Yesterday, WikiLeaks released 17 documents from a little known trade agreement now under negotiation. The Trade in Services Agreement (TiSA) will cover services ranging from professional work to e-commerce and financial services among the United States, the European Union, and 23 other countries. As with other new trade agreements -- notably, the two massive trade deals currently under review with our Asian and European allies -- the TiSA negotiations remain classified. And as with those other trade deals, the negotiating texts -- which reveal the positions that our government advocates for at the deal-making stage -- are to be kept classified for five years after the agreement has been finalized, whether it comes into force or fails.
Services are big business in the new global economy, comprising an estimated 75% of the U.S. economy. And unlike cross-border trade in goods -- largely covered by the WTO -- the governance of the trade in services is more haphazard and much less long-standing. The WTO's General Agreement on Trade in Services (GATS) is a complicated agreement with various opt-in and opt-out clauses, which allow WTO members a degree of autonomy in deciding which services areas they commit to open to foreign competition. One rationale for this degree of autonomy -- which is unlike the more general discipline on the trade in goods -- is that services aren't simply comparable "goods" to be traded. They are the product of complex national regulatory regimes and implicate important legislative decisions. To a first order of approximation at least, a barrel of crude oil is a barrel of crude oil, but what banking or architecture or e-commerce is varies widely across national contexts.
The TiSA represents, in essence, a first step in crafting a new global regime for governing the cross-border flow of services. A great deal of the work that any services agreement must do is definitional, since services can be amorphous and are often controlled by national licensing schemes or one kind or another. Liberalizing the trade in services thus runs up against the difficulty of defining when a national law constitutes improper "discrimination" against foreign competitors in a service sector. As might be imagined, liberalizing agreements often have a deregulatory effect, as different national licensing and oversight regimes are harmonized downwards. And since important services from broadcasting to utilities to health care are provisioned publicly in a wide range of countries, these trade agreements can have a privatizing effect, requiring countries to open sectors to private competition or to eliminate government support.
In the case of TiSA, academics and activists studying the leaked drafts have already noted some of this deregulatory and privatizing pressure. Longstanding systems of public service provision in areas ranging from transport to broadcasting to utilities look likely to be come under new scrutiny. Financial regulations and safeguards -- including Dodd-Frank -- may be further eroded under this agreement, under the guise of financial service liberalization. Equally worrying are the negotiations covering e-commerce, which reveal U.S. efforts to oppose the "data localization" that privacy advocates support as a buffer against surveillance. Other points of concern will surely emerge over the coming days from the leaked drafts.
But as we take in each new revelation, we must not lose sight of the broader context. The Obama administration's proposed trade agreements -- the Trans-Pacific Partnership (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP), and now TiSA -- are not really about "free trade" as conventionally understood. They represent instead the inauguration of a new form of global governance, which proceeds under the mantle of trade liberalization. What these agreements deliver are new forms of cross-border regulation, often with sweeping and understudied impacts on the domestic economy. The regulation of our utilities, our roads, our health-care systems, our banks, our media now comes through a mechanism developed in the post-war era to address high tariff rates.
And there is one overriding fact to bear in mind over the coming week. The same "fast track" authorization that will soon be debated in the House of Representatives doesn't just concern the controversial TPP and TTIP. Later this year or next, it will be used to provide special, expedited review for TiSA as well. For fast track -- now called "Trade Promotion Authority"--will last for six years. Thus, after Obama's term is finished, through the next Presidential administration, and until 2021, the special treatment decided on this coming week will be used to push through future "trade" agreements that may address any activity that crosses a border -- which is to say, almost anything of importance in today's world.
What the latest WikiLeaks release reminds us is that fast track won't just be used to pass the TPP. It will also be used to pass the TTIP, the TiSA, and future agreements not yet leaked -- perhaps not even yet imagined. If the House authorizes fast track next week, we should expect even more "government by trade agreement" over the coming years. Behind closed doors, in the offices of lobbying firms and corporate boardrooms, law firms and foreign ministries, smart people working for special interests will be empowered to reshape the world, through secret negotiations, and under the banner of "free trade."
The author is an Associate Professor at Yale Law School, where he teaches international trade law.
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