issues, that's for treasury to negotiate
and so i think they've been reluctant because of the pushback they're getting from capitol hill about doing anything on this. they've been reluctant to really try and open the door that much on financial services. >> tad? >> yeah, i don't have a lot to add. i just think that the trauma of the financial crisis and dodd/frank and a lot hasn't been implemented yet and i don't think treasury wants to touch this at this point. >> is it too late to add it if the negotiation goes -- >> well, it's in there. >> let me clarify our position. it's still on the table from our perspective. and it's -- we don't see why if we negotiate a trade investment agreement that has such a big regulatory dimension, we should take out financial services. that's such an integral part of our relationship. i mean, not only is it the money side of any transaction, but it's also as you said, european and american companies be it
insurance, banking, reinsurance, securities markets, we are the leading companies in the world and we are also leading in regulatory progress, you know, or evolution. and so it only makes sense to have that part of a transaction, the economy part of the ttip. we're not looking for lower dodd/frank. we've been very clear is we want a forum where regulators meet regularly to talk about the new rules that they will adopt, to talk about how to implement the rules that we've agreed at global level to implement because experience has shown us that, yes, we agree we need the financial stability board or other midlateral forum and then in the implementation of those global agreements there are differences and these differences are costly and not necessary from a safety of the financial system and so we think
that financial services regulatory corporation should still be part of ttip. >> probably aren't going to get much disagreement with us up here, you probably need to bring somebody from treasury in for that one. >> just one additional point, you know, it's not very different from other areas where pharmaceuticals or cars or medical devices where we have the regulators in the room. it's not that they want to take over the discussions on financial services. no, no, no, we want regulators to be in the room and treasury officials together with our counterparts in the commission -- is it okay? >> yeah. >> and so i think the turf battle we can accommodate say, no, you are in charge. actually, if you attend any regulatory talk in ttip you cannot, but i do, the people doing the talk are the regulators. it's not the trade negotiators. and so that's also one of the reasons why we can confidently say that we will not lower our protection, financial services or pharmaceutical products or medical devices because the people who are doing the talks
and assessing what is possible are the regulators themselves. we just coach them a bit. >> i mean, will make one additional point because i do think it emphasizes the difference between what's being tried in ttip and sort of the historical role of trade negotiations because i covered the wto financial services negotiations. and they didn't get that far, but essentially they were about market access, right? they were about making sure that financial services companies, insurance, securities, brokers, banks, were free to do business in other countries, but this is different as i understand it. you're talking here about regulatory structures, pru dencial measures, ensuring the safety and soundness of the banking system so it's a different set of issues in that respect from what was historical done in the wto context. it makes it harder. >> we would still do what we tried to do and more. >> sure. >> we'll do also regulatory issues. >> it's one of the areas where this is very much breaking new ground, so maybe part of the reason it's difficult. >> but not on substance. simply setting up cooperative structures to discuss later.
so, it's not like in pharmaceutical or cars or medical devices where we are trying to have binding outcomes in ttip on substance. it will be just a process. >> well, before we open this open for some audience questions, i have one more issue that i'd like to put out here. and it is the sis sanitary issu. the reasons i raise it, it's an important domestic political issue in the united states for the agricultural community. my sense is if we conclude a ttip that does not allow some additional trade of genetically modified organisms and my chickens and meat that might be treated with some hormones or something, if there's nothing in there for agriculture, i'm not sure that we could get the votes to pass a ttip. and so is it possible to get something on those issues? >> sure. before we agree to launch the negotiations, we looked at spf
issues on both sides and we looked at a number of files that had been there in the drawers on each side, applications that have been pend iing for years a we are trying to move along in the negotiation process on these individual issues. and, for example, i can go into the example, i'm not sure it's really necessary, but we've made some fundamental changes, for example, on carcasses of beef. now, in slaughterhouses in europe, sorry, i have to be a bit detailed here, it used to be the case that carcasses were only washed with water. and the discussion was what's water. what's the temperature. how pure needs the water to be. and we received a request to -- from the united states to allow for carcasses to be exported to europe that have been washed with water with 5% of lactic acid. are we allowed that because our
scientific authority give an opinion that it's actually safe, recommendation how to handle it, and we changed our rules. so, now throughout the european union in all slaughterhouses you can either do water or water plus lactic acid. and that was i think an important step symbolic to show that to the u.s. that, yes, europeans are willing to make changes. it's not going to be business usual. we get that agriculture exports are important and politically much more if you look at gdp, that's for sure. it's the same on our side anyway but it's slightly differently. so, we do get that. and if you look at agriculture from a european perspective, we are the model for strong rules. we don't find it normal that spanish farmers have to wait 15 years to get the export of avocados being approved. we don't find it normal that apples and pears from europe, most european country are still not approved here. so there are things that can be done on this side as well.
we can have stronger rules for both sides to facilitate trade for farmers. no problem, we can do wto and plus an spf issues that. that will require authorities on both sides to agree to be bound by deadlines and by clear rules. >> let me pile in on your side and say i hope to be able at some point to buy cheeses from europe that are made from milk that has not been pasteuriureur and we have our own spf issues here that should be put on the table. enough of that. let's turn to the audience and see whether there are any questions. jim? >> thank you. jim burger from "washington trade daily." i was interested in your comments on -- i guess a new -- not new, but the younger democrats voters moving towards free trade or freer trade.
does that indicate that hillary clinton is totally out of touch with her party? >> she's not out of touch with those who she'll need in the election. she'll need in the primary tend to be different kinds of voters and those she'll need who will support her with the workers, volunteers and that. no, she's not out of touch in that sense there. but i think what you're seeing is a change in the demographic that will eventually catch up there. >> can i add one more thing? it came very clear out of that poll while there is a shift on trade, trade is not a highly salient issue in the election. >> it's not. >> pretty far down the list on what people vote on. >> yes, here. >> one back on that side. >> adam suity with politico. i had two quick questions. the kind of framed around is it just getting harder and harder now to negotiate ttip given some things that have been happening.
first, the isds approach that was unveiled by the commission, is the u.s. going to accept that? that seems to be highly -- it seems to be the opposite of what's in the model bid in terms of what the u.s. views as a model investor state dispute mechanism and although they made some changes in ttip we'll see what those exactly are to soften the investor mechanism a bit. but is that just going to be another red line that cannot be crossed? i know you don't like to use the word red line in the negotiations. and then just last week you saw the safe harbor decision. i know data rules are not being negotiated, but businesses want data flow rules in these deals. how are these two issues linked? how will that decision affect the ttip negotiations?
>> thank you. great questions. we don't talk about isds anymore, we talk about ics. investment court system. anyway, i think you have to step back and look at the essentials that we've been able to preserve. first of all, is that you would have and we are very much in favor of rules to protect foreign investors. in many countries it's actually quite brave to invest and you want a bit of extra protection because you're just not from that country. and so i think with the new proposal and the european parliament we have maintained that principle that foreign investors do need additional protection and host states should have fundamental obligations. but also the right to regulate to achieve legitimate public policy objectives should be clearly reaffirmed in our trade agreements. and second they should be a
dispute mechanism whereby states waive their immunity which is an exception actually in international affairs. usually states have immunlety and so you cannot sue a state unless under a specific circumstances. so, by maintaining these two principles that, yes, investors have to have protection with the right to regulate, that has to be reaffirmed, and the fact that states should be affected by binding dispute resolutions, we put the principles back on the table and we are able to negotiate on this topic, important topic of investment protection, whether the u.s. will agree or not, we haven't tabled our proposal and it will be a matter for further negotiations. but we had been in a situation for a year and a half where we could not negotiate on investment protection because we wanted to conduct public consultation. we had 144,000 comments on our
list of questions, so we've had a very intense discussion on the matter. now, we're able to negotiate again. on the safe harbor, a couple of points. first of all, the court has answered questions from the irish court. so, people, the court didn't do this or that, but the court was very much limited in what it could do. it was asked a couple of questions by irish court and it answered those questions. the safe harbor decision of the commission has been held invalid by the courts. which in a way was in the line of the opinion of the advocate general that came out two or three weeks earlier. does it come as a surprise? yes, in a way. but we've been working with the national data protection authorities to come up with a correlated answer and guidance to companies on how to handle the new situation. this being said, the safe harbor was not the only ground to transfer data.
you had standard contractual provisions, that is a way companies to transfer data, that has been used by companies. you had binding corporate rules to transfer tadata within your n groups and you had the consent of consumers. if companies asked european consumers, their customers, do you agree with your data being transferred outside of the european union and it's part of the long list of things that you signed, it remains valid and legal. all those ways to transfer tada remains valid. it's not that all data cannot -- all -- or data transfer is now banned in the future. what impact will it have on the negotiations, i think it's too early to tell. it also depends on how european and national authorities will handle the situation going forward. we had been discussing -- >> our time is very nearly out.
