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Posted on Techdirt - 4 February 2016 @ 11:23pm

Proposed Hungarian Law Would Allow Government To Suspend Key Human Rights Whenever There Is A 'Terror Threat Situation'

from the please-see-government-for-definition-of-'terror-threat-situation' dept

Techdirt has reported how many Western governments are playing on fears of vaguely-defined "terror" to push through laws limiting fundamental freedoms that would never otherwise have been discussed, much less approved. Amnesty International is warning that Hungary is aiming to join the club -- and go much, much further down this slippery slope:

A draft proposal to combat terrorism, apparently authored by the Hungarian government and leaked in mid-January, recommends amendments to the Constitution and to several laws to streamline the process to call a state of emergency in the country. If adopted in its current form, the proposal would have profoundly negative consequences for human rights in Hungary, including the freedoms of expression, assembly, association, and movement, and the rights to privacy and security of person. The current proposal, referred to as the "sixth amendment", devolves near absolute power on the executive in a so-called "terror threat situation," the result of which would be a full frontal assault on human rights and the rule of law.
As Amnesty International's more detailed analysis of the so-called "sixth amendment" to the country's constitution explains, the "emergency measures" available during a very vague "terror threat situation" would give the Hungarian authorities wide-ranging and almost unchallengeable powers (pdf), including:
Blanket permission to introduce undefined "special counter-terrorism measures"

Complete government control over procurement of goods and services, including over supply lines

Restrictions on the movement of foreign nationals, including refusal to enter the territory, despite Hungary's existing obligations under international law

Arbitrary restrictions on movement (including obligatory reporting requirements) for foreign nationals already lawfully present in the territory

Enhanced stop and search powers

Enhanced asset-freezing powers

Powers to seize and limit broadcasters' equipment, and to control the content and messaging of broadcasts

Powers to suspend or limit the use of postal, telecommunication and email services

Strict controls on internet usage and traffic

Limitations or prohibition on contact and communication with foreign nationals and foreign organizations

Prohibition of organized demonstrations and assemblies in public spaces

Curfews in designated areas

Restrictions on travel to and residence in certain areas of the country (including the possibility of forced relocation or evacuation, or restrictions on travel within the country)

Deployment of armed forces in the national territory

Suspension or limitation of the use of key transport and infrastructure
Amnesty notes that the proposed legislation would almost certainly fail the test of necessity and proportionality required to comply with Hungary’s obligations under the European Convention on Human Rights and Fundamental Freedoms. But something tells me that a government awarding itself near-totalitarian powers probably wouldn't be too worried by a slap on the wrist from a bunch of human rights judges in some distant court.

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Posted on Techdirt - 4 February 2016 @ 3:20am

A Tiny Cell With An Omnipresent Guard, Visitors Just Twice A Day: TAFTA/TTIP's German Transparency Room

from the and-mind-you-behave,-children,-or-you-will-be-punished dept

One of the most problematic aspects of the TAFTA/TTIP negotiations is their lack of transparency. Although the European Commission, to its credit, has made available many of its initial offers and background papers, the key consolidated documents that show what's really happening in the negotiations -- and what deals are being cut -- are reserved for the inner circle. Even national politicians within the EU have been denied access to these, and that has really rankled, particularly in Germany. In an effort to defuse the anger there over this manifestly anti-democratic approach, a special reading room has finally been set up in the German Ministry of Economy. As this report from the non-profit investigative newsroom Correctiv.org makes clear, it's very special:

MPs have to schedule an appointment as the room opens only twice a day for two hours. Before entering the room, they have to leave their mobile phones and any electronic device in a secure locker.

They can read the documents only on a computer screen which is not connected to the Internet. They may take notes but are not allowed to copy any quotes from the consolidated texts.
And if any of the children -- uh, politicians -- are naughty, the US will be very, very cross, and may be forced to withdraw the privileges it has granted:
In the case of unauthorised disclosure of information, the US "may withdraw its consent to the placement of TTIP consolidated texts in any or all of the member states reading rooms”. This means if an MP leaks or quotes any sensitive information, the parliament may be denied access to the documents.
To keep an eye on things, a guard is present at all times in the room, which is very small -- just 35 square meters in all (about 370 square feet). The War on Want site has a picture:
It also provides a handy translation of the room's "features":
Starting in the top left corner and moving clockwise, the signs translate as follows: Lockers (for mobile phones etc) -- Reference library (reference works) -- Work stations (maximum 8 people) -- Digital documents (negotiating language: English) -- Supervisor (official of Ministry for Economic Affairs) -- Computer (not networked) -- Confidentiality agreement (must be signed before use).
These may be standard conditions for viewing negotiation documents in the US, but they are likely to be regarded as pretty insulting to German politicians -- not least because all the documents are in English, and it has taken two and half years to achieve even this miserable level of transparency.

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Posted on Techdirt - 2 February 2016 @ 11:23pm

The Incredible Corporate Sovereignty Saga Involving Ecuador And Chevron Continues

from the not-looking-good-for-the-poor-and-powerless dept

Techdirt has been trying hard to follow the twists and turns of one of the longest-running corporate sovereignty cases -- that involving Chevron and Ecuador -- for many years. Public Citizen's "Eyes on Trade" blog has a good, one-paragraph explanation of the key legal disputes:

In one of the Chevron v. Ecuador cases, a three-person tribunal last year ordered Ecuador's government to interfere in the operations of its independent court system on behalf of Chevron by suspending enforcement of a historic $18 billion judgment against the oil corporation for mass contamination of the Amazonian rain forest. The ruling against Chevron, rendered by Ecuador's courts, was the result of 18 years of litigation in both the U.S. and Ecuadorian legal systems. Ecuador had explained to the panel that compliance with any order to suspend enforcement of the ruling would violate the separation of powers enshrined in the country’s Constitution -- as in the United States, Ecuador's executive branch is constitutionally prohibited from interfering with the independent judiciary. Undeterred, the tribunal proceeded to order Ecuador "to take all measures at its disposal to suspend or cause to be suspended the enforcement or recognition within and without Ecuador of any judgment [against Chevron]."
However, that's only a bare summary of the amazing events in this case, which include a filmmaker being forced to hand over footage to Chevron, email companies supplying nine years of metadata to the oil company, and Chevron's star witness admitting he lied in his sworn testimony. Probably the best explanation of the complicated story is a long, well-written feature in The New Yorker. That appeared in 2013 and concluded by noting that Chevron was appealing once more to an international tribunal in an attempt to block Ecuador's lawsuit. The arbitration court in the Netherlands has now handed down its verdict, reported here by Telesur:
A panel from the District Court of the Hague rejected Ecuador's arguments, stating that the country was bound to the terms of the bilateral investment treaty.

The panel also affirmed Chevron's claim that they could not be held accountable for the contamination since the Ecuadorean government certified the remediation work carried out by the oil company.

President Correa has questioned the legitimacy of that decision by the government of then president Jamil Mahuad.

"All of this is the product of corruption: having signed in 1998 that Chevron had cleaned 'everything'," said Correa Sunday via his official Facebook account.
As that makes clear, the tribunal seems to have based its decision in part on the fact that a previous Ecuadorean administration had agreed with the oil company that the contaminated land in question had been cleaned up sufficiently. The country's current president claims that was because of corruption at the time. So the tangled mess of this case now involves issues of the validity of that previous agreement, and what impact it has on the responsibility of Chevron.

The latest ruling by the international tribunal offers little hope that the Ecuadorean government will be collecting much, if any, of the final $9.5 billion awarded by the local courts -- Chevron prudently removed all its assets from the country many years ago. As Escobar is quoted as pointing out in the Telesur report:

Should Ecuador lose the final ruling by the investment tribunal, the price would ultimately be paid by the Ecuadorean people, as the state, in the face of international reprisals and without access to credit, would lose the ability to invest in social programs.
As usual, it's the poor and powerless that end up suffering -- and the lawyers involved in the corporate sovereignty tribunals who come out smiling.

