Syllabus Globalization: Business, Legal and Public Policy Issues January Term, 2017 — January 3-6, 9-13, 17-18


Steven Greenhouse and Elizabeth Harris, “Battling for a Safer Bangladesh” (news article in The New York Times, April 21, 2014)



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Steven Greenhouse and Elizabeth Harris, “Battling for a Safer Bangladesh” (news article in The New York Times, April 21, 2014)




  • Nine senators write a letter to Barack Obama urging him to promote workers’ rights in Bangladesh (June 25, 2013) [only available in course packet]




  • Karel De Gucht: “Rana Plaza Aftermath” (speech at informal OECD ministerial meeting, June 26, 2014) [only available in course packet]




  • Interview with Atiqul Islam, President of BGMEA (January 8. 2014) [link: https://www.youtube.com/watch?v=rjMvQrOCtqM]




  • Better Work, “Q&A on Better Work Programme in Bangladesh” (attachment to press release, undated) [link: http://betterwork.org/global/wp-content/uploads/QA-for-Better-Work-Bangladesh.pdf;]




  • Better Work, “Case Study: Fire & Building Safety in the Ready-Made Garment Sector of Bangladesh” (Better Work publication, undated) [link: http://betterwork.org/global/?p=4321.]




  • Sarah Labowitz and Dorothée Baumann-Pauly, “Business as Usual is Not an Option: Supply Chains and Sourcing after Rana Plaza” (report by the Center for Business and Human Rights at New York University, Stern School of Business)




  • The Economist, “Working conditions in factories – When the jobs inspector calls: Do campaigns for “ethical supply chains” help workers?” (news report, March 31, 2012)



  • The International Federation for Human Rights (FIDH), “One Year After the Rana Plaza Catastrophe: Slow Progress and Insufficient Compensation” (NGO publication, April 24, 2014)




  • The International Federation for Human Rights (FIDH), “Two years after the Rana Plaza disaster, victims still awaiting adequate compensation” (NGO publication, April 23, 2015) [link: https://www.fidh.org/International-Federation-for-Human-Rights/asia/bangladesh/two-years-after-the-rana-plaza-disaster-victims-still-awaiting.]




  • Bangladesh Sustainability Compact – Technical Status Report (European Commission publication, April 24, 2015) [link: http://trade.ec.europa.eu/doclib/docs/2015/april/tradoc_153390.pdf]




  • Richard M. Locke, “We Live In A World of Global Supply Chains” (excerpt from forthcoming textbook)

Before Class 2

Discuss the following with your assigned group and submit a written proposal or memo to the iSites course page the day before Class 2 by 9:00 pm and email it to Mr. Kaden:

How would you organize an effective campaign to address the challenges facing the RMG sector in Bangladesh? What role should be played by the factory owners, labor organizations, various governments, major global retailers, and international organizations such as the ILO and World Bank?

Parties

  1. Government of Bangladesh [Last names starting with A – E]

  2. Foreign Governments (USA, EU) [Last names starting with F – J]

  3. Factory Owners [Last names starting with K – N]

  4. Western Retailers [Last names starting with O – R]

  5. Factory Workers and Labor Unions [Last names starting with S - V]

  6. International Organizations [Last names starting with W – Z]


Please read your colleagues’ proposals prior to class to prepare for in-class discussion.

TRADE

A. Introduction
The Trans-Pacific Partnership (TPP) is a trade agreement between twelve countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. If the TPP were to be successfully ratified, it would be one of the most significant regional trade agreements in history. The twelve TPP countries account for about 40% of global output. Peter Petri of the Peterson Institute for International Economics has estimated that closing a TPP agreement would raise global GDP by $295 billion a year, $78 billion of that going directly to the United States.16
The TPP was signed on February 4, 2016 in New Zealand following seven years of negotiations. In order to go into effect, it needs to be ratified by all signatories, or by states corresponding to 85% of the GDP of the signatories within two years.17 The full text of the treaty subject to legal review has been made public.18 The negotiations gained momentum after President Obama signed the bill that renewed trade promotion authority for his office on June 29, 2015.19

The negotiations were criticized for lack of transparency and negotiations behind closed doors,20 and often these comments about process mask significant differences between participants and among constituency groups in each country. This byplay is common in all major international trade negotiations, and proponents of the deal and how the negotiations have been handled thus far point out that it would be impossible to strike a good deal if negotiation strategies and goals were all public. In addition, they note that over 1,150 meetings have been held on Capitol Hill so far on the TPP alone.21

