The 1st @PaulKrugman on globalisation & development @harleyhs #TPPANoWay

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Source: Paul Krugman (1997) Enemies of the WTO.

This visiting American education professor who specialises in globalisation, claimed in the linked radio interview that real wages had fallen in the USA and Mexico. Even for the bottom 20% of the USA, their after-tax household incomes increased by 40% since 1979, with most of that after the signing of NAFTA.

Everything that is bad in crony capitalist Mexico is the fault of NAFTA if our visiting academic is to be believed despite trade tripling and investment increasing 600% because of NAFTA.

Women’s earnings growth has been perfectly fine over the last 40 years despite the horrors of NAFTA and the attack on unions and workers rights by a top 1% emboldened by NAFTA and globalisation, if our visiting academic is to be believed.

Gender analysis, gender analysis, where is his gender analysis of NAFTA? Few labour market statistics make sense without being broken down by sex because of the immense economic progress of women in the last 50 years. Can NAFTA claim credit for that?

Development & Trade: Empirical Evidence @DavidShearerMP @oxfamnz @TPPANoWay


https://twitter.com/WorldBank/status/691970229811965952

Jane Kelsey opposes handcuffs on the democratic choices of future governments! Does she oppose labour and environmental standards in trade agreements too?

Jane Kelsey in a television interview said she opposes the reductions in sovereignty in trade agreements that result from investor-state dispute settlement (ISDS) provisions because they limit the democratic choices of future governments.

If so, she must oppose environmental and labour standards in trade agreements and, more importantly, binding the hands of future governments with climate treaties. All international treaties are about restrictions on sovereignty.

Environmental and labour clauses in trade agreements and climate treaties all limit the powers of governments to legislate on environmental and employment law in accordance with the will of the people as expressed in the most recent election and change of government. Power to the people.

https://twitter.com/rorymccourt/status/625540621457960960

Jane Kelsey would do better focusing on those parts of the TPPA deal that lowers the net value of the deal such as those extending the term of patents over the drugs. All international treaties are about trade-offs.

The most important reason for focusing on intellectual property law in trade agreements is Kelsey is likely to actually win people over that are not on the far left, including many on the right of politics over to her cause. Kelsey is too busy rounding up the usual suspects.

Ranting about big corporate conspiracies and the investor state dispute settlement clauses puts people off.

These gusts of paranoia lose support on issues where there is common ground to be suspicious about the growing scope of trade agreements and their reach behind borders.

Regulatory harmonisation is advisable only when there are compelling reasons such as the prevention of hazards or technical compatibility of products – do the plugs fit into each other? As Sykes argues:

as a normative matter, harmonization is inferior to a legal system that tolerates regulatory differences subject to legal constraints, and that relies on mutual recognition where appropriate (the exception to this claim being matters of technical compatibility between products).

Related, as a positive manner, harmonization will often lack any political constituency and thus instances of true harmonization will be rare.

The first Paul Krugman (1997) on what trade negotiators negotiate about

via WHAT SHOULD TRADE NEGOTIATORS NEGOTIATE ABOUT? A REVIEW ESSAY.

#TPPA The first Paul Krugman on trade agreements that level the playing field behind the border

via WHAT SHOULD TRADE NEGOTIATORS NEGOTIATE ABOUT? A REVIEW ESSAY.

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Is investor state dispute settlement a form of overseas development assistance?

Would objections to the Investor State Dispute Settlement provisions in the proposed Trans-Pacific Partnership wilt away if the adjudicating body was the International Court of Justice? The left-wing opponents of investor state dispute settlement genuflect at the very mention of the International Court of Justice and international law generally (unless it is international economic law).

Disputes over the provisions of European union treaties are adjudicated by the European Court of Justice. The judgements of that court brought by individuals against member states so annoy the British that it is a leading reason for many British wanting to leave the European Union and replace the Human Rights Act 1998 with a British Bill Of Rights policed by British courts rather than by the European Court of Justice and European human rights law.