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Posted on Techdirt - 1 February 2016 @ 11:23pm

Beyond Open Access And Open Data: Open Science -- And No Patents

from the accelerating-science,-not-making-money dept

Techdirt has been writing about open access and open data in the academic world for some years now. But beyond those important ways of sharing lies a more integrated approach, generally known as open science. Gabriella Coleman has passed on some interesting news from Canada in this field. McGill University's Montreal Neurological Institute (MNI), under the leadership of its director, Guy Rouleau, wants to speed up the translation of research into treatments, and thinks that opening up completely is the way to do that, as Science reports:

any work done [at the MNI] will conform to the principles of the "open-science" movement -- all results and data will be made freely available at the time of publication, for example, and the institute will not pursue patents on any of its discoveries. Although some large-scale initiatives like the government-funded Human Genome Project have made all data completely open, MNI will be the first scientific institute to follow that path, Rouleau says.
Forgoing patent licensing revenues is unusual, but Rouleau makes the important point that early-stage science results are not really worth protecting:
"There is a fair amount of patenting by people at the institute, but the outcomes have not been very useful," he says, adding that the institute would rather provide data that others could use to develop patentable medicines. "It comes down to what is the reason for our existence? It's to accelerate science, not to make money."
This obsession with patenting that bedevils research at many academic institutions, and the poor returns it produces, is something that Techdirt has written about before. Eschewing patents, and sharing results, data, software and algorithms is bold enough, but arguably even bolder is the requirement that collaborators from other institutions must do the same:
The insistence that any organization or institute that collaborates with MNI will also have to follow open-science principles for that project could help to spread the approach, says Dan Gezelter, a chemist and open-science advocate at the University of Notre Dame in South Bend, Indiana. "It's a little bit viral. I've never seen that before," he says.
Well, maybe not in a science context, but of course such reciprocity lies at the heart of Richard Stallman's GNU General Public License. The GNU GPL is also something that is often called "viral", but a better name might be evangelical. Let's hope that MNI's project is as successful in spreading the word about open science as the GPL has been in propagating free software.

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Posted on Techdirt - 28 January 2016 @ 3:29am

Yet More TPP Studies Predict Slim Economic Gains, Highlight Dubious Underlying Assumptions

from the another-reason-we-need-negotiating-texts-published-early dept

It's striking that from a situation where there were very few studies of the likely effects of the TPP agreement, we've moved to one where they are appearing almost every week. Recently Techdirt wrote about a World Bank study, and one from Tufts University; now we have one from the Peterson Institute for International Economics, which calls itself "a private, nonprofit, nonpartisan research institution devoted to the study of international economic policy." Here's its summary of the results:

The new estimates suggest that the TPP will increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented. Annual income gains by 2030 will be $492 billion for the world. While the United States will be the largest beneficiary of the TPP in absolute terms, the agreement will generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members. The agreement will raise US wages but is not projected to change US employment levels; it will slightly increase "job churn" (movements of jobs between firms) and impose adjustment costs on some workers.
That figure of 0.5% cumulative GDP gain by 2030 is in line with the other studies discussed previously here on Techdirt. But there are various issues with both that figure and the study itself, which are highlighted by Dean Baker, co-director of the Center for Economic and Policy Research, in a post on Medium. One of the most serious is something we've noted before: despite attempts to present them as otherwise, the predicted gains are extremely small. Baker explains this well:
The study's projection of a cumulative gain to GDP of 0.5 percent by 2030 implies an increase in the annual growth rate of 0.036 percentage points. This means that if the economy was projected to grow by 2.2 percent a year in a baseline scenario, it will instead grow at a 2.236 percent rate with the TPP, assuming the Peterson Institute projections prove correct.

The projections imply that, as a result of the TPP, the country will be as rich on January 1, 2030 as it would otherwise be on April 1, 2030.
Then there's the matter of the econometric modelling technique adopted. The Computable General Equilibrium (CGE) analysis employed by the Peterson Institute makes some very big assumptions:
The model assumes that the TPP will affect neither total employment nor the national savings (or equivalently trade balances) of countries. This "macroeconomic closure" assumption allows modern trade models to focus on the goals of trade policy -- namely sustained productivity and wage increases through changes in trade patterns and industry output levels. With minor variations, the assumption is used in most applied models of trade agreements.
That means -- by definition -- these CGE models can tell us nothing about the effects of TPP on employment, and assume that no jobs are lost or gained overall. Baker points out another major consequence of this approach:
by design the model assumes that trade balance for the United States is not changed as a result of the TPP. This means that whatever changes we see in exports, according to the model, will be matched by an equal change in imports.
As a result, the predicted boost of $357 billion to US exports thanks to TPP is matched by a balancing boost of $357 billion to imports as well. Baker also offers an explanation of why the CGE model makes its rather surprising view on employment:
In prior decades most economists were comfortable with this sort of full employment assumption since it was widely believed that economies quickly bounced back from recessions or periods of less than full employment. In this view, if a trade agreement led to a larger trade deficit it would soon be offset by lower interest rates, which would provide a boost to investment and consumption.
However:
in the wake of the 2008 crash, fewer economists now believe that the economy has a natural tendency back to full employment. Many of the world's most prominent economists (e.g. Larry Summers, Paul Krugman, Olivier Blanchard) now accept the idea of "secular stagnation." This means that economies really can suffer from long periods of inadequate demand.
That risk is one key reason why the lack of currency controls in TPP is a big problem:
if one or more of the countries in the TPP began running larger trade surpluses with the United States, and then bought up large amounts of dollars to prevent an adjustment of their currency, there is nothing the United States could do within the terms of the agreement.
Another analysis of TPP comes from a very different quarter: the New Zealand government, as part of the formal process of ratifying the treaty. Even though the document runs to 279 pages (pdf), relatively few of them are devoted to how the modelling results were obtained, and how plausible they might be. The independent team behind a new "expert paper", part of a series exploring many aspects of TPP from a New Zealand viewpoint, was not impressed by what it found there (pdf):
[The writers in the expert group] found that the standard of documentation of the modelling is dreadfully inadequate -- just 20 pages of text in the published report. The authors [of the New Zealand government report] should have chosen, or been asked to present, a much weightier and more detailed account of every facet of the data, assumptions, modelling and results.
Not only is the methodology poorly explained, but the results are underwhelming too. The official predictions of economic gains for New Zealand are summarized as follows by the team of economists:
The government has used modelling to derive estimates of the economic benefit for New Zealand and estimated an increase in real GDP of 0.9% by 2030 or $2.7 billion annually. The increase is modest. A continuation of currently forecast levels of growth would mean that NZ GDP would be 47% higher by 2030 without TPPA, versus 47.9% with TPPA.
The expert group are even more scathing about the way in which the supposed benefits of removing "non-tariff barriers" (NTBs) have been included:
The government's analysis estimated that reducing NTBs would account for $1.7 billion of the $2.7 billion estimate for gains from the TPPA. The modelling is not specific about the types of NTBs that exist amongst the TPPA countries, aside from the definition that they are 'measures that are discriminatory and are for the purposes of restricting trade'. There is no adequate explanation about which countries maintain these barriers, how they are distinguished from legitimate NonTariff Measures (that are not for the purposes of restricting trade), what proportion of NTBs would be removed, what provisions in the TPPA would remove them or what the risks would be to societies as a result of their removal.
That lack of specificity is a serious problem, because most of the gains from TPP are supposed to come from removing NTBs. Without the details, there's no way of knowing how plausible the assumptions are. In any case, as the economists go on to note rather acidly:
This approach implies that societies maintaining higher levels of protection for social, environmental and health reasons, and a more developed system of business regulation, will generate benefits by removing their regulations. This may be a view held by some neoliberal economists but it is not the view of many other economists, and not supported by evidence.
The appearance of these new studies, together with those that were published before, underlines the fact that, whatever the source, it seems impossible to find any compelling economic justification for signing up to the agreement, since the gains are so pitiful -- and that's without including possible costs, which are never discussed. That this is only now becoming incontrovertible, in the wake of the publication of the TPP text last year, also shows why all the key documents should have been released as they were written in order to allow this kind of in-depth analysis to be conducted and debated as the talks proceeded. Not, as is happening currently, just a few days before the official signing ceremony on February 4 when it's a bit late to do much about it.

