Trans-Pacific Partnership

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Trans-Pacific Partnership Agreement
Leaders of TPP member states.jpg
Leaders of prospective member states at a TPP summit in 2010
Type Trade agreement
Drafted 5 October 2015[1][2][3]
Signed 4 February 2016
Location Auckland, New Zealand
Effective Not in force
Condition Ratification by all signatories, or (2 years after signature) ratification by states corresponding to 85% of GDP of signatories[4]
Signatories

12

Ratifiers None
Depositary New Zealand
Languages English (prevailing in case of divergence), Spanish, and French
Trans-Pacific Partnership at Wikisource

The Trans-Pacific Partnership (TPP) or Trans Pacific Partnership Agreement (TPPA) is a trade agreement among twelve Pacific Rim countries. The finalized proposal was signed on 4 February 2016 in Auckland, New Zealand, concluding seven years of negotiations. It is currently awaiting ratification to enter into force. The 30 chapters of the agreement aim to "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories' countries; and promote transparency, good governance, and enhanced labor and environmental protections."[5] The TPP contains measures to lower trade barriers, such as tariffs,[6] and establish an investor-state dispute settlement mechanism.[5][7]

The TPP began as an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, New Zealand, and Singapore in 2005. Beginning in 2008, additional countries joined the discussion for a broader agreement: Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam, bringing the total number of countries participating in the negotiations to twelve. Current trade agreements between participating countries, such as the North American Free Trade Agreement, will be reduced to those provisions that do not conflict with the TPP or provide greater trade liberalization than the TPP.[8] The United States government considers the TPP a companion agreement to the proposed Transatlantic Trade and Investment Partnership (TTIP), a broadly similar agreement between the U.S. and the European Union.[9]

Participating nations aimed at completing negotiations in 2012, but the process was prolonged by disagreements over contentious issues, including agriculture, intellectual property, and services and investments.[10] They finally reached agreement on 5 October 2015.[11] Implementing the TPP has been one of the trade agenda goals of the Obama administration in the U.S.[12] On 5 October 2015, Canadian Prime Minister Stephen Harper stated he expected "signatures on the finalized text and deal early in the new year, and ratification over the next two years."[13] A version of the treaty text "Subject to Legal Review (...) for Accuracy, Clarity and Consistency"[14] was made public on 5 November 2015, the same day President Obama notified Congress he intended to sign it.[15]

Membership[edit]

Twelve countries participated in negotiations for the TPP: the four parties to the 2005 Trans-Pacific Strategic Economic Partnership Agreement and eight additional countries. All twelve signed the TPP on February 4, 2016.[16] The agreement will enter into force after ratification by all signatories, if this occurs within two years. If the agreement is not ratified by all before 4 February 2018, it will enter into force after ratification by at least 6 states which together have a GDP of more than 85% of the GDP of all signatories.

  Signatories
  Potential future members (other APEC member economies)
Country Status 2005 agreement Signature of TPP Start of TPP
Negotiations
 Singapore Party (28 May 2006) 4 February 2016 February 2008
 Brunei Party (28 May 2006) 4 February 2016 February 2008
 New Zealand Party (12 July 2006) 4 February 2016 February 2008
 Chile Party (8 November 2006) 4 February 2016 February 2008
 United States Non-party 4 February 2016 February 2008
 Australia Non-party 4 February 2016 November 2008
 Peru Non-party 4 February 2016 November 2008
 Vietnam Non-party 4 February 2016 November 2008
 Malaysia Non-party 4 February 2016 October 2010
 Mexico Non-party 4 February 2016 October 2012
 Canada[17] Non-party 4 February 2016 October 2012
 Japan Non-party 4 February 2016 May 2013

Potential members[edit]

APEC members may accede to the TPP, as may any other jurisdiction to which existing TPP members agree. After an application for membership is received, a commission of parties to the treaty negotiates conditions for accession.

South Korea did not participate in the 2006 agreement, but showed interest in entering the TPP,[18] and was invited to the TPP negotiating rounds in December 2010 by the U.S. after the successful conclusion of its Free trade agreement between the United States of America and the Republic of Korea.[19] South Korea already had bilateral trade agreements with some TPP members, but areas such as vehicle manufacturing and agriculture still needed to be agreed upon, making further multilateral TPP negotiations somewhat complicated.[20] South Korea may join the TPP as part of a second wave of expansion for the trade agreement.[21]

Other countries and regions interested in TPP membership include Taiwan,[22] the Philippines,[23] and Colombia[24] as of 2010; Thailand[25] and Laos[26] as of 2012; and Indonesia,[27] Cambodia,[28] Bangladesh,[29] and India[30] as of 2013. According to law professor Edmund Sim in 2013, many of these countries needed to change their protectionist trade policies in order to join the TPP.[31]

The largest economy in the Pacific Rim not involved in the negotiations is China. According to the Brookings Institution in 2013, the most fundamental challenge for the TPP project regarding China was that "it may not constitute a powerful enough enticement to propel China to sign on to these new standards on trade and investment. China so far has reacted by accelerating its own trade initiatives in Asia."[32] In 2013, it was thought China might still be interested in joining the TPP eventually.[33] An academic analysis has shown that while the TPP would be more successful if China participated in it, the benefits to China are intangible.[34]

