In 2007, negotiations began for the Trans-Pacific Partnership (TPP), a considerably expanded version of the Trans-Pacific Strategic Economic Partnership Agreement (P4). The Trans-Pacific Strategic Economic Partnership Agreement was initially conceived in 2003 by Singapore, New Zealand and Chile as a path to trade liberalization in the Asia-Pacific region. Brunei joined the negotiations in 2005, and the TPP came into force in 2006. In March 2008, the United States of America joined the negotiations to conclude the investment and financial services provisions. The United States already has Free Trade Agreements (FTA) with TPP members, Singapore and Chile; and other potential TPP members, Australia and Peru. The members of the FTA do not have a common external tariff, which means they have different quotas and customs as well as other policies with respect to non-members. To avoid tariff evasion (through re-exportation) the countries use the system of certification of origin most commonly called Rules of Origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Only the goods that fulfill these minimum requirements are eligible for the special treatment envisioned by the Free Trade Area provisions.
The Trans-Pacific Partnership (TPP) aims to create free trade agreement involving nine Asia-Pacific countries: Australia, Brunei Darussalam, Chile, Malaysia, Peru, Singapore, The United States of America, Vietnam and New Zealand. The agreement has led to stronger economic ties between its diverse members by opening up trade in goods and services, boosting investment flows, and promoting closer links across a range of economic policy and regulatory issues.
History of TPP
The TPP was previously known as the Pacific Three Closer Economic Partnership (P3-CEP) negotiations launched on the sidelines of the 2002 APEC leaders’ meeting in Los Cabos, Mexico, by the then Chilean President Ricardo Lagos and Prime Minister Goh Chok Tong of Singapore and Helen Clark of New Zealand. Brunei first took part as a full negotiating party in the 5th round of talks in April 2005, after which the trade bloc became known as the Pacific -4 (P4). Although all the original and negotiating parties are members of the Asia-Pacific Economic Cooperation (APEC), the TPP is a different program than APEC.
The original TPP agreement was signed by Brunei, Chile, New Zealand and Singapore on June 03, 2005, and entered into force on May 28, 2006. It is a comprehensive free trade agreement, affecting trade in goods, rules of origin, trade remedies, intellectual property, government procurement and competition policy. Among other things, it called for reduction by 90% of all tariffs between member countries by January 01, 2006, and reduction of all trade tariffs to zero by the year 2015.
Initially there were only three members, Chile, New Zealand and Singapore, but Brunei subsequently joined the agreement. In February 2008, the United States agreed to enter into talks with the 4 members to the agreement regarding liberalization of trade in financial services. In November 2008, Australia, Vietnam, and Peru announced that they would be joining the P4 trade bloc. In October 2010, Malaysia announced that it had also joined the TPP negotiations. On June 18, 2012, the Office of the United States Trade Representative (USTR) announced that Mexico had been invited to join the negotiations, pending completion of Mexico's domestic procedures. Mexico's interest in joining was initially met with concern among TPP negotiators about its customs policies. In October 2012 Canada announced that it has officially joined Trans Pacific Partnership negotiations.
Scope of TPP
The main purpose of the agreement is to cover all key trade and trade-related areas under one single undertaking. In addition to updating traditional approaches to issues covered by preceding FTAs, the TPP includes new and emerging trade issues and crosscutting issues. All of the nine countries have agreed to adopt high standards in order to ensure that the benefits and obligations of the agreement are fully shared. They also have agreed on the need to appropriately address sensitivities and the unique challenges faced by developing country members, including through trade capacity building, technical assistance, and staging of commitments as appropriate. A set of new, cross-cutting commitments are intended to reduce costs, enable the development of a more seamless trade flows and trade networks between TPP members, encourage the participation of small- and medium-sized enterprises in international trade, and promote economic growth and higher living standards. The negotiating teams have proposed new commitments on cross-cutting issues in traditional chapters and also have made substantial progress toward agreement on separate, stand-alone commitments to address these issues.
Salient Features of TPP Agreement
On November 12, 2011, the Leaders of the nine TPP countries-Australia, Brunei Darussalam, Chile, Malaysia, Peru, Singapore, the United States of America, Vietnam and New Zealand,announced the achievement of the broad features of the TPP Agreement that will enhance trade and investment among the member nations, promote innovation, economic growth and development, and support the creation and retention of jobs.