shall we take -- is it a quick question? right there. okay, do one quick question. >> yes. i'm a law professor in paris. i have a question on ttip and public opinion. the need to change the thenarrae around ttip to change public opinion. the narrative has changed over time. at the beginning it was about geopolitics and then it became about the economy and then it became about small and medium enterprises under the new commissioner, but yet the argue the remains pretty much today race to the bottom. so public opinion is very much concerned that this kind of agreement might lead to race to the bottom. why don't you revert this? why don't you present this as an opportunity for a race to the top? this permanent regulator to corporation might give consumer rights? >> can i weigh in? i actually think this that this is one of the big opportunities that ttip represents.
this is less of a concern from the u.s. as we saw in the polls in that particular regulation, but this has been an ongoing narrative surrounding trade agreements. if we see a situation where we've got a ttip that has strong regulations that cover the two largest consumer markets in the world, that puts tremendous pressure on the rest of the world to move up to those standards, so i actually think this is a real race to the top opportunity. i like to see that happen in substance. i also agree with the question, i would like to see it presented that way. >> anything? >> sure. i think in a way that's what we've been doing. but i think a number of skeptics will not believe us. they have not believed us when we are saying it's not a race to the bottom. they will not believe us if we tell them it's a race to the top but -- >> jim? >> i think that this is a great opportunity for us to be the two great powers, economic powers that set the rules for the rest of the world, and i don't mean
that we dominate it, but i mean, we can set the standards and the rest of the world hopefully will follow along. if we don't do that, you can be sure whether it's china or somebody else or it's a plethora of different kinds of arrangements we'll do that so i think it's a great opportunity for us as you say to kind of have a race to the top. >> my perspective is that what we're trying to do here is raise the quality of the trade policy debate. >> yeah. >> i hope we've been able to accomplish that to some degree. please join me in thanking my fellow panelists. >> thank you. >> thank you. >> very good panel. >> thanks. >> thank you. >> good. every weekend the c-span networks feature programs
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year in a row from florida for the miami book fair international. and the national book awards from new york city. just some of the fairs and festivals this fall on c-span 2's "book tv." the transatlantic trade and investment partnership or ttip is negotiated between the u.s. and the european union. the discussion at cato continues now with a focus on whether the agreement can live up to its promise. this is about an hour and 15 minutes. >> all right. so, let's get started. i'm invited in my current capacity as deputy secretary-general. let me first start off by saying congratulating cato very much for an incredibly interesting conference. particularly i would say this topic will be rather interesting in the sense of trying to broadening the perspective.
what we're supposed to discuss here is the ttip and the multilateral trading system in a broad sense and we have with us very eminent speakers to address this. after i've spoken i will ask the professor from the university of california berkeley to speak and then joe spolen from the germany law center and then harsha singh. this has been rather gloomy on the ttip and its effect depends on whether it exists, so we'll work on the presumption during this seminar that ttip will be a resounding success. it may be a tall hypothesis and assumption judging from previous panels but i will request all panelists to work under that assumption as we progress to the question of effects. because something that doesn't exist obviously does not have an effect. so, why is this question very important from the point of view of my perspective and why i thought it was very good that
cato put this as one of the key topics for the specific session? well, let me first try to recall the fact that actually the current global trading system was created, maintained, and developed by the two participant in ttip and they don't take that assignment lightly in terms of their commitment to the multilateral trading system, neither of the parties. so, obviously the effect of ttip is something that presumably they also care about. second, they hrp the major powers. they have recently two weeks ago committed to the sustainability of development including the commitment to eradicate poverty so the manner in which ttip will react to the commitments by the united states and the european union on the development of the world is, of course, a relevant one. third, developing countries around the world are currently considering mitigation strategies to multilateral -- to pure lateral agreements as well
as megaregionals to which they are not parties and i hope the panelists will be able to have a conversation of what could be the feasible mitigation strategies. and finally, of course, the wto is the bedrock upon which we all nations basically build their insurance system for multilateral trade or global trade. and i would like the panel to address also what could be the mitigation strategies, adaptation strategies for the multilateral trading system. i have been selected to be both moderator and give an introductory speech and thank you very much for that, dan, but these are the parameters that i've given to the panel. as concerns my own speech, let me just highlight a number of things that at least from my perspective would need to be taken into account. first, it's actually to put ttip in a bit of a context. in my view ttip is often oversold. it's often very, very large arguments and you're mixing apples and oranges. i'm a little bit more on the
frederick -- if you remember from the first panel, that is a very important fta, it's very important for the participants, it's very important for the world because the participants are so incredibly important for the global economy. but in the end it's an fta. and there are a lot of ftas out there, so when you describe the effect of ttip you also have to take into account the fact that we're not starting fr inin inin. it's not in a vacuum. first point. when it comes to the effect of ttip on the countries and the global trading system and i would like to distinguish that from the multilateral trading system meaning wto, if you start with the effects on third countries at least from my point of view i have to differentiate between tariffs and the regulatory agenda. if i start with the tariffs part which unfortunately often overlooked, if this is aserious free trade agreement with
substantial trade elimination of tariffs, it is quite interesting to know that contrary to some of the concerns by developing countries, at least from my organization, the aggregate level there would be quite limited trade diversion. in other words, because the eu and the u.s. in stimulating their economies through this -- and it is on the supply side, it's not on the demand side. it's a separate conversation on what the eu and u.s. should be doing on the demand side which is really in not a good state. but actually because it will stimulate the increased trade flow and both the eu and the u.s. are sourcing heavily from developing countries, we would imagine on the aggregate level there would be a positive effect on the tariff elimination. this being said, on specific sectors there could be quite negative effects. for example, when we have looked at this fisheries industries in ghana would be one example of an agriculture sold to the eu
market considering the mfn duties of the eu could be displacement effects on the european market which needs to be taken into account. a country selling things the individual products matter, and you do care about the negative displacement effects for individual products, so in our view in terms of mitigation measures there the eu and u.s. could do more. first, it's quite important to have liberal and simplified rules. so as not to disrupt the value change in which eu and u.s. companies are part of. unfortunately there, the track record of the eu when it comes to negotiate rules of origin allowing for nonoriginating material to be counted as part of the preference treatment of free trade agreements is not enquournlg ie encouraging and we'd encourage both parties to do both in that field. the next one is probably more for the u.s. to expand its preference schemes the 86% a number of products are excluded. where the eu produce would have
basically better access to the u.s. market than african producers or from that matter ldcs which are also not covered in terms of preferential access to the u.s. market. if the parties are serious about the economic impact for core developing countries these are two measures they can take in terms of mitigation strategies. with respect to the regulatory field, i'm very happy -- i mean, this is an area where a lot of people are very concerned. we're talking about developing countries. our line is basically, well, you know, you could be worried if we're talking about harmonization to higher level than the current level of regulation in the two parties. that's just not realistic. hammonization not in the cards and raising the standards is very, very, very unlikely. so the most negative effects you could assume theoretically is just not going to materialize. where we come out is actually almost the opposite in the sense that the worst-case scenario here is the status quo.
