Importantly, it will be open for accession to other countries and is intended to serve as a building block towards APEC’s longer term goal of a Free Trade Area of the Asia Pacific (FTAAP). So what is the TPP? And what are its prospects?

The TPP will expand on the existing Trans-Pacific Strategic Economic Partnership (P4) between Chile, New Zealand, Singapore and Brunei. The origins of the P4 can be traced to a US proposal in 1998 for the negotiation of a preferential trade agreement (PTA) between Australia, NZ, Chile, Singapore and the US, intended at the time to spur Asian members of APEC into action on trade liberalization. For different reasons, Australia, Chile and the US did not proceed, leaving NZ and Singapore to negotiate a bilateral trade agreement. Chile’s subsequent interest in negotiating bilateral PTAs with NZ and Singapore led the three governments to propose a trilateral PTA. The proposal was launched at the 2002 APEC Leaders Summit, negotiations commenced in 2003 and, prior to the final round of negotiations in 2005, Brunei Darrusalam asked to participate. The final P4 was initialed at the 2005 APEC Trade Ministers Meeting and it entered into force in 2006. During the early stages of negotiations, there was agreement among the parties that they should aim to develop a high quality, ambitious model agreement that was open to other nations to join in the future.

The P4 agreement is the first multi-party trade agreement to link three different continents: Asia, Australia, and South America. The P4 is comprehensive in that it includes provisions on market access for trade in goods and related rules (e.g. customs procedures, rules of origin, sanitary and phytosanitary measures, technical barriers to trade, and trade remedies); trade in services; intellectual property; government procurement; competition policy; and dispute settlement. It also includes agreements on cooperation in matters relating to Labour and the Environment. However, it does not include a separate chapter on investment, and negotiations on investment and financial services were scheduled to commence two years after the P4 came into effect. This will now be on the agenda of the TPP negotiations.

However, one cannot assume that the current structure and design of the P4 would be the same for a new, larger membership Trans-Pacific Partnership. In particular, it is not clear that the TPP would be a genuine regional PTA – that is, an agreement with a single tariff schedule for each country with tariff commitments that would apply equally to all other Parties and with eligibility for these commitments determined by regional Rules of Origin (ROOs). In addition, much of the trade between the proposed TPP partners is already covered by existing bilateral PTAs and the potential gain to the US of securing deals with Brunei, Vietnam and NZ through the TPP are likely to be very small. In that sense, the TPP may have difficulty in attracting the kind of business support in the US that would be necessary to counter protectionist forces that currently hold sway in the Congress.

Nonetheless, a TPP which included the US as well as countries from East Asia, Oceania, and Latin America could well prove to be an attractive vehicle for multilateralising regionalism in the Asia-Pacific, and could serve as a catalyst for broader developments. Certainly, the ‘bottom-up’ and incremental approach of the TPP is likely to be more politically feasible than the FTAAP proposal which is a distant prospect. Moreover, it is a welcome addition to other initiatives within APEC that are aimed at harmonizing PTAS a high standard, consistent with APEC’s commitment to ‘open regionalism’ and WTO norms and rules. These other initiatives include the development of non-binding ‘model measures’ for PTAs as well as the promotion of analytical work that that explores how existing PTAs might be merged or ‘docked’ with a view to enlarging existing agreements.

This post is part of a series of articles on the Trans-Pacific Partnership.