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Posted on Techdirt - 27 January 2016 @ 6:32am

Kuwait Creating Mandatory DNA Database Of All Citizens, Residents -- And Visitors

from the makes-you-want-to-spit dept

A growing number of articles on Techdirt attests to the fact that the use of DNA is becoming commonplace in many fields, thanks to the continuing drop in the costs of gathering and analyzing genetic material. As those costs fall, of course, so the temptation to roll out the use of DNA more widely increases. It looks like Kuwait has the dubious honor of being the first nation to require everyone's DNA -- including that of visitors to the country. The Kuwait Times has a frighteningly matter-of-fact article about the plan, which is currently being put into operation. Here's how the DNA will be gathered:

Collecting samples from citizens will be done by various mobile centers that will be moved according to a special plan amongst government establishments and bodies to collect samples from citizens in the offices they work in. In addition, fixed centers will be established at the interior ministry and citizen services centers to allow citizens give samples while doing various transactions.
Those who are not citizens of Kuwait will be sampled when they apply for residence permits:
Collection will done on issuing or renewing residency visas through medical examinations done by the health ministry for new residency visas and through the criminal evidence department on renewing them.
As for common-or-garden visitors to the country:
Collection will be done at a special center at Kuwait International Airport, where in collaboration with the Civil Aviation Department, airlines and embassies, visitors will be advised on their rights and duties towards the DNA law.
"Rights and duties" basically means: "no DNA, no way Kuwait", since the article says elsewhere:
the test will be mandatory for visitors
The DNA will not be used for medical purposes, such as checking for genetic markers of disease, which will avoid issues of whether people should be told about their predisposition to possibly serious illnesses. Nor will the DNA database be used for "lineage or genealogical reasons." That's an important point: a complete nation's DNA would throw up many unexpected paternity and maternity results, which could have massive negative effects on the families concerned. It's precisely those kinds of practical and ethical issues that advocates of wider DNA sampling and testing need to address, but rarely do.

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Posted on Techdirt - 22 January 2016 @ 7:39pm

Direct Democracy: Successful Petition Gives Swiss Citizens Chance To Vote Against New Surveillance Law

from the time-to-watch-Switzerland dept

A common lament these days is that people have no real political power. Yes, elections take place, but after that, politicians just seem to do what they want, with little concern for what the public really thinks about the laws that they push through, as many stories here on Techdirt indicate. In particular, there is generally no mechanism to cancel a new law except by waiting for the next elections, and voting for a party that might repeal it. Often that's not an option, which means the public has no way to stop harmful legislation from going into effect.

Most assume that's just the way things are, but the example of Switzerland shows that's not the case. Citizens there have a number of options if they want to influence politicians directly. For example, when new laws are passed, they can collect signatures in support of a formal referendum on the measure:

if 50,000 signatures are collected from Swiss voters or eight cantons [Swiss states] demand a referendum within 100 days, then a popular vote is held.
That's precisely what has been done in reaction to a new surveillance law that was passed last September, as this post from the Swiss email company, ProtonMail, explains:
the Swiss parliament passed a new surveillance law known as the Nachrichtendienstgesetzt (NDG) or la Loi sur le renseignement (Lrens). The law would have severely curtained privacy rights in Switzerland. Due to our use of end-to-end encryption, the ProtonMail secure email service would not be negatively impacted by the new law. However, we strongly believe in protecting privacy rights, so together with other opposition groups, we decided to mount a challenge against the new law. Due to Switzerland's unique system of direct democracy, any law can be challenged by collecting 50,000 signatures within a period of 3 months after the passage of the law.

Today, we are happy to announce that this effort has succeeded and this afternoon at 13:30h, the referendum will be officially presented to the Swiss government in Bern. This means at the next election, the Swiss surveillance law will be put to a public vote by the entire country, and for once, the people and not politicians will decide the future of privacy in Switzerland.
That's a pretty amazing result, not least because signatures had to be physical ones on pieces of paper, which then had to be verified before they could be counted towards the threshold figure of 50,000. In the end, over 70,000 signatures were sent in, 64,500 were processed, and 55,000 were certified. The success of this exercise in direct democracy contrasts painfully with how things are proceeding elsewhere around the world. In too many countries, new surveillance laws are being rushed through with little scrutiny from politicians, and no input from the public.

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Posted on Techdirt - 20 January 2016 @ 3:23am

What's The Difference Between 'Mass Surveillance' And 'Bulk Collection'? Does It Matter?

from the words,-words,-words dept

As numerous Techdirt stories make clear, the particular words used to describe something can make a big difference in how it is perceived. For example, intelligence agencies like to avoid the use of the bad-sounding "mass surveillance," with its Orwellian overtones, and prefer to talk about "bulk collection," which can be presented as some kind of cool big data project. No one is more vociferous in insisting that they are not engaged in mass surveillance, but merely bulk collection, than the UK's Home Secretary, Theresa May. She was pushing that line again last week, during a grilling by a UK Parliamentary committee about her proposed Snooper's Charter. As BBC News reported:

She said the security minister, John Hayes, had written to the committee of MPs and peers scrutinising the draft bill to give the reasons why the government did not want to reveal the kinds of data investigators were accessing.

She insisted the practice -- and the sweeping up by the security services of large quantities of internet traffic passing through the UK -- did not amount to "mass surveillance" as civil liberties campaigners claim.

"The UK does not undertake mass surveillance," she told the committee.
Given what we know that GCHQ is already doing, and adding in what the UK government says it wants to do, that seems an absurd thing to say. But Paul Bernal, Lecturer in Information Technology, Intellectual Property and Media Law at the UK's University of East Anglia, thinks that there is more to this than meets the eye:
Precisely what constitutes surveillance is far from agreed. In the context of the internet (and other digital data surveillance) there are, very broadly speaking, three stages: the gathering or collecting of data, the automated analysis of the data (including algorithmic filtering), and then the 'human' examination of the results of that analysis of filtering. This is where the difference lies: privacy advocates and others might argue that the 'surveillance' happens at the first stage -- when the data is gathered or collected -- while Theresa May, [former GCHQ director] David Omand and those who work for them would be more likely to argue that it happens at the third stage -- when human beings are involved.
If surveillance occurs through the act of gathering personal data on a large scale, then clearly what the UK government does (and wants to do more of) is mass surveillance. But if surveillance only takes place once a human operator looks at some of the gathered data, then Theresa May can plausibly argue that what the UK government is engaged in is not mass surveillance, because relatively little personal data is scrutinized in this way. So the question then becomes: at what point is it most appropriate to say that surveillance has occurred? Bernal offers a helpful analogy. What the UK government wants to do with the Snooper's Charter would be like:
installing a camera in every room of every house in the UK, turning that camera on, having the footage recorded and stored for a year -- but having police officers only look at limited amounts of the footage and only when they feel they really need to.

