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Trans-Pacific Partnership update

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In Brief

In the run up to the sixth round negotiations in the Trans-Pacific Partnership (TPP) negotiations, I argued that this was the moment when the proverbial 'rubber would meet the road'. Officials had to start outlining specific bargains in trade rather than talking in generalities. What happened at the Singapore meetings?

For most of the first year of negotiations between the members, officials were free to discuss the high quality, 21st century nature of this new agreement.

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It would not only link together nine countries in three continents of differing levels of development, it would set a benchmark for future free trade agreements. The TPP could become the path to a Free Trade Area of the Asia Pacific (FTAAP) — a goal long expressed in APEC.

Starting earlier this year, however, member countries had to begin producing negotiating texts. The Singapore round marked the first time for viewing a nearly complete set of draft texts in all the various areas under discussion. It is only now that we can start to see if this new agreement will live up to the rhetoric. Is the TPP still heading in the 21st century, high quality direction?

Unfortunately, the evidence early on after these negotiating sessions is mixed.

Those who have been hoping for a truly high quality agreement could breathe a sigh of relief that talks continued across all the areas under discussion. Officials continued to grapple with contentious issues like labour, the environment, government procurement, financial services, and agriculture. The overall tone of the meetings was positive, with the nearly 400 officials present in Singapore spending long hours bargaining with one another.

Less optimistically, some of the more challenging areas still lack texts to serve as the basis for negotiating. For example, a consolidated text is not ready yet for labour and only a bare framework outlines a large set of items now lumped together as ‘horizontal issues’. Services, investment, and government procurement were tabled just before the meeting. Given the tough nature of these topics and the potentially short timeline left for resolution, a lack of texts at this time could prove challenging.

Equally problematic from the perspective of creating a new path to FTAs, market access in goods continues to be handled in three separate chapters with an additional group negotiating rules of origin. This means that rather than bundle agriculture and textiles into the industrial goods category, these areas can be treated differently than other goods. Keeping them separate for now makes it easier to use less liberalizing tools like tariff rate quotas (TRQs) and all sorts of ‘product forward’ rules to limit the free flow of goods among members.

Even within an item like agriculture, some countries have still maintained a fairly large set of items in undefined baskets, with still-unclear commitments to liberalization in the future. Of course, the talks are not concluded and many or even all of these items might eventually be opened to partners. However, as a signal of intent, the placement of items like sugar and dairy into a large undefined basket is worrisome.

The negotiations, even in market access, were largely conducted on a bilateral basis. This means that, for example, the United States exchanged offers with Vietnam and Malaysia separately. Neither country has an existing FTA with the Americans. These market offers were not made public to the rest of the partners. Officials have still not decided how to consolidate these bilateral agreements together at the end of the process.

Early on in the process, officials spoke often of a ‘deadline’ for negotiations as the November APEC meetings in Honolulu. While many are still working towards this objective, many statements out of Singapore suggest that this ‘deadline’ has slipped. Instead, many are now suggesting that ‘substantial progress’ will have been made by November.

One other item of note is that Japan made its announcement to postpone possible entry into the TPP until much later in the year. Given that the same minister charged with regulating nuclear energy is also the key trade official in Japan who would be responsible for TPP talks, this makes sense. This announcement means that Japan will likely not join the TPP (if it joins at all) until the first phase of the agreement is complete.

Next up is a meeting of TPP Trade Ministers on the sidelines of the APEC meeting in Montana, followed by the next scheduled round in Vietnam the week of June 20. In between, officials will be working hard to reach agreement on different elements of the draft texts.

Deborah K. Elms is Head of the Temasek Foundation Centre for Trade & Negotiations at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.

One response to “Trans-Pacific Partnership update”

  1. Thanks to Ms. Elms for an interesting update.

    The TPP negotiators indeed work under numerous constraints which, I think, are not typical for other FTA negotiations. By and large these constraints stem from the level of ambition that the negotiating parties set for themselves. The greatest intrigue is the innovative elements of the TPP, also known as “horizontal issues”, which are expected to distinguish it from other FTAs as a 21st century agreement.

    TPP is a breathtaking policy experiment. Keeping the ambition high is important to make it a flagship economic integration deal in the Asia Pacific. However, it’s unclear to what extent the participants are willing to invest in experimenting.

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