should there be regulatory approximation. under the condition that these are extended to nonparticipants producers that basically fulfill the requirements, then actually they just have to meet one test for both markets instead of currently two tests which is actually a plus. so, in terms of a cost/benefit analysis the regulatory approximati approximation, worst stays status quo and no improvement and ideal case developing countries would probably benefit. my third thing is on the global trading system implication for the wto and here we actually view the effect more psychological than factual. in the sense that there is -- there is -- because fears have been rising with the arrival of megaregionals people are starting to think whether they are avenue pproaching the wto and their own trade agenda in the right way. those type of spillover effects
broadly speaking are positive, for example, in the way that africa has started to think about its own trilateral agreement or it's own continental free trade agreement which is basically megaregional and there's an enormous untapped potential for developing countries. intra-africa trade is 14% if you compare that with east asia it's 50% and you compare it to the eu it's 65% around there. it's an enormous untapped potential and the reason there hasn't been that potential is the barriers that exist. the connectivity is extremely limited in terms of commerce in africa. if they feel there's a game change going on through megaregionals and thereby seeking closer agreement in africa this is a good thing for african producers and good thing for african consumers and it's a good thing for african general development. so, one mitigation strategy coming from a global picture would certainly be to axle rate regional integration efforts
elsewhere. another one which has to do with the wto is the fact that there's a growing gap on the issue putting on regional trade agreements and what we can do in the wto. the solution is not to put a bar on regional trade agreements but to actually start seriously discussing how to raise the level of ambition in the wto and i'm sure that we'll have a number of smart points on this one. but from our point of view one of the conclusions by the rise of megaregionals is actually to put more ambition into the agenda of the wto. the third mitigation strategy on the global level is whether countries would be interested in docking into the agreement. this is not a solution for the vast majority of developing countries. but it certainly is a question that, for example, norway, switzerland, turkey and we heard in the previous panel mexico and canada may want to consider. beyond that a version of that is to be inspired by the provisions and take them into biellateral agreements that you are seeking with one of the ttip partners
like the economic partnership agreements between the eu and its former colonies is one thing. so, could there be a spillover effect. i think this is a question i want to put to the panel. i'm personally not at all convinced that people will be prepared to sign the dotted line individual -- on individual provisions or for the agreement as a whole. the reason why i say that i see megaregionals partly as a reaction to the change in distribution of power in the global system, so as you multilateralize something or plural lateralize these megaregionals afterwards it's highly unlikely that people forget about they have more power than in the past. why would they sign any dotted line. that's not my experience as a negotiator that i would ever sign up to something that somebody else negotiated in a closed room that i was not part of and i don't think emerging economies approach it like that. so, that was my attempt at starting the conversation. i now go to vinod to continue.
>> well, thank you very much. i appreciate the invitation to speak at cato. i have two preparatory remarks. one is that after reading the various papers by dr. singh and your comments, i can see the adage that great minds think alike may be true or small minds seldom differ so we do have a lot of similarities is what we have. the second remark is that my usual role as a political economist as some of you who know me is to tell economists why what they want to do can't be done and to show all the political impediments in front of them despite the wonderful economic models that show these great gains from trade. in this case i have to say i'm pleasantly surprised and maybe you'll be pleasantly surprised i actually think i have more optimism on ttip. i would not have thought ttp would go as smoothly as it did.
and if you think about it, there are a lot of differences among the countries in ttp and so if anything it would be quite unlikely to have an agreement in ttp so the fact that you can get ttp done and it does include a number of the same issues that are in ttip such as that there might be cause for optimism. now, i can revert back to my old style which is to say, well, let me tell you why ttip is actually more problematic. ironically i think there are a number of strong similarities between the two economies and the one is it's a geopolitical issue, both countries -- both groups are very large the eu and the united states and they've been engaged in pitched battles in the wto for some time. -- are extremely strong. and i think what we really here have is a disjuncture between what trade negotiators want to do and regulators want to do. it could be regulators in the eu or treasury or fda who don't
want anybody touching their turf. there's really a turf battle going on between regulators and trade negotiators. they wish to make the trade agreements but, of course, the regulators say, hey, stay away from finance, stay away from a lot of these issues. so, moving forward i think one other point that's useful to think about is the fact that we talk about megafts but we need to think not only about ttp and ttip and talk about rcep and the fact that rcep is moving along provides a different forum in which both india and china are involved and i think that's a very important thing. i think to need to do a comparative assessment of mega-ftas and we've got a promotion on ttp and rcep in the differences in a journal. let me turn directly to ttip and think about the impact on third countries and think about six possible ways and i think some of them have been covered but just to be more systematic about it. we can think about the way in which you might have third parties trying to engage with the ttip process.
the first is that they could just join the negotiations. that was raised why can't you have the canadians, why can't you have the mexicans and gary pointed out very nicely u.s. relations with canada and obama -- and mexico have been at an all-time low under the obama administration and of all the things that puzzled me when the canadians said let's join ttp, i was shocked by how much opposition there was in the united states to the canadians joining ttp given that we already have nafta and it took me some time it boiled down to dairy and pig farmers and a few other things so very narrow, specific interests were able to kind of block them for some time. so, i think this is kind of a no-go that other countries will join these negotiations. and the u.s. was reluctant when somebody wanted to join the ttp they were reluctant and told the canadians you had your big chance to join before and you mocked p-4 which is the forerunner of ttp because they thought who wants to join a bunch of little countries.
that option of joining the negotiation is not likely. a second is you can wait until the negotiations have been concluded and you can join that accord. and in some sense that's what you had from nafta, from kufta and then to nafta, you have the canada free trade agreement and subsequently expanded to nafta and provisions and so on. you can have that approach. it seems complicated, they can try to do that. it's not obvious that there's any specified mechanism to join unlike ttp which is actually encouraging countries to dock on to ttp. so, i don't see that in ttip and maybe that could be an advice to policymakers, you know, at least give other countries an option to do that. a third option is that countries may respond by trying to negotiate an fta of some kind with either the eu or the u.s. and so that possibly the chorus could be indirectly docked on and it depends on rules of origins and things like that. so, that's another possibility. then there's a fourth option is that you may just simply wait and then try to multilateralize
ttip into the wto and i think there is precedent for this. again, we can go back to the u.s./canada agreement and nafta where the u.s. was able to and other countries, canada, too, introduce things into both cufta and nafta that were subsequently kind of multilateralized. i think it was cufta that we got multilateralized into the uruguay round of the wto. that's the other possibility and you can wait for the u.s. and multilateralize it. and then you can also negotiate on separate accords, right? so if we don't have a single undertaking or even if there is a single undertaking we can join piecemeal so if you are india or china, you can say i'm interested in government procurement and interested in standards in i.t. and them you could try to join specific parts of the agreement that could be an opening for third parties to join. and sixth is and i think we've talked about this a little bit, can you unilateral adopt the same rules and regulatory
standards and then you can get mutual recognition from the fact that you're doing that. a lot of this is based on the issue which i think you're here to talk about is about three elements which we have discussed already. we have market arc says negotiations going on. we have negotiations about rules. and we have negotiations about regulatory issues. and i think there is a difference in third party accession in each of these and the implications of third parties being excluded whether it's rules or market access and i think the one in which countries clearly lose is in market access but has been repeatedly pointed out for the most part and here we have to exclude agriculture and textiles and a few of ply my favorite t s industries. with respect to rules maybe on labor standards, if you look at labor standards and environmental standards, i think the u.s. and the eu have increasingly been pushing the issues already in the ftas after the 2007 agreement in the united
states it was in a congressional agreement and it was very clear you'll have all the agreements whether it's chorus or what have you, will have environmental labor standards so that will also be the case and the third and the last one is regulatory. here i think that's where you really have a lot of complications. there are a lot of benefits from joining these regulatory standards but essentially this is now the first time in which you might argue the u.s. is now in the driver's seat with respect to global trade negotiations. the u.s. was kind of sidelined in some ways. we had a lot of trouble and the eu was going out and negotiating a lot of bilateral trade agreements. the u.s. did this. we did a lot of bilateral trade agreements with key trading partners like morocco and bahrain and other important economic actors and there's a security element to that and that was not really happening. but i think with respect to regulatory issues that's where we'll see potential difficulties for third parties to join the agreement and if they're not part of that, then essentially regulatory standards in the 21st century will be set by the u.s. number one and the eu number two
which may or may not be the interests of third parties and may not be good for global trade in some respects. i'll stop there. thank you. >> 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, but i'm for the most part based in geneva, switzerland, where the wto is based so i come to it from a wto perspective and i am based in switzerland and as you know it's also one of those outsiders, third parties, that are pretty much concerned about it. switzerland has a deal with the eu. but they are worried that the this may be on the mind by ttip so i think going back to your six options, they have probably in mind to unilaterally hook on to 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 so i'm involved in dispute settlement. i'm a law professor. i litigate wto, fta and isds cases so my talk will be somewhat more technical, so i'll 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 immovable object. and this is really very much how i see the relationship playing forward. so, obviously the unstoppable force is ftas and ptas being all over the place, the immovable object is very much the wto. people have said this is not really a paradox. it's really unstoppable. the immovable object would have to go out of the way. and the other way around. it could also be that they are just two ships passing in the
night. basically what i will try to show is that what we will need is to have some type of control over the unstoppable force of ptas and that at the wto level we'll have to make this immovable object a little bit more flexible. so, i'll do three things. i'll first say why this ft movement is pretty much an unstoppable force and i'll say a few things why the wto is unmovable for the most part and then go through a number of issues by way of conclusion that we'll have to address moving forward. so, the unstoppable force of ptas i think it's been mentioned already, there is close to 300 preferential trade agreements out there. when teaching in this area i was always using the example of mongolia as the only wto member out of 161 that didn't have a pta so far. the bad news is that last year they also concluded a
preferential trade agreement and of all countries with japan. japan being a traditional outlier. very hesitant to conclude pta deals. honestly if you had mentioned five or six years ago that there would be an eu/u.s. pta, this is a huge game changer. unstoppable force also in terms of what kind of preferential agreements you are talking about. the term is often used megaregionals. this is no in longer the traditional small-type bahrain/u.s. pta, and we have rcep and ttp, and looking at this from geneva this is really undermining the wto centrality. a lot of people in geneva are really worried about this. unstoppable force also in terms of the coverage. it's no longer tariffs. it's rules and investment and services. in 2000 there were only four preferential trade agreements in the area of trade and services. last year there were 127, so this is really a force to be reckoned with.