Does the surveillance happen when the cameras are installed? When they’re turned on? When the footage is stored? When it’s filtered? Or when the police officers actually look at it.
Most people would probably find the automated video recording of everything they did in the privacy of their own home intrusive, and clearly a form of surveillance, even if it was unlikely the footage would ever be seen by a human being. And in Europe, the question has already been settled by the courts:
Privacy invasion occurs when the camera is installed and the capability of looking at the footage is enabled. That’s been consistently shown by recent rulings at both the Court of Justice of the European Union and of the European Court of Human Rights. Whether it is called ‘surveillance’ or something else, it invades privacy -- which is a fundamental right. That doesn’t mean that it is automatically wrong -- but that the balancing act between the rights of privacy (and freedom of expression, of assembly and association etc that are protected by that privacy) and the need for 'security' needs to be considered at the gathering stage, and not just at the stage when people look at the data.
That's important, because it is precisely this issue that the courts will have to consider when the inevitable legal challenges are brought against the UK's Snooper's Charter once some version of it becomes law. In the end, whether the Home Secretary thinks what she is doing is mass surveillance or merely bulk collection is irrelevant -- the UK and EU courts will be the ones that decide whether it's allowed.

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Posted on Techdirt - 19 January 2016 @ 11:23pm

'More Realistic' Modelling Of TPP's Effects Predicts 450,000 US Jobs Lost, Contraction Of Economy

from the accelerating-the-global-race-to-the-bottom dept

Last week we wrote about a World Bank report that predicted that TPP would produce negligible boosts to the economies of the US, Australia and Canada. Of course, that's just one study, and it could be argued that it might be unrepresentative, or unduly pessimistic. That makes the publication of yet more econometric modelling of what could happen particularly welcome. It comes from Jerome Capaldo and Alex Izurieta at Tufts University, and starts off by making an important point that is too often overlooked when considering other TPP predictions:

The standard model assumes full employment and invariant income distribution, ruling out the main risks of trade and financial liberalization. Subject to these assumptions, it finds positive effects on growth. An important question, therefore, is how this conclusion changes if those assumptions are dropped.
Assuming that TPP won't change employment levels in any of the participating nations seems a stretch, not least because previous trade liberalization has caused sizable job losses, as the new study notes. At the very least, it means that those using these models to argue in favor of TPP shouldn't be making any claims about its effects on employment, since these don't exist by definition. Capaldo and Izurieta are able to look at how jobs are affected because they use a different model, which they claim is superior to the one found in most other studies:
In this paper, we review existing projections of the TPP and propose alternative ones based on more realistic assumptions about economic adjustment and income distribution. We start from the trade projections put forward in the main existing study and explore their macroeconomic consequences using the United Nations Global Policy Model.
Most of the paper is spent taking a rather critical look at previous results, and will probably be mostly of interest to economists, especially academic ones. But the final results of the new calculation are certainly worth noting:
Given the small changes in net exports, the resulting changes in GDP growth are mostly projected to be negligible. We present two sets of growth figures: ten-year totals, which measure the overall effect of the TPP on growth rates compared to the baseline, and annual averages, which measure the average changes in growth rates due to the TPP.
That underlines another point often missed: that the GDP growth figures quoted by politicians and TPP supporters reflect the overall effect after ten years. Here's what Capaldo and Izurieta found:
Total ten-year changes in growth rates are projected to be below one percent, by 2025, in all regions but two. In East Asia and Latin America, GDP growth is projected to increase by 2.18 percent and 2.84 percent respectively under the TPP. By comparison, during 2005-2015, GDP in the two regions is estimated to have grown by 50 percent and 47 percent respectively.

The US and Japan are projected to suffer net losses of GDP of 0.54 percent and 0.12 percent respectively compared to the baseline
Although those growth figures are worse than previous predictions, they confirm that TPP's impact on GDPs will be small. What's new in this paper is an estimation of the agreement's effect on jobs:
While projected employment losses are small compared to the labor force, they clearly signal an adverse effect of liberalization not taken into account in full-employment models. In TPP countries, the largest effect will occur in the US, with approximately 450,000 jobs lost by 2025. Japan and Canada follow, with approximately 75,000 and 58,000 jobs lost respectively. The smallest loss -- approximately 5,000 jobs -- is projected to occur in New Zealand, where the increase in net exports is projected to be the largest. Overall, projected job losses in TPP countries amount to 771,000 jobs.
Also novel is the report's comments about the global effects of TPP:
when analyzed with a model that recognizes the risks of trade liberalization, the TPP appears to only marginally change competitiveness among participating countries. Most gains are therefore obtained at the expense of non-TPP countries.

Globally, the TPP favors competition on labor costs and remuneration of capital. Depending on the policy choices in non-TPP countries, this may accelerate the global race to the bottom, increasing downward pressure on labor incomes in a quest for ever more elusive trade gains.
Although this is just one (more) study, it does seem to confirm the more gloomy predictions for TPP. It inevitably poses a key question with yet more force: why exactly are politicians in TPP nations pushing so hard to ratify a controversial agreement that seems have few quantifiable benefits, and very considerable costs?

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Posted on Techdirt - 15 January 2016 @ 3:26am

NZ Newspaper: An 'Honor' To Welcome Small Pacific Rim Countries As They Sign Away Much Of Their Sovereignty

from the most-comprehensive-and-far-sighted-economic-agreement-of-all-time dept

As we've written recently, a report from the World Bank suggests that the economic benefits from TPP will be slight for the US, Australia and Canada. New Zealand is predicted to do better, but not much: the econometric modelling predicts a 3.1% boost to its GDP by 2030 -- roughly 0.3% extra GDP per year. That's a pretty poor payback given the price participant countries will have to pay in terms of copyright, biologics and corporate sovereignty. Such details have not prevented one of the main newspapers in the country, the New Zealand Herald, from banging the drum for TPP's signing ceremony, which is probably going to take place quite soon:

New Zealand is about to have the honour of hosting the formal signing of the Trans-Pacific Partnership agreement by trade ministers from 12 nations of the Pacific rim. And it is an honour. This is the most comprehensive and far-sighted economic agreement the world has seen in our lifetime, possibly of all time.
Rather bizarrely, the editorial goes on to list TPP's many problems:
The TPP's intellectual property discussions raised the risk that US patent law and copyright protection of pharmaceuticals and other products of investment in science and research could be strengthened at considerable cost to public purchasing agencies, such as Pharmac, and innovation in digital technology in other countries. Medical professionals and IT developers have been among those fearful of the TPP during the course of its negotiation. So were environmentalists and public health promoters. They feared the inclusion of investor-state dispute settlement procedures could stop governments taking action in the interests of public health or the environment that would reduce the value of commercial investments.
At this point, you might expect a refutation from the editorial, and a compelling explanation why all those concerns proved misguided. Instead, it notes that many of these fears were stoked by the insane secrecy surrounding the negotiations, and suggests that since the text was released two months ago, everything's OK now. The editorial has to admit that yes, there are 6000 pages that need to be read, but points out that the final text has provided great summer holiday reading for those in the Southern Hemisphere. It then makes the following claim:
The precise terms seem to have survived scrutiny so far.
In fact, the release of the TPP text has amply confirmed the main worries regarding just about every aspect of the deal. For anyone wanting a quick catch-up on the major problems there, Michael Geist is running a helpful series with the self-explanatory title "The Trouble with the TPP":
[I] wanted to expand on the trouble with the TPP in more detail. With that goal in mind, I plan to post each weekday until February 4th on problems associated with the TPP. The series will include posts on copyright, privacy, Internet governance, and many other issues.
Maybe the editors at the New Zealand Herald should read the series before the TPP signing ceremony, so that at least they understand why the following is not going to happen:
It is too much to hope any fears now assuaged [sic] will reduce the scale of protest at the signing. But it should not be too much to ask that those philosophically opposed to free trade respect the views of those who disagree with them, and let this country host the occasion with dignity and pride.
Dignity, maybe. But pride? That's hardly appropriate given what is really happening here.