Besides the TPP, China and the United States are engaged in bilateral negotiations over a treaty on cross-border investment; China has organized talks on a Regional Comprehensive Economic Partnership (RCEP), which includes the ten members of ASEAN and six other Asian countries; and the US is involved with the European Union and its twenty seven member countries on the Transatlantic Trade and Investment Partnership (TTIP).22
B. Major Issues in the Trans-Pacific Partnership Negotiations
Five major issues made up the core of TPP negotiations: intellectual property rights; investor protection; state owned enterprises (SOEs); sustainability and environmental protection; and labor standards.
The TPP negotiations also involve efforts to achieve important agreements on market access. One significant example is the US-Japan automobile sector, an issue of interest also to Mexico. Japan currently has severe restrictions on US auto access while the US restricts access for Japanese trucks.
Agriculture is another important issue in the TPP negotiations. The TPP countries account for more than 30 percent of world exports and over 20 percent of world imports of agricultural products. In many of the TPP countries, agriculture is a politically and economically important sector. This has contributed to turning several agricultural issues into some of the main sticking points in the negotiations. One such example is trade liberalization of dairy products. New Zealand has advocated for far-reaching liberalization of dairy products and wants better access to North American markets. But United States officials are wary of falling dairy prices in the American market that could result from liberalization. Another sticking point is sugar exports: Australia wants access to the American market for sugar, but this proposition was already rejected earlier by American officials in bilateral trade negotiations between Australia and the United States.23

The issue of agricultural market access became even more acute after Japan joined the TPP talks in 2013. The Japanese Parliament supports five “sacred” agricultural product categories—rice, wheat, beef and pork, dairy, and sugar—which it believes should be exempt from the free trade agreement.24 In the negotiations so far, Japan has been criticized by others for its position on agriculture, but it has continued to stand its ground.25 Agriculture accounts for only 0.8% of Japan’s GDP, but farmers have always been a powerful political constituency.26

Another issue raised in TPP talks is internet freedom.27 In the TPP, America seeks “[r]equirements that support a single, global Internet, including ensuring cross-border data flows, consistent with governments’ legitimate interest in regulating for purposes of privacy protection,”28 and a recent bilateral agreement between the US and China addresses this subject. However, the US position on intellectual property also seeks expanded copyright protection, and critics in other TPP countries have claimed that this would force internet providers to act as “copyright police” by cutting off people’s access to the internet for copyright violations.29 The TPP has also spurred discussions on cybersecurity provisions that may help prevent economic espionage that leads to unfair competition.30

Congress gave President Obama “fast track” authority to pass the TPP, allowing the President to negotiate an international agreement that Congress must either approve or deny, but cannot amend or filibuster.31 Congress has thus far refrained from voting on the TPP during the presidential election. It is possible that the TPP vote will be brought up during the “lame duck” session, which begins after the November election and lasting until inauguration. However, Speaker of the House Paul Ryan has indicated that it will not be brought to a vote during the lame duck because it lacks the necessary votes.32



  1. Intellectual Property Rights

Developing rules on intellectual property rights (IPRs) is “one of the most complex and challenging” issues in the TPP negotiations.33 The US wants TPP IPR provisions that extend protection beyond the standards found in the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).34 US business groups seek TRIPS-plus provisions similar to those in the Korea-United States Free Trade Agreement (KORUS FTA). But other TPP countries—fearing overregulation of IPR will have negative effects—favor a TPP IPR framework that is generally consistent with, but does not exceed, the existing TRIPS obligations. Countries including New Zealand, Malaysia, Australia, and Vietnam have opposed aspects of US proposals on trade secrets, copyright enforcement and the internet, and pharmaceutical patents and access to medicines.35 On June 20, 2015, WikiLeaks leaked a negotiation draft of the Healthcare Annex to the secret “Transparency” chapter of the TPP36, and some analysts in Australia and New Zealand have expressed concerns regarding the effect of several provisions on domestic healthcare policies.37




  1. Investor Protection

The US seeks to include in the TPP several investment obligations, such as standards for nondiscriminatory treatment of foreign investments and investors by host countries. One of the more contentious investment issues is whether to include an investor-state dispute settlement provision, which allows private foreign investors to seek international arbitration against host governments. Australia has been the primary opponent of including an investor-state dispute settlement mechanism. ALF-CIO and Senator Elizabeth Warren also expressed concerns regarding the “fine print” of investor-state dispute settlement (ISDS) provisions in the TPP that “would allow big multinationals to weaken labor and environmental rules”.3839





  1. Environment

Since NAFTA, the United States has sought advances in environmental protection and sustainability in free trade negotiations. Recent bilateral agreements have included provisions on the environment, with TPP commitments that prevent countries from lowering their environmental standards in order to try to attract investment, and that protect fisheries and endangered species.


