Asia Global Institute

Uncertainty Over Ratifying Transpacific Trade Deal

Thursday, November 12, 2015

Uncertainty Over Ratifying Transpacific Trade Deal

Patrick Low, Fellow of Asia Global Institute, examines the pros and cons of the Trans-Pacific Partnership agreement.

Last week the dozen parties to the recently concluded Trans-Pacific Partnership released the full text of their agreement - more than 30 days after it was announced. The delay did not help the protagonists of a deal already encountering strong headwinds from multiple sources, especially in the United States. The secrecy surrounding the negotiations has not helped either.

The main text of the TPP (signed by the United States, Canada, Mexico, Peru, Chile, Japan, Brunei, Malaysia, Singapore, Australia, New Zealand, and Vietnam) contains thirty chapters and runs to some 600 pages. The annexes make it a lot weightier still. Replete with daunting detail, the agreement covers many issues that are familiar fare in trade agreements.

But it also contains novel and more far-reaching features, which would seem to vindicate President Barack Obama's characterization of the TPP as a high water mark in preferential trade diplomacy.

Among its significant new features - just to take some of the more salient examples - are the provisions on digital trade, state-owned enterprises, small and medium-sized enterprises, regulatory coherence, and anti-corruption and transparency.

Most of the articulated opposition to the TPP comes from the United States, although interest groups in the 11 other signatory nations doubtless have their reservations. Resistance in the US emanates from those who say the deal does not go far enough as well as those asserting that it goes too far. Sometimes these critics are one and the same.

Unsurprisingly, most of the contentious issues prolonged the negotiations beyond repeated deadlines. These include the duration of data exclusivity provisions for biologic medicines, a variety of agricultural products including dairy, rice and sugar, and autos and auto-parts.

On the first of these, the US Senate Finance committee Chairman, Orrin Hatch, has said that a core reason why the TPP cannot stand as negotiated is because the data protection provisions on biologics only last 5 to 8 years rather than 12. The failure to secure 12 years was attributed by Senator Hatch to Australia's pursuit of its "own greedy advantage" in the negotiations.

Such is the tenor of trade-related discourse these days. Senator Hatch also said that the provisions on dairy, tobacco and labour were wanting. The Sierra Club characterised the TPP as an environmentally toxic deal rife with pollution giveaways. The steel lobby called it a knife in the heart of manufacturing.

The Ford Motor Company berated the negotiators for only securing a non-justiciable side agreement to deal with foreign currency manipulation. The fact that anything at all was inscribed on this matter is a sad concession to fallacious economic reasoning.

The intensity of anti-TPP chatter is obviously a reflection of the US electoral cycle. Both leading Democratic candidates for President have expressed opposition. Most of the Republican aspirants have also pronounced themselves opposed to the TPP, either outright or in its current form.

A renegotiation scenario for TPP, akin to that secured in the US-Korea free trade agreement between 2007 and 2010, is espoused by some but regarded as impossible by most. With 12 parties instead of two, any attempt to redefine the terms of the TPP agreement would almost certainly kill the deal.

Under Presidential authority for negotiating trade agreements, the only option for the legislature is a vote for or against. Tweaking is out. A no vote is a distinct possibility, although legislators may think twice before replacing the TPP with a policy void.

The best chance of passing the TPP is probably after the election and before a new Congress and President assume office. A deal like the TPP is flawed by comparison to a truly multilateral arrangement because it is discriminatory, exclusionary, and potentially damaging to third parties. Yet these days this set of arguments does not enter the debate.

Despite the limitations of TPP and the underlying dynamic of big power politics that at least in part animates it, the emptiness and leadership vacuum implied by failure is perhaps more threatening than the imperfections of success.

This article first appeared in the South China Morning Post on November 12, 2015.

The views expressed in this article are the author's own and do not necessarily reflect Asia Global Institute's editorial policy.


Patrick Low

Senior Fellow, Asia Global Institute

Patrick Low


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