Steven Okun, Governor and Chair of the TPP Task Force of the American Chamber of Commerce in Singapore ("AmCham") and Senior Advisor to McLarty Associates, discusses with Jones Day partner Darren Murphy the progress of the TPP following the exit of the United States.

Darren Murphy: Since our previous discussion in August 2016, the United States pulled out of the Trans-Pacific Partnership ("TPP") in spectacular style. Many may think that the U.S. exit spelled the end of the TPP, but we know that progress is continuing. Can you please provide an update on the process?

Steve Okun: Many thought that without the United States, the TPP would fall off the region's agenda because the presumption was that without greater U.S. market access afforded by the TPP, the gains to the other 11 members would not be worth their own market opening and reform. However, that has turned out not to be the case. The remaining 11 countries ("TPP-11") recognize the TPP is still within their interest—even without the United States. In terms of milestones to watch, the Asia-Pacific Economic Cooperation ("APEC") Summit to be held in Vietnam in November 2017 presents an opportunity for concrete steps to be taken to conclude negotiations for the TPP-11. Indeed, it is possible that the TPP under the new framework will be adopted—at least in principle—at that Summit.

DM: Having lost its largest participant, why does the TPP remain important to TPP-11 countries?

SO: In the absence of an agreement on TPP-11, there is no regional economic framework in Asia that can provide the same access to markets and level playing-field for local and foreign businesses. The Regional Comprehensive Economic Partnership does not meet the same high standards enshrined in the TPP, particularly in areas such as competition with state-owned enterprises, intellectual property rights protections, and protections for labor and the environment.

While existing bilateral agreements provide, to an extent, an opening to new markets and a framework for trade, the complexity of a spaghetti bowl of individual bilateral trade deals can be a significant burden for both small companies hoping to expand overseas and large multinational companies that must adapt to different rules and standards across multiple markets.

Regional trade deals such as the TPP are the most effective way to enable exports to multiple markets by establishing uniform rules of the game. There is no substitute.

The TPP would, even with only the TPP-11 countries, represent the most high-level multiparty trade framework in the region. A multiparty agreement like the TPP would do the most to reduce complexity in trade rules and enable companies to more easily export to multiple markets. Even without the United States, the grouping of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam is still significant in its own right.

Further, as has always been the case, the TPP would bring with it high standard trade rules. These will aid further economic growth and development in the Asia-Pacific region. Not only will the TPP eliminate duties for nearly all goods, it will also address trade in services and provide a framework for investment. It better protects intellectual property rights, promotes cross-border data flows, requires more fair competition by state-owned enterprises, and includes protections for the environment and workers.

DM: Is the TPP still important for U.S. business?

SO: Yes. Most importantly, the TPP will set rules for the region, greatly benefiting trade and enhancing Asia-Pacific as a market. This will occur with or without the U.S. government being a party. Second, as the first true 21st century multiparty trade agreement, the TPP will help form standards and norms for future agreements and trade beyond the current TPP participants. Third, at some point, offshore affiliates of U.S. companies could potentially benefit themselves from being in the region, certainly from the increased cross-border trade that will result from the TPP.

DM: Will the new TPP remain the same as the TPP-12 version?

SO: We hope it will remain as close to the original TPP as possible. To have come into force, the original TPP required ratification by six or more countries that accounted for at least 85 percent of the combined GDP of the original signatories. This required the United States, and thus the entry-into-force provision will need to change. There is also a question of whether there will be changes to the substance of the TPP. Compromises were obviously made to get to the previous TPP wording, and the temptation will be for countries to reopen issues absent U.S. market access. Obviously, passage of the TPP-11 will come faster and maintain higher standards if the agreement is not renegotiated. Whether issues are reopened remains to be seen, or if certain provisions are just "suspended" until a future date.

DM: What is AmCham doing in respect of the TPP?

SO: AmCham Singapore, back in 2009, was the first U.S. business association to urge the U.S. government to place the TPP at the top of its trade policy agenda. While the United States withdrew from the TPP in January 2017, AmCham Singapore Task Force remains engaged and urges the TPP-11 to reach a successful conclusion and implement the TPP as soon as possible, ideally at or before the APEC Summit in Vietnam this coming November. If the agreement goes into effect, AmCham will continue to monitor the agreement as well as to advocate for whatever may be appropriate as a next step for the United States government to undertake to ensure U.S. business remains competitive in the region and fuels growth back home.