now, a few points on -- on why the wto is really this immovable objection, in what sense the wto is celebrating its 20th anniversary. a lot of people in geneva are all excited, posting about what has happened, how wonderful the regime has been. the reality is that in the last 20 years, very little has moved on the negotiating side, and we all know this. there's a trips amendment but it's not even in force yet because the majorities haven't been achieved. there's a couple of waive waivers that were enacted and committee has had some success but other than that we haven't seen a lot of movement. why is that, i think most people agree on this imagine 161 countries and it's not just a number, it's also the diversity between them. you have now china, russia part of the membership, many more countries with de facto veto power. the issues that are on the table
are far more difficult. it's no longer tariffs. it's rules. it's kind of normal that we move to iron out the differences there. and i think frederick mentioned this morning already there is also the issue of political s l salient. the environmental imperatives and the end of the washington consensus, it's become very, very difficult to agree on anything in this multilateral setting. now the wto has been immovable 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 really been dysfunctional. it hasn't been able to make decisions either way. there is this few settlement, but somewhat surprisingly in 20 years there's only been one appellate body case looking at the compliance with preferential
trade agreements and wto rules. the customs between the eu and turkey. some people are saying, well, that probably means all these ptas are consistent but the wto recent studies, and i think most people would agree, go in the other direction. there's a very interesting paper by a former wto official stating that about 60%, 70% of pta ms are actually wto mindless, are not complying with wto rules when it comes to gat or gats conditions. immovable also in another way, and i think that's what vinnie was already alluding to, in the gat, gats rule book, the fear about ptas is one of discrimination, is one of trade diversion. that test if you ask me is really outdated. if you look at an agreement like ttip or ttp, yes, there's some trade diversion potential in there, there's some discr discriminati discrimination.
but most of the provisions are hard to implement on a discriminatory platform. so, we did some studies looking at the korea/u.s., korea/euptas and it's surprising how many of the provisions in there by various methods really extend or have to be extended on an mfn basis. because of a technical stability and transparency because the member states or the parties have opted to implement it on a nondiscrimer to basis or because of mfn provisions. anything on i.t., for example, needs to be extended on an mfn basis. you don't have a pta exception in the trips agreement. a lot of u.s. mfn provisions are concluded in biellateral investment treaties. whether you like it or not, a lot of the stuff that is exchanged in ttp or ttip will have to be extended to third parties also. now, the last element in terms of the wto being immovable, and
i get a little bit more technical, is that the appellate body is open to look at these issues, but has been very strict when it comes to interpreting, for example, gat article 24 on ptas or wto rules are very strict on bringing in plural laterals within the wto agreement. you need to have a consensus of all wto member states and recent cases included when i worked on in guatemala have really put a number of brakes in terms of outside agreements influencing the wto package making it a bit more adapted to current concerns. so, where does that leave 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 mindless in major ways. make sure that they are transparent for third parties including developing countries, but also a country like switzerland and at the same time find ways to update this wto that is really a little bit
frozen in time. now, how can we update the wto? mr. singh will talk about this, but for me one perspective is that we need to stop looking at it as a fight between the wto and and ptas. this has to become a division of labor. in the wto we are stuck with this mantra of reciprocal bargains. i was talking to an ambassador from a developing country and he was saying i like the trade facilitation agreement but the u.s. and the eu are so firm on it 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 really fit the wto mind-set. and it has been mentioned by several people this morning in the wto we are used to work with hard law, dispute settlements, treaties enacted and on hard dispute settlement linked to it, as carrie was mentioning i see ttip as a long-term process, not so much a treaty as a process and as much as i am a lawyer in
light litigation i think we will have to have guidelines in there to move this forward. two very brief points on more legal issues. what i'm worried about is, w ptas, i mean if tpp is now concluded you have the nafta. the legal issues of how do these not wto and regional trade agreements, but different ptas interrelate is becoming a very serious issue. there's been a kafta case on this already looking at how cafta relates to central american customs. and the last point i'd like to mention and it goes back to dispute settlement as well the more wto plus we have in agreements like ttip the more we will have to think about workable dispute mechanism settlements in these agreements. today most disputes that could have been handled under regional trade agreements go to the wto.
i think over time, this will change because the wto plus elements and ptas, but regional trade agreements, and the dispute settlement mechanism they are really dysfunctional in many ways. the cafta case i mentioned was quite interesting to go through. we don't even have clear provisions on how to deal with forum shopping, how to deal with overlaps, and the wto as i said, has really put a block on looking at outside agreements, even agreements that tell you to sequence for example wto and regional trade dispute setments. and i'll stop there. thank you. [ applause ] >> thank you. and i want to thank cato, dan, and other friends here who have invited me, given this opportunity, it's a wonderful event, very high quality participation.
when i -- and joakim has commented about this, he started by saying that the presumption is that 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 -- on a project, on trying to sensitize india, how its markets will change after tpp. and also trying -- working various standards, because of the private standards value chains, and the kind of trains which are now seen for example in the g-7 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's happened is because the country's concerned recognize the fact that without that, you know, we are talking about various difficulties across. without that the difficulties and costs might be even higher. so one has to really expand the scope of what is lost, what is the cost of doing something and not doing something. and the other thing, which i come from, you know joost talked about wto and the perspective he came with. i have a wto perspective but i have a larger one. which is that today we are in a world with major interdependence and interconnectedness. we are far more dependent for our own prosperity on others and we are developing a highly fragmented world at the same time. and, one could say this fragmentation is temporary. therefore, it's like a little
more what we have here and that's what history has shown us. but, what i would like to emphasize is, that the earlier we move towards multilateralization, the better it is for everyone concerned, including the united states, or the eu. and when we have discussed various issues, we talked about eu, u.s., a little bit tpp, china came up a few times. but very little concern about all the others. because the action is actually in that inner circle, inner list of concentric circles. but those concentric circles are one integrated whole. therefore it's very important to try and see how to multilateralize it. the second point is that we -- even though we are discussing new issues we are discussing them from the perspective of old idea of like trade. today, investment changes the
whole manner in which countries interact. you can have a trade agreement here, between the eu and u.s., and investment from countries which are -- which i excluded, can change the -- the relationship as well as business opportunities. i tell people that there's a tpp with china is negotiating, and it's called the silk road. but this perspective, i now just want to get in to another aspect rcep was mentioned. i think its impact was overestimated. but one, because it's not going to develop standards which are global standards. second, seven rcep members are already part of tpp. if south korea has applied, some more from asean. indonesia announced yesterday that it is interested in applying. and my assessment is that china is also keen to join that game.
so, the only country which really is not thinking about moving on to standards of tpp is india. but today there is an editorial in a very influential newspaper, arguing to follow that course. so, the global standards, both because they are higher than what rcep will come up with, and the membership moving on to a new agreement, will be determined by tpp. ttip is going to extend it in some ways. and because it's the problematic i want to look at is how do we move to multilateralize the results of ttip? and ttip is at a very important juncture because something around the corner is waiting to happen, which is fda appeal with china and u.s. both in it. one is that there are certain which will be negotiated like
privacy, et cetera, investment, competition policy, transparency mechanisms, which by virtue of the fact that they are negotiated between u.s. and eu, rest of the world will have to look at them, as the kind of regulatory principles or disciplines to follow. another is the framework which will come up. they can be in regulatory coherence initiatives, as well as the sme platform. today sme and jobs is a very major issue in every economy. and we need to have some specific efforts built 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 a system which is inclusive, rather than fragmenting, or exclusionary. and that's where conformity assessment become very
important. deliberate impact effort is needed. after that, we have to also see, so it's not that ttip itself is going to move into multilateralization. a specific effort has to be made. even more, specific efforts have to be made outside that in wto itself. and, inclusion of many of the others because trade today is no longer just the issues way are covered. you go to world customs council, you go to ilo and they're discussing issues which are going to be part of ttip so mechanism far more relevant than what we have today is a required and one thing which people often don't consider this that the wto agreements are actually plural lateral agreements in effect because you have a whole structure of different levels of
disciplines amongst different members. what makes it multilateral is mfn. and what has prevented that is the fear of free riders which if i give something which i'm giving as a -- 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 there's reciprocity but not identical reciprocity. that is not fair. then my producers are actually going to lose out. so, we have to identify who are the free riders, which these key economies are really concerned about. there are very few. so, it's not the 161 members which will be the limit to multilateralization. it's the free riders of potential concern for free riders. that's the context in which china's name comes up very often.