In its early summary of objectives for TPP, the US stated that environmental protection and conservation across the region was a “key priority” and it would seek the following provisions in the regional agreement40:

  • Strong and enforceable environment obligations, subject to the same dispute settlement mechanism as other obligations in TPP;

  • Commitments to effectively enforce domestic environmental laws, including laws that implement multilateral environmental agreements, and commitments not to waive or derogate from the protections afforded in environmental laws for the purpose of encouraging trade or investment;

  • New provisions that will address wildlife trafficking, illegal logging, and illegal fishing practices; and

  • Establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP member is not meeting its environment commitments, and requirements that governments consider and respond to those concerns.

120 members of the House of Representatives sent a letter to Michael Froman, the United States Trade Representative, urging him to ensure language on environmental protection in the TPP. “We don’t all agree on the merits of TPP, but we all agree the administration must continue to insist on a robust, fully enforceable environment chapter … This would allow the U.S. to better address climate change, protect finite natural resources, strengthen national security, and foster economic stability at home and abroad,” the letter said.41

WikiLeaks released the secret draft text for the TPP Environment Chapter, which covers environmental issues such as climate change, biodiversity, and trade and investment in environmental goods and services, as well as environmental dispute resolution, on January 15, 2014.42 Environmental groups such as the Sierra Club, WWF, and the Natural Resources Defense Council have criticized the American government for drafting language in the TPP negotiations that they say would be weak on the environment.43 “If the environment chapter is finalized as written in this leaked document, President Obama’s environmental trade record would be worse than George W Bush’s,” says Michael Brune, executive director of the Sierra Club.44

Environmental protection appears to be one of the main points of controversy in the TPP negotiations. Reports suggest that the United States is facing strong opposition from other TPP parties over the environment. Some countries are pressing to drop the US demand that environmental-protection standards be legally enforceable through a dispute-settlement mechanism.45 In addition, a consensus is still lacking on how to address climate change, as well as whether environmental standards should be part of the treaty text itself or put into a separate accord.




  1. Labor

Vice President Joe Biden has said that the TPP and the other trade agreements that the Obama administration is currently negotiating should “include unprecedented steps to protect labor standards.”46 American negotiators have stated that they want the TPP to lead to implementation and enforcement of the ILO’s Declaration on Fundamental Principles and Rights at Work. The declaration is based on five different principles: freedom of association, right to collective bargaining, a ban on forced labor, abolition of child labor, and a ban on employment discrimination. A particularly contentious issue in the negotiations is whether labor standard commitments should be subject to the dispute settlement procedures of the overall TPP agreement. According to recent public statements, some progress has been made with respect to “enforceable” labor standards, but no clear consensus has so far emerged.47 The US initial summary of objectives included these goals for labor provisions48:

Ensuring respect for worker rights is a core value. That is why in TPP the United States is seeking to build on the strong labor provisions in the most recent U.S. trade agreements by seeking enforceable rules that protect the rights of freedom of association and collective bargaining; discourage trade in goods produced by forced labor, including forced child labor; and establish mechanisms to monitor and address labor concerns.
/…/


  • Requirements to adhere to fundamental labor rights as recognized by the International Labor Organization, as well as acceptable conditions of work, subject to the same dispute settlement mechanism as other obligations in TPP;

  • Rules that will ensure that TPP countries do not waive or derogate from labor laws in a manner that affects trade or investment, including in free trade zones, and that they take initiatives to discourage trade in goods produced by forced labor;

  • Formation of a consultative mechanism to develop specific steps to address labor concerns when they arise; and

  • Establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP country is not meeting its labor commitments, and requirements that governments consider and respond to those concerns.

The AFL-CIO, America's largest trade-union group, has been pushing for a “strong labor chapter” that stipulates enforceable labor standards, including “basic rights such as freedom of association and collective bargaining.”49 In May 2014, some 150 Democratic members of the House of Representatives wrote to Michael Froman, the United States Representative, urging him to do more to promote labor standards in the TPP negotiations. “In countries like Vietnam in which workers have faced extraordinary abuses, there must be binding and enforceable plans to bring those countries’ laws and practices into compliance with TPP labor requirements. Those plans must be made public, and the changes to the laws and practices must be fully implemented, before Congress takes up TPP for consideration,” the letter said.50 The members of Congress also expressed concern with the lack of freedom of association in Brunei and lax protection of labor unions in Mexico.

