Eased Con­cern for the TPP Com­pared to Pre­vi­ous Spec­u­la­tion

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Rachda Chi­asakul and Varan Ki­taya­porn

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.

TPP BEN­E­FITS

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.

TPP DRAW­BACKS

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.

CON­CLU­SION

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

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