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Posted on Techdirt - 14 January 2016 @ 3:28am

World Bank Report: TPP Will Bring Negligible Economic Benefit To US, Canada And Australia

from the well,-that's-awkward dept

Supporters of TPP generally insist it's absolutely worth doing, despite any infelicities it might contain, because of the huge overall economic benefit it will bring to participants. But when challenged, they are unable to cite any credible evidence for that claim. That's because there isn't any: despite the impact that TPP's measures will have on how the US and other countries do business, there are astonishingly few studies on whether it will indeed have a positive impact overall. Just over a year ago, we wrote about one of the rare attempts to model TPP, commissioned by the US Department of Agriculture, which came up with the following result for countries like the US and Australia:

TPP is projected to have no measurable impacts on real GDP
However, that particular study only looked at the effect of removing traditional tariffs; as it pointed out, TPP includes other elements that might also boost GDP. Fortunately, we now have a new report from the World Bank, no less, which took into account all aspects of the proposed deal. Here's the summary of what it found (pdf):
The model simulations suggest that, by 2030, the TPP will raise member country GDP by 0.4-10 percent, and by 1.1 percent, on a GDP-weighted average basis.
That's a little vague: 10% GDP increase is very different from only 0.4%, so it really matters who gets what. The detailed figures are as follows:
Vietnam -- 10%
Malaysia -- 8%
Brunei -- 5%
New Zealand -- 3.1%
Singapore -- 3%
Japan -- 2.7%
Peru -- 2.1%
Mexico -- 1.4%
Canada -- 1.2%
Chile -- 1%
Australia -- 0.7%
US -- 0.4%
But those figures too are misleading, because they refer to the cumulative GDP gain from TPP by 2030. It's not clear when the World Bank econometric model assumes TPP will come into effect, but by 2030 it's clearly been running for at least ten years, and maybe even 12. That means all of the figures above need to be divided by at least a factor of 10 in order to arrive at the annual boost to growth, which provides a better measure of TPP's impact than the overall figure.

So according to the World Bank's figures, the US will gain an extra 0.04% GDP per year on average, as a result of TPP; Australia an extra 0.07% annually, and Canada a boost of 0.12% per year. In other words, they differ from the USDA's earlier projection of "no measurable impacts on real GDP" by amounts that are so small they will be swamped by the general imprecision of the model -- trying to predict what will happen to a big chunk of the global economy out in 2030 is hard, and that's putting it mildly.

The fact that two econometric models of TPP's effects, both from highly-respected institutions, predict that TPP will produce vanishingly-small economic benefits for key countries, including the US, could explain why there are so few such studies. A cynic might suggest that others were started but generated such inconveniently-awful outcomes that they were quietly dropped and never published.

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Posted on Techdirt - 12 January 2016 @ 3:25am

Patents On Presentation Of Information Excluded In EU, But Germany Has Just Granted A Patent On A Graphical User Interface

from the not-promoting-innovation-as-such dept

Software patents are contentious, and nowhere more so than in Europe. Patenting there is governed by the European Patent Convention (EPC). Article 52 of the EPC reads as follows:

(1) European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.

(2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1:

(a) discoveries, scientific theories and mathematical methods;

(b) aesthetic creations;

(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;

(d) presentations of information.
Although the exclusion of software seems crystal clear there, the same Article adds the following regrettable rider:
(3) The provisions of paragraph 2 shall exclude patentability of the subject-matter or activities referred to in that provision only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.
What exactly those two words "as such" mean in this context has been argued over for years. In practical terms, it has led to thousands of software patents being issued thanks to clever framing by lawyers that takes advantage of the "as such" loophole. According to this post on a blog that is called unashamedly "European Software Patents," it seems that German judges have now gone even further, and granted a patent for a graphical user interface. That's surprising, because the same EPC Article 52 explicitly excludes "presentations of information" from patentability. So how did the lawyers get around that? By using the "as such" loophole again. As the blog post explains:
the Federal Court of Justice (FCJ) held that the [EPC's] exclusion is overcome when the presentation of information serves the solution of a technical problem with technical means
Just in case that legalese isn't crystal-clear, here are details of the case considered by the German court. The patent dealt with the display of visual information captured by a swallowable capsule equipped with a camera. Apparently, these cameras produce information too rapidly to be useful for ready examination by the human eye. That problem was solved by showing only a subset of transmitted frames in one window, and different subsets in other windows. The idea is that an expert can scan several of these windows at once, since the images in each are changing relatively slowly.

Germany's Federal Patent Court held this to be a pretty obvious idea (which it is), but the country's Federal Court of Justice reversed that finding, and decided that the idea of breaking up a stream of images into subsets was terribly clever, and definitely eligible for patent protection. It also made a more general statement about the patentability of graphical user interfaces:

Instructions relating to the (visual) presentation of information which do not primarily focus on the conveyance of particular content or its conveyance in a particular layout but on the presentation of image content in a manner that takes into account the physical characteristics of human perception and reception of information and are directed towards making possible, improving or making practical the human perception of the displayed information serve the solution of a technical problem with technical means.
It's one of those how-many-angels-can-dance-on-the-head-of-a-pin distinctions beloved by patent lawyers, but which actually makes no sense. After all, it could be argued that any intelligible, well-designed presentation of information "takes into account the physical characteristics of human perception and reception of information," and therefore is eligible for a patent. The latest decision by the German courts will doubtless lead to the granting of further, similarly-trivial patents, and to companies increasingly nervous about the use of even the simplest graphical user interface in their products for Germany. So how is that encouraging innovation or benefiting the public?

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Posted on Techdirt - 7 January 2016 @ 8:19am

Former NSA Whistleblower Bill Binney Warns UK Lawmakers Mass Surveillance Will 'Cost Lives In Britain'

from the analysis-paralysis dept

Shortly after the first Snowden documents were leaked, Techdirt wrote about former NSA whistleblower Bill Binney providing some context and history to the newly-revealed information. The central point he made was that trying to collect "haystacks" of data -- mass surveillance -- doesn't work, because intelligence agencies have insufficient resources to search through vast digital stores for the "needles" hidden there. It's a theme Techdirt has returned to a number of times, as has Binney. This week, he was trying to convince a committee of MPs and peers who are scrutinizing the UK's Snooper's Charter Bill that too much data leads to "analysis paralysis," and that targeted surveillance was the way to go. The Guardian reported:

William Binney, a former technical director of the US National Security Agency (NSA), told parliamentarians that the plans for bulk collection of communications data tracking everyone’s internet and phone use are "99% useless" because they would swamp intelligence analysts with too much data.
He said:
This approach costs lives, and has cost lives in Britain because it inundates analysts with too much data. It is 99% useless. Who wants to know everyone who has ever [been] at Google or the BBC? We have known for decades that that swamps analysts.
He claimed that the attacks carried out on September 11 could have been thwarted if the NSA had adopted the more targeted approach he and his colleagues were advocating:
Sixteen months before the attacks on America, our organisation (Sigint Automation Research Center -- Sarc) was running a new method of finding terrorist networks that worked on focusing on 'smart collection'. Their plan was rejected in favour of a much more expensive plan to collect all communications from everyone.

