Free Trade and the Small Manufacturer

If Trans-Pacific Partnership Is Instituted, Will It Trample Individual and Corporate Rights, Free Expression, and Intellectual and Creative Commons?

By Jeremy Pollard, CET

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You probably haven't heard of the TPP, which stands for the Trans-Pacific Partnership. It was formed in 2005 and amended in August 2013 to include 12 countries, including the U.S., Canada and Mexico.

The general intent of the agreement is to widen markets, allow access to global markets in a free-trade environment and, most importantly, protect those ideas and processes from any form of theft. Well, if you believe the politicians. There's more under the hood.

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The list of opponents is long, and if TPP is instituted, many fear its IP regime could trample individual and corporate rights and free expression, as well as ride roughshod over the intellectual and creative commons.

Free-trade agreements have been in place for a while. Some would argue that the Mexico-U.S.-Canada free-trade agreement (NAFTA) created a dangerous precedent in the domestic economy. For me, history has shown that those concerns were warranted.

A possible thread to this TPP issue is that the U.S. GDP calculations were changed in late July by the Bureau of Economic Analysis (BEA). I'm not an economist, but rearranging the deck chairs to provide a different view doesn't change any of the fundamentals. The changes were made to give a better perception to the growth of the domestic economy. Could there be political motivations? Part of the biggest change is the inclusion of "intellectual property products," which includes R&D and software.

GDP provides an indication of business activity, relative worker wealth and general economic strength. It can be a benchmark for overall confidence. A bigger number suggests that business is booming. Including the new IP components in the GDP will give the impression that all is good; you can hire and create jobs. 

Higher GDP numbers also influence global investment in that country. It's widely thought that this new GDP calculation will give the U.S. more clout in TPP negotiations.

There's good reason to think that North American innovation might now be protected in some manner by TPP. There is a section in the TPP called Industrial Designs. While short, its purpose is to protect the designs of manufacturing. Machine design, components of automation and processes would have some protection. At least on paper they would.

There have been stories of U.S. machine builders providing full engineering drawings along with the machine to an offshore customer, only to find out later that the customer reversed-engineered it and now builds and sells the machine itself. This practice might be disallowed under the TPP rules.

That protection sounds good, but the global economy is real, and somehow we have to adapt to this changing tide, along with understanding the global effects of politics and legalities.

We never had to do that. We just designed, innovated, built, supplied and consumed. We hired people, paid them well, and everything was wonderful.

The new world is influenced by social, political and legal differences. For smaller companies, these could be debilitating. The seeming protection of U.S. big business could create an unfair playing field for the small guys. The only ever-present groups who support the current negotiations are large U.S. corporations and Wall Street, so this can't be good for smaller, competing companies, right?

When I did the research for my recent presentation at the ISA Automation Week Conference, every metric that dealt with jobs, employment and business growth in our sector(s) did not agree with the overall perception that the economy is busting loose.

According to census.gov, most areas of the economy are at 40 to 60% utilization and have been for some time. Some of the increases simply might have been a result of inventory replenishment. Of course, a major concern has been the slow speed at which anything has happened.

I'm concerned that the risk to the well-being of smaller North American manufacturers might be the most troubling possibility in all this if the IP and innovation rights of U.S. companies are truly protected in all these other countries. No longer fearing for their IP rights, would large companies think again about moving operations to countries with lower wages and more-lenient regulation? Could this re-ignite outsourcing?

We need to understand more about the TPP.

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