and the interesting thing is, my understanding of china's mind-set is, it doesn't truly see itself as benefiting if it is outside that system. so it's actually prepared in a major way. ipr, investment, it's prepared -- it has a side agreement with the eu on labor standards. so we are not dealing with the conventional china which we understand. we are dealing with a china which sees that there is interdependence with the rest of the world. investment is going out. its trade relations, the global value chains, all that is a very essential part of the region of where the chinese leadership wants the country to go. and it's increasingly beginning to take root in the indian conceptualization, as is evident from the efforts they want to make to go in to apec.
because that's a preparatory route. so you have at least these two so-called free riders which, if you -- you address their concerns, then the process of multilateralization 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 mfn. and that conditional mfn can be possible if you have a transition phase. how have you sorted japan's agriculture problem or the u.s.
tariff issues in tpp. look at the 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. and there are provisions in wto which are already there which distinguish between developing nations, which provide you breathing space, and a review system to give you what i call manageable risk situation because a negotiation is always manageable discomfort. very few actually have high comfort levels in that. so when you take a look at that, and you have the kind of developments which i've talked about in regulation, or regulatory frameworks, and michelle had mentioned some of the other international initiatives, there is enough to make an effort to move forwards
multilateralization. there is enough interest of some of those so-called potential free riders to make those adjustments. and once that happens, then we have to address some other things which are yet to be addressed. i defer from joakim in terms of his assessment of 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 there are various reasons why they come in to being. and they are the ones which determine the global value chains. it's not the mandatory standards. it's disciplines or some kind of efforts to bring more predictability and transfer to that process that will be required later.
but, that is a place we will not be in if we are unable even to multilateralize ttip. so we have to really see what is required, some factors from ttip will be leading to multilateralization. some specific effort will be required to keep a mind-set, which is inclusive. the wto will have to consider changes. and, yes, they may feel that now, if something is -- that trade is a zero sum game especially if you're very poor, you have that feeling. but look at the kind of questions which the african leadership is truly asking in the trilateral trade initiatives. they've 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 actually manage otherwise. and when you combine with all this, the increasing investment
in to developing countries, and from developing countries, you have a -- the incentive system for moving towards some kind of landing zone where everyone is included in the system. rather than a situation where number of nations will say, hey, i contribute to your prosperity. and you're going to keep me out. that is the situation which will really stimulate both those who are 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 ] >> all right before i open the floor for questions from the audience, maybe throw out two questions, and if there are any takers of these. a number of harsha certainly touched been this in terms of -- actually all of you did in terms
of nonparticipants 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 would 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 mon of this, actually, the things which are not ttip which still requires global solutions. which means fuel subsidies, agriculture subsidies, none of which are appropriately addressed in free trade agreement. are we too gloomy on the role of wto and the niche of wto, in other words the fact that there will never be a solution to these things unless it's a global solution. second linked to that is the i.t. if there's a industry that is truly globalized, are mega
regionals actually that interesting compared to doing it in wto on a sectoral basis and that would appeal to another niche of the wto for which they don't have to sort of twist around in order to survive in a scenario of mega regionals. i want to throw that out as a starting point to try to go more in to specifics. you know, do you want to start? >> sure. i agree with you that we're likely to see this development where we have essentially both sectoral agreements taking place like the ita, ita-2 and telecom agreements as the same time as we have mega ts and you really need to handle agriculture and fisheries and so on in the wto. it's not clear to me actually that there will easily be a ttip agreement given these regulatory issues that we have. so given that regulators are very unhappy about trade negotiators intruding on to their bailiwick i think that's going to be very problematic. on the other question that you asked about third parties i am less -- i am less optimistic
than harsha singh was about these countries accepting standards that are put out in ttip. so take for example this question of tpp. i often say to u.s. trade negotiators why don't you just ask the chinese to join tpp rather than making this seem like it's tpp versus r sepp, and the reason they can't do that is they can't join tpp because they have so much industrial policy which is inconsistent with tpp that they simply can't meet the standards. it's not clear to me that despite some progress on the chinese leadership in terms of opening up their market and so on, that the chinese don't have a completely cynical view of this and they may be willing to join the agreement but will there really be changes? one of my students has written extensively on the fact that industrial policy in china simply shifted from the national level to the state level, and you can do what you want to do with industrial policy in the sector at the provincial level, state level, and not have to do it at the national level. you can still engage in a lot of the same industrial policy approaches that you wanted to before.
so the idea that somehow we're having a convergence in economic models around free market economics with no state intervention, despite what cato may want to have us believe, i don't think this is taking place in china. i'm very skeptical that they will go along with some of these ideas. >> joost? >> i think i agree with the bigger point. you know we keep talking about china and perhaps switzerland, outsiders, how they could be left out, discriminated. if you look at it from a different perspective, they are arguably free riders. as i said a lot of these provisions in ptas are kind of public goods. and public goods you can only give once, transparency, privatization, ip rights enhanced so if i'm china i get all of this for free without having to give anything, so the question then is how do you -- what are the incentives for china are or switzerland or outsiders to join these arrangements? and i guess there you'd have to go back to tariff issues,
government procurement. but it's a game changer. it's not so much that they're being discriminated, victims, in many ways they have become free riders. if you look at tpp, and the investment chapter there, tpp has 12 countries. we've looked at this if you add another 10, 15, you can very easily get a critical mass of close to 90% of the flows and stocks so you could by just adding a handful of countries, really make a plurry lateral that covers political mass. on your topics that must be dealt at in a multilateral setting, subsidies or other questions, that was the point i was trying to make. i think it would be hard to do this with all 161. what i would like to see is plural laterals but in the wto it's almost impossible, because even countries who are not part of the plurry lateral have to agree this could be discussed in the wto.
so what i would like to see is the wto lets a substantive wto members negotiate rules issues such as subsidies, the other big thing that happened last week was the oecd coming out with brand new tax rules. this is 90 countries. this will have a huge impact on trade investment as well. it's not all 161 countries. so we need to find ways that are not wto minded just adaptation into the wto framework. the appellate body seems to be very hesitant about this. they accept changes only through wto formal amendments or waivers. that i think would be a mistake. >> on each of these that are sudden concepts which we have touched upon, and the key concept is is a plurilateral
with mfn not happening within wto. effectively a multilateral because that's what the wto agreements are all about. and it's not -- it's not happened 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. the i.t.-2 is being negotiated because all the free riders or potential free riders are part of it. in that context, a country like india, which is not part of ita-2, has not scrubbed that. it's still being negotiated. so the issue is, that when we see something like tpp or ttip and it's not as if china has --
actually it's not a question of u.s. asking china, china has asked many times to u.s., please let me be part. and it's not happened because u.s. doesn't want to do that before it had a deal. and now let's see what happens. what -- how china and -- china stopped asking once it had a bad experience with its tsa application. and since 2013, china has kept out of the tsa negotiations precisely for the same region china was not allowed to enter anything which was significant in the context of tpp with discussions. so the interesting thing is, china actually is 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 eu on labor standards and 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 high value technology, and in order to also protect their own investment outside, they want to have a strong investment agreement, maybe multilateralize it eventually, and also, start introducing state-of-the-art ipr technologies. so when you see all this, they're not going to -- the momentum of these generic exchanges so to say, they may be managed in parts of china and thence spread the word but the change in china does happen like that, and it will -- it has the incentives to participate rather than be out.