The US large-scale surveillance plan failed. It had to be abandoned in 2005. Checks afterwards showed that communications from the terrorists had been collected, but not looked at in time.
Binney pointed out that in addition to improving the operational efficiency of intelligence agencies, a targeted approach brought with it other important advantages:
It reduces the privacy burden affecting the large number of innocent and suspicion-free persons whose communications are accessible to our systems.
And as a bonus:
Legally protected groups such as MPs, lawyers and journalists could have their communications screened out and excluded from bulk collection and analysis unless a designated and targeted authorisation is in place.
Alongside the facts about the failure of mass surveillance laid before them by Binney and other expert witnesses giving evidence to the committee, let's hope the MPs and peers also took on board that point about the personal advantages of targeted surveillance for them as a group.

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Posted on Techdirt - 6 January 2016 @ 11:27pm

Fingerprints For Food: Venezuela Shows How Not To Use Biometrics

from the I've-got-a-little-list dept

Biometric scanners are hardly a novelty these days, but how the data they generate can be used is still controversial. Here's a good example from Venezuela of how function creep there has turned fingerprint readers into instruments of pervasive surveillance:

In Caracas or Maracaibo' supermarkets and drugstores, buying a kilogram of grain or a pack of cookies has become a complex procedure: it's required for you to deliver an ID, full name, phone number, address, date of birth and to slide both thumbs in a device: the emblematic "fingerprint scanner"; a device which usage by stores was originally voluntary, but which evolution, months afterwards, is one of omnipresent machinery, kind of a necessary toll for the acquisition of a simple pack of gum in any chain store.
As a post on the Digital Rights in Latin America and the Caribbean blog explains, the Food Safety Biometric System was supposed to be a boon for citizens, ending Venezuela's food and medicine shortage. Not only has it failed to do that, it has helped create one of the world's most complete and intrusive population profile databases:
Along with biometric and personal data requested to the customers at the moment of the purchase, stores are obliged to preserve a great deal of information regarding the transaction, demanded by the government's tax collector. The extend [sic] of the databases that the Venezuelan government possesses regarding their citizens would be heaven for any big data analyst. With enough computer skills, it wouldn't be difficult to establish a detailed profile of every Venezuelan citizen, starting from data such as address, the places where he shops, how much money he expends and the products he acquires. Nevertheless, no one outside of the government possesses the capability to know if ... systems are intertwined, or where this huge quantity of information is stored, much less what's the policy for its retention and storage.
That would be worrying anywhere; in Venezuela, it's doubly so, because of the country's experience with something called the Tascón List:
a list of millions of signatures of Venezuelans who petitioned in 2003 and 2004 for the recall of the President of Venezuela, Hugo Chávez, a petition which ultimately led to the Venezuelan recall referendum, 2004, in which the recall was defeated. The list, published online by National Assembly member Luis Tascón, is used by the Venezuelan government to discriminate against those who have signed against Chávez. The government also claimed some private firms were using the list to discriminate in favour of petitioners.
According to the Digital Rights post, because of the Tascón list, some Venezuelans found themselves shut out from things like mortgage loans, scholarships and job opportunities. The fingerprint scanners of the Food Safety Biometric System are already being used to deny people access to even more essential items -- food and medicine:
those marked by the system shopping in quantities superior to those of their established quotas, go to a blacklist, and are blocked completely from the system. This makes them use the (illegal) black market in order to purchase food, medicines and basic products.
Venezuela is clearly the country to watch if you want to see how not to use biometrics.

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Posted on Techdirt - 6 January 2016 @ 6:35am

UK Government Spends Three Years And Large Sums Of Money To Avoid Revealing The Number '13'

from the pollutant-of-publicity dept

As we pointed out last month, the UK government is hoping to hamstring the country's Freedom of Information laws to make it much harder to dig out facts and thus hold politicians to account. In the meantime, it is going to absurd lengths in order to avoid responding to even the most harmless of requests, as this story from the BBC's Social Affairs Correspondent, Michael Buchanan, makes plain. Here's the background:

Back in 2010, the [UK's] coalition government were trumpeting a new red tape-busting cabinet panel, the Reducing Regulation Committee. I suspected that it was all froth and no action, so in 2012 I asked how often they had met since the committee's creation.
Nothing very threatening there, you might think, but the UK government refused on the basis that disclosing this magic number would "impinge on cabinet collective decision-making". So Buchanan appealed -- first, to the Cabinet Office, the department he had made the request to, where he was turned down, and then to the UK Information Commissioner's Office (ICO), which oversees this whole area of government transparency. Here's what happened:
Merry hell ensued. The ICO found in my favour, the Cabinet Office appealed, lost, appealed again, won, the ICO appealed for me, won, etc. Back and forth it went for three years. At one point, the government called in the fearsome-sounding "Treasury Devil", the so-called Star of the Bar, James Eadie QC [Queen's Counsel], to argue their case.
The "Treasury Devil" may or may not be fearsome-sounding, but he is certainly fearsomely expensive -- think top-class corporate lawyer expensive. In other words, the UK government was willing to spend many, many thousands of pounds of taxpayers' money in order to keep the number of meetings of an obscure committee secret. An earlier post by Buchanan reveals one of Eadie's devilish attempts to fend off the FOI request. The government's lawyer argued that:
publicly revealing how often a cabinet committee meets would harm the workings of government by introducing the "pollutant of publicity".
But in the end, the UK's Information Rights Tribunal was undaunted by the Treasury Devil and his artful alliterations, and it rejected the government's final appeal, going so far as to issue:
a strongly worded judgment which described the Cabinet Office's approach as "irresponsible", its key witness as "evasive and disingenuous", and her evidence as "of no value whatsoever".
And so, a mere three years and five months after he submitted his FOI request, Buchanan could finally write:
I'm now in a position to exclusively reveal to you, dear reader, that between 2010 and 2012, the Reducing Regulation Committee met on a total of 13 occasions.
And he adds:
Ministers are currently pondering whether to put restrictions on the Freedom of Information Act. In the meantime, how much it cost in legal fees to refuse my request for three years will be the subject of my next FOI request.
Well played, sir.

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Posted on Techdirt - 4 January 2016 @ 11:24pm

US Department Of Agriculture TAFTA/TTIP Study: Small Gains For US, Losses For EU

from the remind-me-why-we-are-doing-this-again dept

As we are constantly reminded by its supporters, the TAFTA/TTIP agreement currently being negotiated between the US and the EU is huge: together, the two regions account for around half of global GDP. Given that scale, and the impact that TTIP is likely to have on both the US and EU, you might expect there would be dozens of detailed studies looking at the likely effects -- and whether, on balance, it would be a good idea. And yet such studies are very thin on the ground.

The main one (pdf), produced by the London-based CEPR for the European Commission, dates back to 2013. Initially, its figures were widely quoted to bolster the case for TTIP; and then, almost overnight, it was quietly dropped. It's not hard to see why. Once people started digging more deeply into its oft-cited figures -- an extra €119 billion for the EU's economy, and €95 billion for the US -- it turned out that these were from an "ambitious" deal, and referred to the cumulative effect of TTIP in 2027, after it had been in operation for ten years. Even that best-case scenario worked out at just 0.05% extra GDP per year -- little more than a rounding error. Since then, TTIP supporters have stopped making precise claims about the boost to growth that TAFTA/TTIP will provide, and simply claimed instead that it will be good for the US and EU economies without going into further details.

The embarrassing lack of any compelling economic justification for the deal probably explains why there are so few studies: anything even half-way rigorous would show the same, thin gains, which would hardly bolster the case for TTIP. That dearth of high-quality research makes the recent appearance of a new report from the Economic Research Service of the US Department of Agriculture entitled "Agriculture in the Transatlantic Trade and Investment Partnership: Tariffs, Tariff-Rate Quotas, and Non-Tariff Measures" (pdf) all-the-more welcome.