None of Vietnam’s existing trade agreements with other TPP parties include labor provisions. The Vietnam Chamber of Commerce and Industry, which represents Vietnamese businesses enterprises, has lamented that “Vietnam is not ready for such high requirements on labor standards and implementation, which would increase costs for entrepreneurs, risk workers’ unemployment, and have high implementation costs.”51 George Miller, a Democratic member of the House of Representatives, has questioned whether Vietnam will be able to comply with the TPP commitments because evidence suggests that many workers in Vietnam are “routinely denied basic labor standards.”52 Similarly, Khai Nguyen, a former senior research analyst at the World Bank and lecturer at the School of the Advance International Studies of Johns Hopkins University, has said that if negotiators keep pushing for strong labor provisions, “Vietnam will necessarily be barred entry to the partnership.”53

Froman views the issue in a more positive light, asserting that because Vietnam takes part in the TPP negotiations, there is a “mechanism to improve adherence to labor rights and working conditions in Vietnam that would not exist otherwise.54

Controversy also arose over whether Malaysia would receive an upgrade in its human-trafficking status in the State Department’s Trafficking in Persons report so that it can maintain its position in TPP negotiations.55 Senator Bob Menendez included a provision into the trade bill renewing fast track authority to prohibit the executive from entering into fast-tracked trade agreements with Tier 3 countries, and Malaysia had received a downgrade to Tier 3 in 2014.56


  1. State-Owned Enterprises

State-owned enterprises (SOEs) are an important part of the economies of several current prospective TPP countries. The US seeks TPP rules to level the competitive playing field between private businesses and SOEs and mitigate the market distortions caused by state-owned firms’ structural advantages and government backing. Among current TPP countries, Vietnam, Malaysia, Singapore, and Japan all have significant SOE sectors. Current TPP countries are still debating the form and content of the SOE provisions. These rules will have implications for the SOEs of potential future members and trading partners, especially China.



C. Relationship to China
Although China is not participating directly in the TPP negotiations, similar issues are the subject of ongoing bilateral talks between the US and China in the Strategic Economic Dialogue and the Bilateral Negotiations on an Investment Treaty. Many of the same issues as well as other matters are also on the agenda in the talks on a Regional Comprehensive Economic Partnership (RCEP). The TPP countries plus South Korea account for the majority of all Chinese merchandise exports and close to half of all its imports. If the US and China make progress on TPP and the issues in the forefront of their bilateral relationship and China makes progress on RCEP, these complementary agreements could become the foundation of an Asia-Pacific pact including almost all countries in the region. 57 Wang Shouwen, China’s deputy trade minister, has described the TPP and the RCEP as “two wheels of a bicycle.”58
Before Class 1
Please read through the readings and respond to one of the discussion questions that follow. Send a written response to one of the questions to Professor Kaden (Lewis.Kaden@gmail.com) the day before Class 1 by 9:00 pm.
1. What are some of the pros and cons of such a comprehensive 12 party trade agreement like the TPP? If you were advising the US government, would you recommend ratifying the TPP, or pushing for a deal with fewer countries and greater depth? Conversely, what would have been the advantages and disadvantages of bringing in additional countries at various steps of the negotiation process?
2. Would the TPP have benefitted from China joining the negotiations? Is it the better course to push ahead with bilateral agreements between the US and China and a TPP agreement?
3. What is your position on TPA/fast-track authority? How do you think TPP negotiations would have been affected if TPA had not been renewed?
4. The process of negotiating the TPP was widely criticized for lack of transparency, even though all major international trade agreements are negotiated privately. Should future international trade negotiations be made public? What are the arguments both for and against? Is secrecy possible in the current internet and communications landscape where leaked documents are easily obtained and disseminated, as is the case with WikiLeaks?
5. Refer to Senator Menendez's last minute inclusion of a provision to the TPA bill that limits the executive from concluding trade agreements with countries that are classified as not meeting minimum standards as regards human trafficking. Should human rights concerns be tied to international trade agreements?


Before Class 2
Taking the perspective of the party to which you are assigned – please write a memo discussing the following:
1. What is your country’s strategic interest in the TPP? 

2. What were the biggest benefits gained and losses incurred for your country in the negotiations? Consider the five major TPP issues: intellectual property rights, investor protection, state-owned enterprises, sustainability and environmental protection and labor standards.

3. What is the status of ratification of the TPP for your country or countries? What are the greatest stumbling blocks to implementation?

4. To what extent will the TPP affect your country’s economy?
Please respond to the question above from the perspective of the party to which you arc assigned in the form of a memo. Upload the completed memo to the course iSites page the day before Class 2 by 9:00 pm.
Group 1: U.S.

Group 2: Mexico and Canada

Group 3: Japan

Grou p 4: Singapore

Group 5: Vietnam and Malaysia

Group 6: Australia and New Zealand



Group 7: China


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