the incentives to participate for others will also be what do i lose out if i'm not part of it. today with tpp actually being done is far more palpable. what you can lose. so there are incentives. however 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. on wto sectoral basis the free riders issue is that the interesting thing is in terms of trade there was a very strong movement when india was blocking it, and a very strong viewpoint that 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 -- of wto, if there is a mandate to do something, allows that. you can have an agreement between two parties, and 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 consequences of this. india was trying to work things out domestically. and the wto members realized this was the case and ultimately we did have a trade consultation agreement with india. so it's preferable to have it with them rather than without them. but today, i've seen 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. so that is the way it will go if those who find the disincentive
to high to be part of the system. on the public goods aspect actually one is the rules, and and the promulgation of rules and the second is how you implement them. it's the implementation whether discrimination will come. if you are discriminated against in an fta you have zero recourse. capability of questioning them in a dispute settlement system if you're not a member. so in effect even these issues have to be multilateralized precisely for giving full effect to inclusiveness. that's something which we have to keep in mind. thank you. >> thank you very much. i will use the authority to just respond to harsha on the private standards, where i disagree with you, because it's not part of trade negotiations. i think this is a very important issue but the problem is that trade negotiators are too afraid of dealing with it. partly because you don't want to enter into what is market driven
developments. it is true, it's very important issue and defining global value chains but i have yet to come across a single trade negotiator -- >> can i give a short point to that? if you see the g-7 declaration, the g-7 governments are saying we will monitor the implementation of sustainable development social standards in value chains operated by our enterprises which are located in our territory. the government is all right, talked about -- the government if joined this year has actually become a party to private standards also in global value chains. my point is that since they impact so much upon whatever global business, however global business is conducted, and if you're already a party through monitoring and ensuring that the standards are actually implemented throughout the value
chains, you might as well start talking in any agreement, be it an fda, or the multilateral one, about how to make sense for everyone so that global trade and investment doesn't bear the additional but is facilitated further. so that's the point -- >> but we're still waiting to see that happening in trade negotiations. >> if it doesn't happen then that's the next frontier. >> yes, that's true. as is coherence. so i open the floor. yes, you have a question here? mike? and if you could be so kind to introduce yourself when you're asking the question. >> i was just wondering if you
can really address the problem for all these agreement will bring us -- we are saying a free market. we are saying a free stance to fairness to all people whoever are interested in particular vend your. not toll whatever you think is a special interest group, they take whatever they want and it's free to them. so the fair cost to them and i just wonder, and in america, the labor, or workers group, they are thinking doing things, buying things made in america not from other country. so, do you think the agreement would be become a sort of body ing specials -- lower properly group or labor working group or
some poor poverty country rather than the humanity to support them probably -- pieces, they are to invest something without going through the corporate or trade agreement. so i just wonder you can say any problem that can cost they say the privatization, or public/private partnership, there are most likely agreement misleading and is unjust so would you be address those problems? >> just a question are you directing your attention to any one in particular or all the panel? >> all the panel. very good petition to solve your problems. >> do you have more questions? >> first of all thanks for a very good panel. second, let me just support the point on the world private
standards. de facto today in a lot of sectors, government mandated market access is dependent on the compliance with private standards and that they're being followed. this is not just an issue of private -- private nature anymore it's an issue about governments increasingly have to sign regulations in order to make private standards more important than they are. the question i would like to ask the panel, and i'd like to put it in somewhat provocative terms, now, if the point is to use the sort of the political tail wind from mega regionals or ftas in order to shake the wto system in to action, isn't it favorable then, that ftas, mega regionals, whatever you call them, are going to be as much trade operative as possible that you are going to build tensions into the system which is going to change the political calculation in those countries that so far have either refused
or ignored global trade 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 obvious protectionism existence between different country, it was much more an issue of trying to take away preferential and risk effects that existed through various types of existing economic agreements. i mean you can go back to sort of the kennedy round and role of creating the common market in the eu, and sort of the political coalescing effect it had on the united states, and others to move forward with a global trade agreement. you can go to uruguay round with
nafta, the creation of the single market and sort of see the very strong plate cal effects that these trade diverting initiatives have had on fear among other countries that if they -- if these initiatives were not going to become eventually part of a wto system it was going to create a lot of trade aversion. from the political economy viewpoint shouldn't we try to make these agreements as much trade as we can. >> i'll start with the second question, if no one disagrees with that, since i was also panelist. i think there's a mix-up, depends on who -- the politically correct answer is no. the reality of negotiator is yes. negotiators think like that. and i used to be a negotiator. the problem you have is that currently the impasse in wto has a huge klatt cal damage called the poorer developing the
countries, particularly the ldcs. now they're not the ones hijacking the system or preventing progress. it's a rather small group incapable of moving forward. so why would you devise a trade agreement and mega regional that adds to the already heavy burdens that are on their shoulders, which does have a direct toll. so 'tis makes a lot of sense if you think you can engineer in a direct effect on one developing country as opposed to another one. it's however very difficult to do so without having a huge klatt cal damage which just happens to be the majority of the wto memberships who are already the collateral damage of the deadlock in the wto. that's my view on this issue. >> well, i think i would like to raise one issue. i mean there's always enthusiasm for both mega fts and sectoral agreements what we forget in many cases we really want to do sectoral tradeoffs. i think the real problem is the developing countries have rightly complained that there has not been agricultural
liberalization in the rich countries. i heard a former wto economist, i will not mention his name or her name who said the wto and gatt was very much tilted against the developing countries. and i think in many respects that's right in the sense that if you look at every time there was liberalization there was always exceptions. textiles for example where developing countries were successful and we have this whole history of expert restraints that as soon as you became competitive in some sector, it was imposed on you by europe and other state countries as well. yes it sounds great. i do political economy it sounds very appealing to me to beat them into submission through trade diversion but i think the reality is that i don't think that's really in some sense equitable. and i think in -- and we're practically the probably will not be very clear rules set up by the eu and the u.s., it's going to be hard for them to get movement on regulatory standards and finance a lot of these issues, on other issues they may
agree to not deal with agriculture and the like because they are protectionist of agriculture. i'm not going to say who's more protectionist, the u.s. or eu but we're in the middle of a massive drought in california and they're still growing rice in the imperial valley which is a desert, right? so clearly there is some protection in the united states in agriculture. forget eu protectionism. so i don't see how those problems are going to be addressed. and even if they cut a deal in the mega eft how will that multilateralize into the wto since agriculture essentially could be excluded. >> on private standards, i think creative lawyers, and i'm one of those, could argue that's it already covered in the tpp. private standards, standards enacted by nongovernmental bodies that you could go after or even classify as international standards that need to be followed. there's already some of that covered. on fredrick's point i think you're spot on. there's less trade diversion i would say because of these new deeper ptas. so less of a pressure for others to join in and i don't see this
as a problem. i think it's wrong to think that everything needs to be multilateralized. certain issues that will never be agreed upon amongst 161 countries. if you look at the eu, even in the eu, we have multiple speed. we have euro countries. we have all kinds of provisions that apply to a subset only. why on earth would the wto stick to its single undertaking. it just doesn't make sense. >> yeah, thanks. thanks. it's very important what you id, multiple. and that is the only way you can multilateralize. and, wto gave up on single undertaking in 2011 ministerial meeting. so you know, we -- the structure is open. in terms of what you talked about whether there is an incentive to make it direct as possible, actually depends on which agreement you are talking
about. if it's the tpp, it's not the trade diversion to adversely affect the non-members it's more to attract the members to be a part of a deal through agreement specific development of value chains and this is something which the ustr has said many times that 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. so -- but in ttip, i think both u.s. and eu would like others to follow the system, which now the system which they would like to emphasize in order to create a fair and level playing field. in terms subsidies to state enterprises, in terms of standards on environment and
labor, so that the so-called competitive neutrality conditions are maintained. and if that is the case, s have to balance the issue which you talked about, and greater acceptance by those who are also the objective of that entire system. and, therefore, they've -- i expect there to be some kind of mechanicism for this to be extended to include others. profess e professors agarwal actually mentioned as advice to ttip negotiators. i think that's very good advice to keep that in mind. on the other hand, as far as multilateralization is concerned, you know, when we think of multilateralization we have to think of the court, and
then the rest, and then i think there are systems like reference paper and telecom, et cetera, which are recommendations agreed. so you could see whatever is agreed in ttip as a recommendory packa package. and that's possible under the wto legal system. so there are many ways it could be done, provided the free rye ter problem is addressed >> everyone with the last question but they're not supposed to respond to now. but think about it. the panel was how do we mull toy lateralize. are there certain things in ttip that really should not be multilateralized, as all, they shouldn't even be an attempt to extend beyond the two parties? i leave that question with you. now i have an announcement by the organizers which is that the luncheon and interview will be held on the second floor or second level in the george w. yeager conference center. so it's up the spiral staircase.