As you would expect given its provenance, it's a rigorous piece of work, and confirms that the GDP gains from TTIP are likely to be tiny: in the best case, around 0.1% for the US, and 0.29% for the EU. Both of those are cumulative gains, which means that the annual GDP boost for both sides is once more extremely small. What makes the new study particularly valuable is that it naturally concentrates on the agricultural sector, and provides us with the first detailed breakdown of how the proposed agreement is likely to affect what is a very important -- and highly influential -- industry for both sides.

The first scenario the report examines is one where all the tariffs currently imposed by the US and EU on each other's agricultural goods are removed, which is what is typically found in "classical" trade agreements. Here's what the report says might happen:

U.S. agricultural exports to the EU increase by $5.5 billion from base year (2011) levels, while EU agricultural exports to the United States increase by $0.8 billion. Overall, U.S. agricultural exports increase by 2 percent and agricultural imports by 1 percent. EU agricultural exports decrease by 0.25 percent, and agricultural imports rise by 0.5 percent.
To unpack that, this says that the agricultural trade between the US and EU increases for both sides, but that overall, including trade with other nations around the world, EU farmers end up exporting less than they currently do, while the EU as a whole imports more. In real terms, that means EU farmers will have a tougher time under TTIP if tariffs are removed.

The other situation modelled by the USDA study looks at what happens if so-called "non-tariff barriers" (NTBs), termed "non-tariff measures" (NTMs) by the researchers, are removed in addition to the tariffs. This is much more contentious, because those NTBs/NTMs include things like the EU's ban on chickens washed in chlorine water, or the European refusal to accept the use of growth hormones for beef. As that indicates, this is not about traditional monetary tariffs imposed on imports, but cultural choices about how food is produced. Here's what the econometric modelling found in this case:

[T]he additional removal of select NTMs (e.g., meats, field crops, and fruits and vegetables) results in an increase in U.S. exports to the EU by an additional $4.1 billion over gains in the first scenario [to $9.6 billion]. For the EU, the removal of NTMs generates an additional gain of $1.2 billion in exports to the United States [giving a total of $2 billion].

Overall, agricultural imports and exports each increase for the United States by about double the percentage in scenario one [4% and 2% respectively], while EU agricultural imports increase by 1 percent and agricultural exports decline.
As you would expect, removing those NTBs/NTMs does boost agricultural trade between the EU and US. But the bigger picture shows that the US fares better globally, while the EU does even worse than in the first scenario. In fact, the report prefers not to say how much -- just that "agricultural exports decline," which means decline even more, since the tariff-only scenario already saw global exports go down by 0.25%. But the report does make another very significant comment:
The decrease in overall EU agricultural exports in the first scenario is also largely attributable to a reduction in intra-EU trade.
What that means is that if TTIP is implemented, it will cause the agricultural trade between the 28 EU nations to decrease, as trade with the US increases, and EU production is diverted there. But one of the key reasons for creating the European Union's "common market" was to facilitate economic interactions between member states so as to strengthen their political bonds. Put another way, the USDA study predicts that TAFTA/TTIP -- a deal supposed to bolster the EU -- will in fact undermine the European project.

Removing the non-tariff barriers is pretty disastrous for the EU, but is unlikely to happen, since the European Commission has promised that it will not allow chickens washed in chlorine, or beef injected with hormones, to enter the EU. And even if it broke those promises -- surely an impossibility -- the USDA study points out EU consumers might well refuse to buy those US products anyway:

The removal of select NTMs could lead to consumers preferring domestically produced products versus the importer equivalent. Thus, in the third scenario, export gains are smaller for both the United States and the EU.
As a consequence, the report warns:
Potentially, these demand-side effects could erase any gains from the removal of specific NTMs.
That's an important result. It shows that it would be pointless for the US negotiators to fight for the removal of non-tariff barriers for agricultural goods, since doing so is unlikely to bring any benefit for US producers. More broadly, the new study not only confirms that the economic benefits of TAFTA/TTIP are vanishingly small overall, but suggests that the EU's agricultural sector will actually be worse off under the deal than it is now without it. Good luck getting that through the European Parliament....

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Posted on Techdirt - 30 December 2015 @ 3:34pm

If Microsoft Wins Its 'Stupid Patent Of The Month' Lawsuit, Expect A Plague Of Trolls To Move Into Design Patents

from the agonies-of-atomization dept

The recent Techdirt article about Microsoft's design patent on a slider understandably focused on the absurdity of companies being forced to hand over all of the profits that derive from a product if it is found to have infringed on someone else's design patent even in just a tiny portion of that product. But there's another angle worth mentioning here that picks up on something Techdirt has written about several times before: the rise and threat of patent thickets. Back in 2012, it was estimated that 250,000 active patents impacted smartphones. That makes it impossible to build devices without licensing large numbers of patents, and even then, it's likely that claims of infringement will still be brought.

The underlying problem is that patents were originally devised for a complete, self-standing process or invention. For example, some of the earliest patents were those granted in fifteenth-century Venice for glass making. Over the centuries, invention has become atomized, with smaller and smaller elements being granted patents. These are not, in general, useful on their own, but must be combined with other components to make something useful.

That process of atomization has reached its peak in the world of software, which is typically made up of thousands of smaller software parts. That's in part why computing has emerged as the field most plagued by patent litigation: if you own a patent on a key element that is required for the other software parts in a product to work properly, you are in a very strong position to force manufacturers to pay you for a license.

The situation described in the Techdirt article about Microsoft's slider shows that there is a risk that the consequences of atomization in the field of design patents, where even tiny, obvious elements are awarded a patent, could be worse than for "ordinary" utility patents. That's because of the high level of damages based on the total profits derived from an infringing product, irrespective of the importance of the design element in question. Let's hope the Supreme Court decides to take this case, and comes out with a sensible ruling that heads off the danger of disproportionate damages. If it doesn't, we can probably expect trolls to move into the design patent world in a big way -- and for real innovation to face even more hurdles than it does at present.

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Posted on Techdirt - 29 December 2015 @ 11:23pm

TPP's Forgotten Danger: Stronger Trade Secrets Protection, With Criminal Penalties For Infringement

from the quid-without-a-quo dept

Since the release of the TPP text back in November, commentators have naturally tended to concentrate on the bigger, more obvious problems -- things like the corporate sovereignty chapter, the extension of Big Pharma's monopolies to scientific data, and copyright provisions -- that Techdirt has been exploring for years. But there's one area that has received relatively little attention, perhaps because for most people it's an obscure topic that seems rather unimportant. It concerns the issue of trade secrets, which Techdirt wrote about in the context of TPP in October 2014. There, we concentrated on the risk that it would chill investigative reporting and corporate whistleblowing, but a new column in The Globe and Mail by Dan Breznitz, professor of Innovation Studies at the Munk School of Global Affairs at the University of Toronto, looks at the economic impact of TPP's trade secrets measures. First, he notes that copyright and patents are based on a social bargain:

