Trade ministers from the 12 countries negotiating the Trans-Pacific Partnership (TPP) have just concluded a meeting in Maui, Hawaii, that had been billed as a final push to reach an agreement. The goal is a far-reaching pact to reduce tariffs and coordinate a wide range of regulatory regimes and standards in a multitude of disciplines in countries that comprise approximately 40 percent of world economic output. In addition to the United States and its NAFTA partners Canada and Mexico, the TPP would include Australia, Brunei, Chile, Japan, Malaysia, New Zealand, Peru, Singapore and Vietnam.
With such a disparate mix of cultures, political systems and levels of economic development, several difficult issues remain, and it is not a surprise that, notwithstanding the professions of optimism prior to the Hawaii conclave, no final agreement was reached. For a deal to be achieved, a host of vexing questions will have to be answered:
- Will Japan open its markets for agricultural products, especially rice?
- What about the Japanese automobile market?
- Is Canada ready to accept dairy imports from New Zealand and the United States?
- Can communist Vietnam allow labor to organize freely?
- Is the United States going to insist on patent protection for biologics and other pharmaceuticals in ways that encourage R&D but put a wide variety of medicines out of the reach of less well-to-do people?
- Will the U.S. entertainment industry get the types of copyright and Internet controls that it is after to protect its movies and music?
Although U.S. tariffs are already very low, and thus there is little to fear from lower import prices, U.S. labor is concerned that imports from countries with fewer worker and environmental protections will still result in a net loss of jobs. Supporters of the trade pact argue it will increase trade, contribute to economic growth and enhance the position of the United States in Asia. As demonstrated by the recent vote in Congress to give the President Trade Promotion Authority (essentially setting an up-or-down vote on trade agreements so that Congress can’t amend them upon submission by the President), support and opposition to the TPP cut across party lines. In general, however, Republicans, except for the more populist segments of the party, support the TPP, whereas Democrats, except for the party establishment leadership, are skeptical.
While there have been expressions of optimism from negotiators even after the Maui meeting, the list of open issues put out some weeks ago by House Ways and Means Committee Ranking Member Sander Levin remains relevant and suggests that a lot of tough international negotiating – and perhaps even tougher internal negotiations in many of the TPP countries – still lies ahead. Some of the issues we know about include:
- Access to the Japanese agricultural and industrial markets;
- Rules of origin for auto parts (of particular concern to Mexico);
- Workers’ rights, especially in Vietnam;
- Environmental protections;
- Labor standards;
- Patent protection and access to generic medicines in developing countries;
- Copyright protections for entertainment content, including on the Internet;
- Investment and dispute settlement procedures, particularly the use of investor arbitration rights to block local government actions;
- Food safety measures, and making sure that arbitrary and scientifically indefensible barriers are not allowed to block imports (controls on genetically modified organisms (GMOs), for example, could become a sticking point);
- Restrictions on state-owned enterprises (SOEs); and
- Tobacco controls and rules on cigarette packaging.
In short, hard work remains before the TPP can be signed by the parties and submitted for ratification. A breakthrough to a final agreement remains possible, but that will indeed be a breakthrough.