It is routine for any treaty to have some provision for arbitration of disputes. This includes trade and investment treaties.

The World Trade Organisation treaty includes a dispute settlement provision with arbitrators based in Geneva. Some of the more than 400 cases heard have been motivated by discrimination against imports on the basis of a breached environmental protection policies of the importing country.

A number of countries want to ban imports that are produced in ways that upset them. Others want to include labour and environmental standards in trade agreements to impose developed country standards on developing countries in what is a new form of colonialism.

I have previously said that investor State Dispute Settlement provisions have no place in trade and investment treaties between democracies. I must now admit there are good reasons to have arbitration clauses in treaties between democracies.

The puzzle is why refer these trade and investment disputes to a little-known arbitration body adjunct to the World Bank rather than the far more prestigious International Court of Justice.

Perhaps the reason is both sides want an arbitrator who is not too strong and not too credible. It would look very bad if the International Court of Justice was to rule against you.

William Landes and Richard Posner contended that judicial independence maximises the value of legislative deals with interest groups by enhancing the durability of those deals.

Why no International Court of Commercial Law? When deciding what type in judiciary to enforce international trade bargains, the signatories may prefer a less credible adjudication and enforcement mechanism in case they want to opt out of it or chip around the decision.

The jurisdiction of the International Court of Justice is to settle, in accordance with international law, legal disputes submitted to it by special agreement and matters specifically provided for in treaties and conventions in force.

UN member states are the parties to any litigation but that doesn’t stop them raising cases on behalf of individuals. That said, organizations, private enterprises, and individuals cannot have their cases taken to the International Court, such as to appeal a national supreme court’s ruling. Only the states can bring the cases and become the defendants of the cases.

The International Court of Justice is different from the European Court of Justice because individuals cannot easily bring complaints before it. One of the causes of action before  the European Court of Adjusters is under European competition law over member states providing financial aid to industries.

Democratic countries with high levels of economic and  social integration, such as the  European union, do find it in advantage to set up a European wide Court to adjudicate disputes over rights under European law.

Why then would a democracy sign up to an investment protection treaty with a developing country? One reason is overseas development assistance.

Developing countries with corrupt and incompetent courts, politicians and bureaucracies sign international treaties as a way of assuring foreign investors and trading partners of some degree of security of their property rights and their ability to enforce contracts with suppliers and buyers.

By folding these assurances into trade treaties, the developing country has a stronger incentive to honour its promises. There will be domestic constituencies wanting to retain reciprocal export market access who will lobby for the honouring of the promises of legal protection to investors and businesses in their home country.

New Zealand signing up to the Trans-Pacific Partnership is an example of this form of overseas development assistance. Exporters and investors from the developing country who export and invest in New Zealand have another reason to support more secure property rights and better enforcement of contracts in their home country as a way of securing their treaty rights to export and invest in New Zealand.

The Left of the political spectrum should be keen on this form of overseas development considering their general belief in greatly increasing the amount spent on overseas development assistance. Rather than pay cash to the development country, the payment is in kind as reciprocal legal promises.

Trade treaties that include investor state dispute settlement are forms of governance assistance to developing countries. The reciprocal exchange of promises about investor protection and the enforcement of contracts and property rights improves the quality of governance in the developing country.

The countries most likely to be subject to investor state dispute settlement are those with weaker governance. Even in the European Union, the member states most likely to be sued are former communist countries. The most common course of action was the cancellation of a licence or permit.

Investor state dispute settlement clauses are no different from any other international treaty include environmental and human rights treaties. All these treaties require countries to give up part of their sovereignty.

Democracies give up their sovereignty in investor state dispute settlement in the hope that developing country partners to the treaty will improve the development potential of their country through better governance and more secure property rights.

That is an overseas development aid objective the Left of the political spectrum should support, but it does not. The Left of the political spectrum is happy to use trade agreements to impose developed country labour and environmental standards on poor countries desperate for access to rich country markets, but is not willing to give up anything in return.

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