Eased Concern for the TPP Compared to Previous Speculation
The negotiation of the Trans- Pacific Partnership ( TPP) has finally reached its conclusion, and the Agreement was signed on February 4, 2016. A number of speculations and concerns arose during the negotiation, mostly based on the negotiation patterns of past U. S. free trade agreements ( FTAS) as well as leaked documents. When the final text has been released to the public, things became clearer. While several concerns raised turned out to be justified, there were also certain issues that turned out to be rather different from what was expected. This article is going to look into the concerns that were discussed during the negotiation of the Thai- U. S. FTA ( dormant since 2006), as well as issues that arise from the consideration of whether Thailand should join the TPP as highlighted the figure 1.
For TPP proponents, securing tariff preferences with non- FTA partners, particularly the U. S., is one of the most important benefits to be reaped from the deal. Even though Thailand has already been enjoying Generalized System of Preferences ( GSP) benefits from the U. S. for years, there is no guarantee that such benefits will last forever, especially since Thailand is now classified as an uppermiddle income country. The coverage and degree of tariff reduction from TPP are also undoubtedly much larger than what Thailand has received from the GSP.
Interestingly, this is also true in the case of the current partners of Thailand’s FTAS, as TPP has significantly higher degree of trade liberalization than those conven- tional deals. Besides, Canada and Mexico are two new markets that TPP can bring about. Such greater market access appears to be the extra boost needed for Thailand’s exports that have lately become stagnant.
Another main reason in support for joining the TPP is that it is crucial for Thailand to retain its position in the regional supply chain. Since four other ASEAN nations have already joined the pack – and two of those, namely Malaysia and Vietnam, have similar economic and exporting structures with Thailand, being left out from the group can lead to dire consequences. Based on a recent survey of foreign investors’ confidence in Thailand by Bolliger & Company, more than 60% of those investors derive at least 20% of their revenue from foreign markets, and about 20%
of them cited the ability to utilize FTAS, among other things, as the main reason for them to retain or expand their investment in Thailand. This emphasizes the importance of having the right FTAS from the investors’ points of view, especially in a time when the concept of a regional value chain has become a new trend.
On the other hand, TPP critics, including NGOS and academics, have made some noteworthy points about problems that stem from the TPP, with the intellectual property rights chapter being the main target for criticism. The concepts of data exclusivity, patent term extension, and patentability of new uses of existing drugs are totally new for Thailand, and have the potential to threaten the access to generic drugs and affordability of healthcare if appropriate precaution measures are not taken. Due to the lack of necessary personnel and resources, current patent approval time often takes longer than 5 years – a norm that was stipulated in the TPP – and thus the extension is very likely to come into action. A similar thing applies to the marketing approval process, which many critics argue should not be connected to intellectual property rights issues, but should focus solely on the safety features of the product in question. Data exclusivity provisions are also heavily criticized as they could delay access to non- patented drugs, and may cause clinical trials to be done without sufficient scientific necessity, which is considered very unethical among medical professionals. Likewise, the inclusion of “new uses of a known product, new methods of using a known product, or new processes of using a known product” as patentable subject matter has generated great amount of fear that patent protection for a particular product can be renewed indefinitely by exploiting such a clause. A counterbalancing juridical or administrative procedure could help in preventing such risk, but the effectiveness in practice given the huge difference between the legal resources of a multinational drug company and a generic drug manufacturer remains in question.
Another controversial issue in the TPP is the accession to the UPOV ( International Union for the Protection of New Varieties of Plants) 1991 convention. Many fear that, in addition to the extension of coverage and terms of protection that the Thai law currently grants, it would prohibit collecting plant seeds for growing in the next crop season and seed sharing in the community. Such restrictions are claimed to be inconsistent with traditional practices among Thai farmers and may adversely affect the variety of plants being grown in the long term. Furthermore, the possibility that the government could be sued by foreign firms under the investor- state dispute settlement clause, the extension of copyrights protection terms to 70 years, the usage of trademark system to protect a geographical identification, and many more concerns are also raised by those who oppose the TPP.
Such criticisms, although they might contain certain degree of rhetoric, are not entirely groundless and should be taken into consideration when making a decision about the TPP. Nonetheless, not every fear brought about by public speculation during the FTA negotiation with the U. S. materialized in the TPP. Article 18.6, which reaffirms the rights and obligations under the Declaration on Trade- Related Aspects of Intellectual Property Rights ( TRIPS) and Public Health has relieved some fears over restriction against invoking compulsory licensing in an urgent situation. The financial services chapter does not prohibit the use of capital control measures under justifiable situations, as one might have been afraid. Even the dreadful investor- state dispute mechanism explicitly shows its respect to the rights of the Parties to adopt measures for public interests as well as sets out several measures to prevent abusive uses and frivolous claims. Other unrealized concerns that were previously speculated about are, among others, the requirement for state- owned enterprises to be subject to a competition law, the possibility that there might be a dispute over a tobacco control measure, and the argument that TPP might not recognize the concept of fair use in its copyrights provisions.
Acceding to the TPP on one hand, requires a lot of domestic changes in laws, regulations, and enforcement regimes, some of which could be painful, but on the other hand, most of those changes are arguably inevitable and could lead to long- term benefit for the country. Thailand has exploited its labor force and ecosystem in an unsustainable manner for a long time, and is unlikely to be able to deviate from such counterproductive behavior without external pressures. Take the ongoing fishery forced labor and illegal, unreported, and unregulated ( IUU) fishing issue as an example. Of course, appropriate transition periods and technical assistances, which are generally available under the scope of the TPP, are needed to reach the goal of sustainable development smoothly. Whether we like it or not, the conclusion of the TPP has set a new standard in the global trade regime, and if Thailand wants to stay on this stage, it has to accept this ‘ 21st century standard’ sooner or later.
As we have discussed so far, it is not straightforward to say whether the TPP will bring about a gain or a loss for Thailand. With every change, there is someone who gains something and someone who losses something. For example, a liberalization in a certain market brings greater completion pressures to domestic businesses, and at the same time creates more choice for consumers. Hence, it is necessary that before Thailand makes any decision that could affect such a broad range of sectors of society like the TPP, there has to be open, transparent, impartial, and inclusive public discussion with stakeholders on each and every issue. The inputs from such discussions should then be incorporated and taken into consideration by the relevant authorities in their decision- making process. Appropriate measures have to be developed to alleviate the damage to affected groups and smoothen the transition to the greatest extent possible. Likewise, negotiators have to make their best effort to secure the best possible terms under the existing text. Last but not least, it should be left in the hands of Thai people to make their final decision, through a free and fair democratic process, about Thailand’s accession to this agreement.
Figure 1: Comparison of Sensitive Issues between Thai- U. S. FTA and TPP