The side that wishes to be granted a patent needs to disclose new and useful information to society at large, and in return we (the people) give it an exclusive right for a limited time, preventing others from using it without permission. In other words, we grant it a temporary monopoly.
But trade secrets are quite different:
[W]e (the people) give rights to prevent others from using any information without any disclosure and without any time limitation or otherwise -- as long as it remains undisclosed (in other words, secret). In so doing, we give a quid that covers potentially wide-ranging types of information, without receiving any quo in return.
Since society gets almost nothing out of this other bargain, the remedy available for the disclosure of secret business information is limited:
Currently, the remedy is available only against those who breached the contract or trust, but not against others who obtained the information. Once the information has been disclosed publicly, the person who disclosed it might be held liable, but everyone else is free to use it.
As Breznitz points out, TPP changes all that, offering a much wider scope for protection, and much more serious penalties for breaches of trade secrets:
Article 18.78 [of the TPP text] adopts a potentially very broad concept of a trade secret, a very wide range of activities that might constitute a breach and a very broad potential class of persons who might be liable. Worse, it also calls for criminalization. The potential risk for would-be entrepreneurs to start a business in anything that even remotely relates to their past job are now enormous.
In other words, like much everything else in TPP, the proposed changes work to the advantage of big, established companies -- and against the interests of start-ups and entrepreneurs:
The resulting chill [caused by TPP's trade secrets rules] in entrepreneurship alone would cost the U.S. and Canadian economies significantly higher orders of magnitude in terms of lost growth, jobs and welfare than any positive benefits that the TPP might bring. Even more disturbing, Articles 18.74 and 18.75 profoundly expand the enforcement measures, including significant provisional ex parte proceedings [with only one side present], and narrow the discretion of the courts. Those provisions apply to all intellectual property rights, including trade secrets. These extra-potent tools would be used not only where they are appropriate, but also where they aren’t -- such as to stifle competition and innovation.
That's a bold claim, but, if true, suggests that TPP could be an extremely bad deal for the US. At the very least, it deserves some serious research to investigate the issue. However, given the absurdly-truncated time span available for studying the TPP text, that research is unlikely to be conducted, which means that the US could end up entering blindly into an agreement whose net economic and social effects will be decidedly negative.

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Posted on Techdirt - 23 December 2015 @ 3:28am

Just Because Australia Won Its Plain Packaging Case Against Philip Morris Doesn't Mean Corporate Sovereignty Isn't A Threat

from the extrapolating-from-a-single-data-point dept

The challenge by Philip Morris to Australia's plain packaging law for tobacco products is perhaps the best-known example of how companies try to use corporate sovereignty provisions in trade agreements to force nations to change their policies -- in this case, one designed to save lives. That case was also notable for the way that it had been brought: since Philip Morris was very unlikely to win by invoking the trade agreement between Australia and the US, it used one between Australia and Hong Kong -- a classic case of treaty shopping. Last week, we heard that the case had been dismissed. An article by Kyla Tienhaara in The Sydney Morning Herald explains:

it appears that Australia was able to convince the tribunal that Philip Morris should not be permitted to plead the merits of its case because it engaged in "treaty shopping". In other words, it was an American investor when plain packaging was introduced and only adopted a "flag of convenience" in order to access arbitration.
It's great news that Australia won't be forced to pay huge punitive fines for proceeding with its health policy. But, predictably, people are already pointing to this result as "proof" that corporate sovereignty isn't really a problem, as in this column published by The Conversation:
A tobacco company sued a government for enacting laws designed to improve public health. They used a little understood mechanism -- ISDS -- to sue, despite having lost in Australian courts. International trade law disputes rarely have such a clear-cut villain. It is natural to distrust the mechanisms they relied on. However, this victory -- in the first ISDS claim brought against Australia -- should allay those concerns.
The author concludes:
Australia's victory over Philip Morris should take much heat out of this debate.

The bogeyman has been slain.
Leaving aside the rather important fact that it is not possible to extrapolate from a single data point -- and that there are dozens of other ISDS cases where governments have lost and been hit with massive fines -- there are couple of aspects to note here. First, as Tienhaara writes in her article:
the dismissal of the case on procedural grounds means that we will never get a ruling on the substance of Philip Morris' claims. As such, the award contributes nothing to the bigger debate about the conflict between investment protection and public policy.
That's the key issue -- whether companies can use corporate sovereignty provisions to trump laws enacted democratically. The defeat on a procedural issue leaves open the possibility that other ISDS cases will succeed where Philip Morris failed, and cause governments to repeal laws rather than pay massive fines. In particular, both TPP and TAFTA/TTIP are likely to give far stronger rights to tens of thousands of companies to sue governments directly, without needing to invoke obscure treaties with third parties. Tienhaara points out a further reason why the defeat of Philip Morris does not signal that corporate sovereignty is no longer a threat:
poor countries are in the worst position because they can't afford even a preliminary defence in an ISDS case. It has been reported that Australia has spent [AU]$50 million [about US$35 million] defending plain packaging in arbitration. Uruguay has been mired in its own dispute with Philip Morris for even longer than Australia and has to rely on funding from a foundation set up by former New York mayor Michael Bloomberg because it can't afford to pay its legal fees.

The high cost of ISDS makes the threat of arbitration a potent tool for the tobacco companies.
In other words, it is not necessary for companies to win all or even most corporate sovereignty cases: the mere threat of them winning is likely to be enough to dissuade many governments from proceeding with policies that could result in them paying huge awards. The ISDS bogeyman may have taken a hit with Australia's win, but it is most certainly not slain.

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Posted on Techdirt - 22 December 2015 @ 3:21am

UK Government Has Secretly Created A Huge Database Storing Details About Its Citizens' Private Lives -- Since 2000

from the database?-what-database? dept

Long before the vast planetary surveillance programs being carried out by the Five Eyes team were revealed by Edward Snowden, there was Echelon, a similarly globe-spanning system for slurping up communications. The person who did more than anyone to expose this top-secret collaboration was the UK journalist Duncan Campbell:

In 1988, he revealed the existence of the ECHELON project, which has since 1997 become controversial throughout the world. In 1998, he was asked by the European Parliament to report on the development of surveillance technology and the risk of abuse of economic information, especially in relation to the ECHELON system. His report, “Interception Capabilities 2000” was approved by the European Parliament in April 1999, and presented to the parliament in Brussels in February 2000. In July 2000, the European Parliament appointed a committee of 36 MEPs to further investigate the ECHELON system.
The MEPs wrote another report, "on the existence of a global system for the interception of private and commercial communications (ECHELON interception system)", which was presented in July 2001. It would doubtless have created some pretty big waves in the EU had not the attack on the Twin Towers a few months later meant that nobody wanted to be seen weakening the intelligence services. The report was filed and Echelon was forgotten -- and carried on as before. A new article by Campbell published in The Register shows that around the same time that most politicians lost interest in exposing mass surveillance, the UK government was busily building another, highly-intrusive monitoring system that was only acknowledged very recently:
Finally, on November 4th [2015], the Home Office took the lid off what had been going on secretly since 2000. Asking Parliament to allow mass surveillance of telephone records to continue, Home Secretary Theresa May admitted that "under Section 94 of the Telecommunications Act 1984 ... successive governments have approved the security and intelligence agencies' access" to [bulk] communications data from communication service providers", claiming that it helped MI5 "thwart a number of attacks here in the UK".
According to Campbell, that "bulk communications data" includes detailed records of telephone calls, health records, personal credit card and banking transactions, flight bookings and internet records. As he points out, the fact that all this data was being gathered secretly meant that repeated -- and heated -- Parliamentary debates about whether it should be collected, conducted in the belief that currently it was not, were a complete sham:
MPs and peers spent months arguing about a pretence, and in ignorance of the cost and human rights implications of what successive governments were doing in secret.
As well as duplicity, that bespeaks a stunning contempt on the part of the UK government for both Parliament and the public. That indifference to people's concerns is also manifest in the latest attempt to bring in a Snooper's Charter, officially known as the Investigatory Powers Bill. Campbell points out that the only response from the UK authorities to widespread fears about the creation of a huge, intrusive database recording key aspects of UK citizens' lives is to pretend it doesn't exist:
Vigilance on behalf of liberty has had little discernible impact, except in the field of semantics. Across 299 pages in the new Investigatory Powers Bill, the word "database" does not appear once.

Billions of call and internet records, stolen financial data, intercepted travel records, a heap of bulk personal datasets on matters including religion, racial or ethnic origin, political views, medical condition, sexual orientation, or legally privileged, journalistic or otherwise confidential information, all joined up together and archived in secret do not constitute a "database", whatever techie readers may think. And that's official.
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