rest rooms, which is very important information heading for lunch, rest rooms on the second floor on the way to the lunch. look for the yellow wall. thank you very much on behalf of the panelists, we'd like to thank the organizers. all persons having business before the honorable, the supreme court of the united states, draw near and give their attention. >> this week on c-span's landmark cases, we'll discuss the historic supreme court cause of schenck versus the united states. in 1917 the united states entered world war i. patriotism was high, and some forms of criticism of the government will a federal offense. charles schenck who was general secretary of the philadelphia socialist party handed out and mailed leaflets against the
draft. >> this is a flyer that was produced by charles schenck in 1917. 15,000 copies of this were produced and the point was to encourage men who were liable for the draft not to register. the language in this flyer is particularly fiery. equates conscription with slavery and calls on every citizen of the united states to resist the conscription laws. >> he was arrested, tried and found guilty under the recently enacted espionage act. he then appealed and the case went directly to the supreme court. find out how the court ruled, weighing the issues was clear and present danger, and freedom of speech. our guests include attorney thomas goldstein, co-founder of stoatous blog. and beverly gage, professor of history at yale university, coming up next on the landmark cases live, monday at 9:00 p.m. eastern, on c-span, c-span3 and c-span radio. for background on each case while you watch order your copy of the landmark cases companion
book. it's available for $8.95 plus shipping at c-span.org/landmarkcases. monday on the communicators, california representative anna es skew the top democrat discusses how congress should address cybersecurity and data breaches. she's joined by politico's technology reporter. >> what i'm struck by is what analysts have instructed us that there are two main pillars relative to cybersecurity that need to be honored. and up to 90% of these breaches are due to two factors.hoo. and up to 90% of these breaches are due to two factors. lack of hygiene in the system and lack of security management >> monday night at 8:00 eastern
on the communicators on c-span2. next, a hearing on what's being done in the public and private sectors to protect seniors from financial predators. the house commerce subcommittee held this hearing last week. the subcommittee on commerce manufacturing and trade will now come to order and the chair recognizes himself for five minutes for the purpose of an opening statement. this morning, first let me welcome our witnesses. this morning we will receive an update on the consumer protection efforts in place to address the fraud risk for america's seniors. as of july 2013 there are over 44 million americans who are older than 65, that's almost 14% of the population. the population 65 and older in
the united states projects to outnumber people younger than 18 for the first time in 2033. a mere 18 years from now. the median income of these households is over $35,000 per year and 71% report having a computer in their home. the median net worth of seniors 65 and over is 25 times that of people under 35 years of age. the expanding population of older americans and their relative wealth compared to other great age groups increases the risk that someone will want to target them in scams. new technologies are everywhere. each week a new smartphone or tablet is announced, new apps with new capabilities keep cropping up. keeping up with new technology can be a challenge particularly for seniors that are less familiar with technology or are retired and are not exposed to new technology at the workplace. the risk of fraud cannot be underestimated. in the november issue of
"consumer reports" eight brave seniors came forward to tell their stories about being defrauded. in some cases out of thousands of dollars, sometimes just in a matter of hours. this is all before family or law enforcement could be notified or intervened. while fraud perpetrated by strangers against the elderly is not the only type of abuse against the elderly, it does represent 50% of the reported cases. that is why the hearing today is so important. even where there is no silver bullet, it is critically important for the subcommittee to understand what government agencies, what the media, what universities, and what private groups are doing to empower seniors to protect themselves from fraud and to help them recuperate losses if they are targeted. and we need to figure out how our enforcement agencies can devote more resources to the problem. there are few more important issues when it comes to fraud
and consumer protection. the chair now recognizes the subcommittee ranking member ms. schakowsky for five minutes for an opening statement, please. >> thank you, mr. chairman, for holding this hearing on preventing fraud against seniors. i really appreciate the focus on this topic. i look forward to hearing from our witnesses. i want to particularly thank a fellow chicagoan, robert harris, for being here. mr. harris is the cook county public guardian and he's leading the fight to protect the elderly against fraud and deception in my hometown. as a longtime consumer advocate and now the co-chair of the congressional task force on seniors for the democratic caucus, i'm committed to ensuring that seniors benefit from strong consumer protections. more now than ever this subcommittee ought to be helping and we are beginning that process today to ensure that elderly americans are protected
against fraudsters. seniors represent the fastest growing segment of our population since 2000, the number of seniors has grown about 30% while the population overall just increased 10%. more than one in four seniors who lives alone has difficulty with activities of daily living or some cognitive impairment. according to the fbi seniors generally have higher net worth, a tendency to be trusting and are less likely to report fraud. all of this makes the elderly prime targets. we have seen an uptick in the number of products and services that are targeted toward the elderly including anti-aging products, health related products, prize promotions and reverse mortgages. i'm incredibly concerned about the risks posed by those products and services. not necessarily that all of them are fraudulent but that we need to be careful.
i want to know what trends our witnesses are seeing, hear their policy in public engagement, prescriptions for combatting fraud, and learn how we can help you in protecting the elderly. i'd also like to say that if this congress is truly committed to rooting out senior fraud, we should start by providing adequate funding to the cfpb, the -- i know, what's the -- i want to say it out. the consumer financial protection bureau, the federal trade commission, and other agencies responsible for protecting seniors. stopping fraud should not come at the cost of adequately overseeing financial services, industries, appropriately monitoring corporate data security and privacy policies. yet, unfortunately, the republican budget would
eliminate mandatory funding for the consumer financial protection bureau and cut funding for the ftc more than 3% from the previous year. with those entities responsible for protecting more seniors from more threats each year, it's hard to see how those proposals are anything but anti-senior. i hope this hearing is the beginning of a collaborative process that will yield real benefits to senior citizens. our senior population and their families deserve no less. again, i thank the witnesses for appearing today. i thank the chairman for this hearing, and i look forward to gaining from your insights. >> does the gentle lady yield back? >> and i yield back. >> the gentle lady yields back. the chair thanks the gentle lady. chair asks if there are other members on the republican side who seek time for an opening statement?
we will temporarily conclude with members' opening statements. there may be additional members on the other side that may yet arrive at the committee and we would like to give them time because we do know there is another subcommittee hearing going on this morning, and people are toggling in between for the members who are here, the chair reminds members that pursuant to committee rules, all members' opening statements will be made part of the record. to be respective of everyone's time -- >> it is quiet. >> i know. it's unreal. >> the chair then is pleased to recognize the ranking member of the full committee, mr. pal loan for five minutes for purpose of an opening statement. >> you shouldn't wait for me, mr. chairman.
