TPP Ne­go­ti­a­tions Stall

Thai-American Business (T-AB) Magazine - - Contents -

The Trans- Pa­cific Part­ner­ship ( TPP) agree­ment is be­ing hailed as the new model for trade in the 21st cen­tury and is a key com­po­nent of the United States’ ‘ Pivot to Asia’ that was an­nounced by then Sec­re­tary of State Hilary Clin­ton in 2010. The TPP is meant to en­sure U. S. lead­er­ship in the Asia- Pa­cific re­gion well into the cen­tury and is de­signed to al­low the U. S. to con­tinue to de­fine the rules of global trade.

The TPP is aimed at lev­el­ing the play­ing field within the trade bloc by cre­at­ing trade equal­ity among mem­ber coun­tries. The TPP would lower tar­iff and non- tar­iff bar­ri­ers sub­stan­tially, which would pro­vide a boost to Amer­i­can ex­porters who have long been hin­dered by dis­pro­por­tion­ate tar­iff rates when en­gag­ing in in­ter­na­tional trade, and elim­i­nate in­vest­ment by sta­te­owned en­ter­prises ( SOES) that re­ceive state sub­si­dized or pref­er­en­tial rate loans, as well as pro­vide a num­ber of other ben­e­fits to mem­ber na­tions and com­pa­nies.

The TPP will also sig­nif­i­cantly ex­pand the mar­ket in which Amer­i­can com­pa­nies can op­er­ate. U. S. multi­na­tional and ex­port- based com­pa­nies, which have long faced av­er­age tar­iff bar­ri­ers much higher than the 1.4% av­er­age tar­iff bar­rier other coun­tries ex­pe­ri­ence in ex­port­ing to the United States, will be able to ex­pand their mar­ket far be­yond the 320 mil­lion peo­ple in the U. S. mar­ket, but to the al­most 800 mil­lion per­son mar­ket that will be cre­ated, rep­re­sent­ing 11.4% of the to­tal global pop­u­la­tion and 40% of to­tal global GDP.

For all of the po­ten­tial ben­e­fits of the TPP, hur­dles still re­main in the fi­nal pas­sage of the agree­ment. The cur­rent mem­bers to the deal are at vastly dif­fer­ent stages of eco­nomic de­vel­op­ment, from coun­tries such as Viet­nam and Peru, to the OECD coun­tries of the U. S., Ja­pan, or Canada. As such, much as with the World Trade Or­ga­ni­za­tion ( WTO), each coun­try is seek­ing to gain in dif­fer­ent ways. The needs or de­sired out­comes of one coun­try are not al­ways 100% con­sis­tent or com­pat­i­ble with those of other coun­tries and the ne­go­ti­at­ing process is a finely- tuned game of give- and- take that ul­ti­mately will re­quire con­ces­sions from all par­ties in­volved.


In July, ne­go­ti­a­tions on fi­nal­iz­ing a deal over the Trans- Pa­cific Part­ner­ship in Hawaii came up short as ne­go­tia­tors failed to reach an agree­ment over a num­ber of stick­ing points that are plagu­ing the deal that re­volve around dairy, au­to­mo­biles, phar­ma­ceu­ti­cals, and agri­cul­ture.

New Zealand, the United States, and Aus­tralia are un­will­ing to sign any trade deal that does not lib­er­al­ize the cur­rently shel­tered Cana­dian dairy mar­ket, while Canada has so far not been will­ing to loosen quo­tas to the ex­tent that other bloc coun­tries would like to see.

Ja­pan is seek­ing ex­cep­tions to the ex­ist­ing rules that have gov­erned au­to­mo­bile trade in North Amer­ica on ‘ rules of ori­gin’ re­quire­ments by re­quir­ing mem­ber coun- tries to source at least 62.5% of the fi­nal prod­uct from other mem­ber coun­tries in or­der to qual­ify for de­creased or elim­i­nated tar­iffs, as it sources many of its au­to­mo­tive parts from Thai­land, a coun­try that is not a cur­rent party to the twelve na­tion ne­go­ti­a­tions. Th­ese ex­emp­tions would dras­ti­cally af­fect the au­to­mo­tive in­dus­tries in both Canada and Mex­ico, both of whom have raised ob­jec­tions to the deal.

The United States, for their part, is try­ing to im­pose length­ier IP re­quire­ments on bi­o­log­ics, med­i­cal treat­ments de­rived from bi­o­log­i­cal sources, which is un­pop­u­lar among ev­ery other bloc mem­ber, es­pe­cially Aus­tralia, while the U. S. and Aus­tralia also squab­ble over sugar quo­tas and Ja­pan re­fuses to lift re­stric­tions on rice and beef which have long pro­tected the Ja­panese agri­cul­tural sec­tor and kept prices in Ja­pan ar­ti­fi­cially high.

The fear mov­ing for­ward is that as Canada ap­proaches elec­tions this Oc­to­ber lead­ing into the U. S. elec­tion cy­cle for 2016 that any pos­si­ble agree­ment made on the deal will not oc­cur un­til at least 2017 at the ear­li­est as the new U. S. pres­i­dent takes of­fice, which could po­ten­tially de­rail the en­tire agree­ment based upon the out­come of the United States elec­tion. The Trans- Pa­cific Part­ner­ship, how­ever, has long been a cor­ner­stone of the Obama Ad­min­is­tra­tion and a key com­po­nent of Pres­i­dent Obama’s for­eign pol­icy and op­ti­mism re­mains among the mem­ber coun­tries that a deal will ul­ti­mately be reached and the TPP will be passed.

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