Following are the key features of the TPP agreement:
Comprehensive market access: To eliminate tariffs and other barriers to goods and services trade and investment, so as to create new opportunities for our workers and businesses and immediate benefits for our consumers.
- Fully regional agreement: To facilitate the development of production and supply chains among TPP members, supporting our goal of creating jobs, raising living standards, improving welfare and promoting sustainable growth in our countries.
Cross-cutting trade issues: To build on work being done in APEC and other forums by incorporating in TPP four new, cross-cutting issues. These are:
- Regulatory coherence: Commitments will promote trade between the countries by making trade among them more seamless and efficient.
- Competitiveness and Business Facilitation: Commitments will enhance the domestic and regional competitiveness of each TPP country’s economy and promote economic integration and jobs in the region, including through the development of regional production and supply chains.
- Small- and Medium-Sized Enterprises: Commitments will address concerns smalland medium-sized enterprises have raised about the difficulty in understanding and using trade agreements, encouraging smalland medium-sized enterprises to trade internationally.
- Development, Comprehensive and robust market liberalization, improvements in trade and investment enhancing disciplines and other commitments, including a mechanism to help all TPP countries to effectively implement the Agreement and fully realize its benefits, will serve to strengthen institutions important for economic development and governance and thereby contribute significantly to advancing TPP countries respective economic development priorities.
- New trade challenges: To promote trade and investment in innovative products and services, including related to the digital economy and green technologies and to ensure a competitive business environment across the TPP region.
- Living agreement: To enable the updating of the agreement as appropriate to address trade issues that emerge in the future as well as new issues that arise with the expansion of the agreement to include new countries.
The main problem with TPP agreement is two-fold:
- Intellectual Property Chapter: The leaked draft texts of the agreement show that the IP Chapter would have extensive negative ramifications for users’ freedom of speech, right to privacy and due process, and hinder peoples’ abilities to innovate.
- Lack of transparency: The entire process has shut out multi-stakeholder participation and is cloaked in secrecy.
On March 05, 2012 a group of TPP protestors disrupted an outside broadcast of 7News Melbourne’s 6 pm news bulletin in the Melbourne city’s Federation Square.
On July 07, 2012, around 200 to 300 people marched in a “Pots and Pans” protest march against TPP and the secret negotiations to the hotel where the negotiations were being held. There was an alternative “ People’s Conference” held in the evening during the week.
Protestors choose Internet as a medium, in September 2012 Internet Freedom Organization OPENMEDIA and other groups launched the OpenTheTPP Campaign. The website includes a tool that collects citizens comments. These comments are then projected inside the TPP meetings for officials to see citizens reactions.
An Online Petition website Avaaz has a petition against TPP. As of today the petition has gained over 7,10,000 signatures.
INDIA & TPP
As far as India is concerned, it has been keen on being accepted as a member of APEC (Asia-Pacific Economic Cooperation), but nothing has moved forward due to various reasons. However, in November 2011, India was invited to be an observer. As of today, people may say that India is unlikely to be affected by TPP agreement, because of its intrusion in domestic policy but India’s trade relations with TPP members are likely to be affected. Therefore, it is important for India to pay close attention to a further evolution of TPP and APEC.
The complications created by the TPP are becoming visible in Asia. Japan and the ROK (Republic of Korea), while expressing interest in the TPP, are also negotiating on the EAFTA (European Free Trade Association). The dilemma of choosing between the TPP and other Asian trade frameworks will affect more Asian economies. Emerging markets like China, Brazil and India will find it difficult to join the TPP, given its rigid rules and the US dominance. But to ensure that the TPP does not divert global trade from them, they will need to act together. The best thing for them to do would be to expedite BRICS’ development so that it can provide an alternative trade framework to the TPP by creating rules that are easier to implement and follow by emerging market industries.
The TPP began as a modest trade pact between Singapore, New Zealand and Chile has the potential to alter existing global economic relationships. This so called trade pact of the future covers far more than just trade, with chapters addressing modern topics as extension of investment past real property, intellectual property rights and environmental standards among other topics.
Although this trade pact addresses many international economic issues, relationships and negotiations suspiciously have been conducted behind closed doors. The dearth of transparency does not adequately portray the actual picture which represents a 21st century agreement, but rather one of the Cold War era, cloaked with secrecy.
The member nations must work towards providing the general members of public with the real picture of the agreement by involving the citizenry in the negotiations.