>> so noted. it will never happen again. >> seriously, you shouldn't. i want to thank you and the ranking member for holding today's hearing on ways to protect our seniors from fraud. as we've seen far too often each year, fraud affects consumers of all ages and the perpetrators of scams remain highly adept at avoiding the consequences of their criminal acts. seniors, however, are a fast-growing segment of our population and the threats to their financial security could mean billions of dollars in stolen assets if we let them fall prey to scammers. today's seniors are living longer, more active lives and possess greater wealth than previous generations of seniors. these are encouraging trends but represent opportunities for abuse to occur. seniors are inundated with advertisements that promote fraudulent work from home arrangements, computer repair, anti-aging products and many others. they are also targeted disproportionately for certain scams like those involving prize mow motions, health related products and services and reverse mortgages. in addition, more active lives increasingly means active on the
internet where a significant number of scams originate according to the ftc. moreover, certain types of harassments such as being bombarded with telemarketing scams and feeling the need to stop answering the phone can lead to feelings of isolation for our seniors. most troubling, we also are seeing a rise in abuse particularly financial in nature committed by those closest to seniors including family, friends, caregivers or other trusted advisers. seniors victimized are hesitant to report crimes to law enforcement either out of embarrassment or fear of retribution from their abuser. others may simply be unaware of a crime committed against them. a number of federal agencies stand ready to assist state and local services in combatting fraud. the ftc and the consumer financial protection bureau both play a key role in collecting data, educating consumers, and taking enforcement actions against the perpetrators of financial exploitation. and as often is the case, much of the day-to-day fighting against fraud is occurring at the state and local levels. i look forward to hearing from
those witnesses today about what is working and where we can improve our response to fraud against seniors. our seniors and the savings they have worked so hard to build over the course of their lives are at stake and some seniors have seen their nest eggs wiped away never to return. we need to ensure that all levels of government are doing what they can and have the tools they need to prevent these devastating scenarios. we though this commitment to our seniors. i just wanted to say when i graduated from law school for a couple years, i was actually -- i worked for an agency called protective services for the elderly. and when i was in the state legislature, we actually put together a bill that governor kaine, a republican, signed that basically set up a program protecting the elderly from fraud and abuse. so i'm particularly -- i haven't really been involved as directly since then. that was a long time ago. it's always something i worry a great deal about and something i
was involved with on a day-to-day basis. thank you, mr. chairman. >> the gentleman yields back. the chair thanks the gentleman. now we will turn to our witnesses as we do want to thank them for being here with us this morning and taking time to testify before this subcommittee. today's hearing will consist of two panels, each panel of witnesses will have an opportunity to give an opening statement followed by a round of questions from members. once we conclude with questions of the first panel, we will take a brief recess to set up for the second panel. our first witness panel for today's hearing includes mr. daniel kaufman, deputy director of the bureau of consumer protection at the federal trade commission. mrs. stacy canan, deputy director of the office of financial protection for older americans at the consumer financial protection bureau. and mr. robert f. harris, public guardian of cook county, illinois. we appreciate all of you being here today and we will begin the panel with you, mr. kaufman. you are recognized for five
minutes for an opening statement, please. >> thank you and good morning, dr. burgess, ranking member schakowsky. and members of the subcommittee. i am daniel kaufman, deputy director of the bureau of consumer protection at the federal trade commission and i'm delighted to appear before you to provide an overview of the fraud threats to older americans, and the ftc's actions to address them. combatting fraud is a critical component of the ftc's consumer protection mission and virtually every law enforcement case that we bring affects older americans. we have adopted a multifaceted approach in our battle against fraud that targets older consumers or injures them more than others and that includes aggressive law enforcement, policy initiatives, and consumer education and outreach. to address such fraud effectively, the ftc monitors fraud trends by examining data gathered from consumer complaints and surveys and collaborating with others in law enforcement, industry, academia,
and legal services. through our extensive law enforcement experience and efforts to track fraud trends we have identified practices affecting seniors in several discreet areas and our consumer complaint data shows that for 2015 older americans complained primarily about government and business impostor scams, telemarketing, technical support scams, and sweepstakes and lottery scams. while our consumer survey shows that older americans are not necessarily more likely to be defrauded than younger consumers, the ftc has nevertheless focused on scams involving seniors. for example, in recent years we have concentrated law enforcement efforts on technical support and health care related scams. fraudsters frequently claim affiliation with well-known businesses or government agencies to build trust with consumers and often use robo calls and spoof caller i.d.s to reach as many people as possible. in the last year the ftc has
filed three cases against defendants engaged in technical support scams where con artists trick consumers into purchasing technical support services and products purportedly to fix problems on their computers. in fact, the computer problems are nonexistent and the defendants have caused millions of dollars in injury to older consumers. the ftc's actions are crucial in halting these practices. similarly the ftc has filed multiple cases against fraudsters that have used deceptive practices to sell health care-related products and services to older americans such as medical alert systems, pharmaceutical benefits, and fake information regarding medicare benefits. in all of these cases the fraudsters pretended an affiliation with a consumer's friend or family member or with a well-known bank or government agency in order to gain consumers' trust. our law enforcement efforts have banned defendants from telemarketing, making robo calls, or debiting bank accounts
and we have recovered money for consumers. we have also sued money transfer service that is are commonly used in scams that target older americans. and our coordination with state, federal, and international partners is as strong as ever. indeed, some of the individuals sued by the ftc for defrauding elderly consumers have been prosecuted criminally. finally, consumer education and outreach are indispensable. in 2014 we launched an innovative and successful education effort called pass it on that is aimed at older active consumers. pass it on arms seniors with important information regarding topics such as impostor and health care scams, charity fraud, and identity theft that they can pass on to family and friends who might need it. the ftc has an ongoing and sustained commitment to protecting older americans by pursuing robust law enforcement, important policy work and
innovative consumer education and outreach. i look forward to any questions you may have. >> the chair thanks the gentleman. you're recognized for an opening statement, please. would you please check to see if your microphone is on. >> thank you. can you hear me now? great. thank you. thank you, chairman burgess, ranking member schakowsky and distinguished members to speak with you today about the devastating problem of elder financial exploitation. my name is stacy cannon. i'm the deputy assistant director in the office for older americans at the consumer financial protection bureau. our office is dedicated to providing older consumers with the tools they need to protect themselves from financial abuse and to make sound financial decisions. the evidence is clear. older americans have assets that make them attractive targets of fraudsters. in 2011 the cumulative net worth of consumers aged 65 and older was approximately $17.2
trillion. older adults are victimized by a range of perpetrators including scam artists, family members, caregivers, financial advisers, home repair contractors, and even court-appointed guardians. the national study found that an estimated 5.2% of americans 60 and older are exploited by a family member. other studies show that most incidents of financial abuse go unreported and under the radar. once the fraud occurs, of course, older americans have little time and few resources to recoup lost savings. to address the serious challenges we recognize that collaboration is critical. among other things, the bureau participants along with several other federal agencies in the council that fosters coordination of federal agencies. for example, many of our
initiatives support council recommendations. and this year the cfpb jointly issued a consumer advisory on planning for diminished capacity and illness. the bureau also works in education initiatives with nonprofits, community organizations, and industry groups such as the financial services roundtable and meals on wheels america. i'd like to tell but a few of our initiatives to combat elder financial exploitation. one is the money smart for older adults program which we developed jointly with the fdic. money smart is a curriculum that teaches consumers and their caregivers about different types of fraud scams, exploitation, and provides warning signs and tips. it's used by a broad range of intermediaries including state and local governments, nonprofit financial institutions. in october 2013, that's who we released managing someone else's money guides. they assist people who are managing the finances for a
family member or a friend who is unable to pay bills or make financial decisions. many older americans experience declining capacity to handle finances which make them very vulnerable to fraudsters. 22% of americans over age 70 have mild cognitive impairment. it can reduce the older person's ability to detect fraud or a scam thereby necessitating the need for a surrogate to handle their money. the guides that i mentioned are user friendly how to guides that explain responsibilities and how to spot scams and exploitation. in 2013 the cfpb and seven other federal agencies released interagency guidance to provide financial institutions with certainty about the legality of reporting suspected financial exploitation. the guidance encourages timely reporting to law enforcement adult protective services and other federal and state and local agencies.
the bureau also has additional resources that help protect older americans against fraud. ask cfpb is an interactive online tool that helps provide clear, unbiased answers to their financial questions. it has served more than 8 million visitors since march of 2012. we also accept consumer complaints by phone, mail, fax, and through our website. as of september 30, 2015, the bureau handled over 726,000 complaints of which approximately 63,000 were submitted by or on behalf of a consumer 62 years and older. congressional leadership and support is critical to implementing a multifaceted solution to the problem of elder financial exploitation. we, therefore, commend this subcommittee for holding this hearing and look forward to continued information sharing with interested parties and stakeholders. thank you very much. >> the chair thanks the gentle lady.
mr. harris, you are recognized for five minutes for an opening statement, please. >> good morning, mr. burgess, ranking member schakowsky and members of the commerce, manufacturing, and trade subcommittee. i'm the cook county public guardian in chicago. i was appointed in 2004 by the chief judge at the circuit court of cook county to act as the guardian for people with alzheimer's and dementia. i'm here today to discuss the issue confronting hundreds of people under my guardianship who have severe forms of dementia and have been exploited. my office serves approximately 600 people right now as the guardian of last resort for people without family or others to care for them. the average age is 72. the oldest is 103 and around 70 of them are over 90 years old. our goal is to maintain them in their own homes or in a
community setting and we are available for assets. most of them have bought homes, saved money for their golden years. unfortunately, there are people who view them as potential victims. and the problem is so widespread that at least a third of our intake cases have some form of financial exploitation. it doesn't matter if they have a house worth $25,000. the exploiters can be anyone, family members, agents acting under the power of attorney. long time friends, clergy, police officers and strangers and others who have -- either have or obtain a position of trust for the elderly victims. to combat and recover assets
stolen from the people we serve, we do several things. we work with law enforcement, adult protective agencies and fraud protection of financial institutions. we work with the media to shed light on the problem within the public and we speak at various community organizations to educate their constituents about the problem. one of our strongest and chief tools that we use is the development of a financial recovery unit that we call fru. we have three full-time attorneys who file citation actions pursuant to the illinois probate act and other causes of action to recover stolen, converted, embezzled or concealed assets. over the past ten years that we have worked on this particular issue, the unit has recovered almost $50 million in money, houses, and other properties for the people under my guardianship to be able to use for their care
to maintain them in the community. the types of scams that we see include executing fraudulent deeds, unduly influencing the elderly individuals to sign over their property or using power of attorney to empty their bank accounts. the almost $50 million that we've recovered for people under my guardianship is just the tip of the iceberg. and i'm sure that it is only a tiny fraction of the money that individuals have been exploited of in and around chicago. some of our suggested solutions are to help local governments establish offices such as mine or legal clinics to establish practices that help people who have been exploited whether they come into the court system or whether they simply need help and aren't involved in the probate court case. educate seniors and the public