In October 2015, Indonesian President Joko Widodo declared Indonesia's intention to join the TPP.[35]

Sri Lanka has announced interest of joining the TPP and is currently studying its feasibility.[36][37]

Country Status 2005 agreement Status TPP Announced Interest
 Colombia Non-party Announced Interest January 2010
 Philippines Non-party Announced Interest September 2010
 Thailand Non-party Announced Interest November 2012
 Taiwan Non-party Announced Interest September 2013
 South Korea Non-party Announced Interest November 2013
 Indonesia Non-party Declared Intent to Join[35] October 2015

History[edit]

Trans-Pacific Strategic Economic Partnership Agreement[edit]

Brunei, Chile, Singapore and New Zealand are parties to the Transpacific Economic Partnership Agreement, which was signed in 2005, and entered into force in 2006. The original TPSEP agreement contains an accession clause and affirms the members' "commitment to encourage the accession to this Agreement by other economies".[38][39] It is a comprehensive agreement, affecting trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy. Among other things, it called for a 90 percent reduction of all tariffs between member countries by 1 January 2006, and reduction of all trade tariffs to zero by the year 2015.[40]

Although original and negotiating parties are members of the Asia-Pacific Economic Cooperation (APEC), the TPSEP is not an APEC initiative. However, the TPP is considered to be a pathfinder for the proposed Free Trade Area of the Asia Pacific (FTAAP), an APEC initiative.

Trans-Pacific Partnership negotiations[edit]

In January 2008, the U.S. agreed to enter into talks with the Pacific 4 (P4) members regarding trade liberalisation in financial services.[41] This led to 19 formal negotiation rounds and a subsequent series of additional meetings, such as Chief Negotiators Meetings and Ministers Meetings, and resulted in the agreement announced on 5 October 2015. For details on the negotiations process, see Trans-Pacific Partnership negotiations.

Ratification[edit]

The text of the agreement will have to be ratified, according to the national procedures of the countries concerned and the instrument of ratification is to be deposited with the Government of New Zealand, the depositary of the agreement.

Canada[edit]

On 5 October 2015 Canadian prime minister Harper indicated he expected "signatures on the finalized text and deal early in the new year, and ratification over the next two years."[13] On 4 February 2016, at the TPP signing, Canadian International Trade Minister Chrystia Freeland said "There is a big difference between signing and ratifying". "Consultations in Canada very much will include aboriginal communities, they are a very important part of the national discussion," she said. "We are committed to a full parliamentary committee study and a full parliamentary debate ahead of ratification."[42]

United States[edit]

Most international agreements in the United States are approved using Trade Promotion Authority (also called fast track) authorization, in which the US congress is required to hold a yes/no vote on any agreements without modification. The US passed a law agreeing to this fast-track procedure in 2015.

The terms of the TPA stipulate that when a deal is formally submitted to Congress, they must act within 90 legislative days. According to Politico, many expect Congress to vote on the bill either during the Summer of 2016 or in the lame-duck session after the 2016 elections.[43]

Contents[edit]

A version of the text of the agreement "subject to legal review" was released by prospective member parties on 5 November 2015.[44] Portions of drafts of the full agreement were previously leaked to the public.[45] Many of the provisions in the leaked documents are modeled on previous trade agreements.[citation needed]

The TPP agreement is divided into 30 chapters: Initial Provisions and General Definitions, Trade in Goods, Textiles and Apparel, Rules of Origin, Customs Administration and Trade Facilitation, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade Remedies, Investment, Cross-Border Trade in Services, Financial Services, Temporary Entry for Business Persons, Telecommunications, Electronic Commerce, Government Procurement, Competition Policy, State-Owned Enterprises and Designated Monopolies, Intellectual Property, Labour, Environment, Cooperation and Capacity Building, Competitiveness and Business Facilitation, Development, Small and Medium-Sized Enterprises, Regulatory Coherence, Transparency and Anti-Corruption, Administrative and Institutional Provisions, Dispute Settlement, Exceptions, Final Provisions. Brief summaries of each of these sections are provided by the USTR.[5]

A 2016 study by University of Maryland political scientists Todd Allee and Andrew Lugg finds that out of the 74 previous trade agreements that TPP members signed since 1995, the text of the TPP most resembles that from earlier U.S. trade agreements.[46]

Trade barriers[edit]

The agreement cuts over 18,000 tariffs.[47] Tariffs on all U.S. manufactured goods and almost all U.S. farm products would be eliminated completely, with most eliminations occurring immediately.[48] According to the Congressional Research Service, TPP "would be the largest U.S. FTA by trade flows ($905 billion in U.S. goods and services exports and $980 billion in imports in 2014)".[49]

In addition, the agreement mandates expedited customs procedures for express shipments and prohibits customs duties from being applied to electronic transmissions. It also requires additional privacy, security, and consumer protections for online transactions and encourages the publication of online customs forms. These provisions are expected to be particularly beneficial to small businesses.[48]

Environmental protection[edit]

According to the Office of the United States Trade Representative, the "TPP includes the most robust enforceable environment commitments of any trade agreement in history".[50] The USTR notes that the TPP requires signatories to fulfill their obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) to protect and conserve iconic species.[50] According to the USTR, TPP is the first trade agreement to prohibit harmful fisheries subsidies, such as those that contribute to overfishing.[50] The USTR asserts that TPP signatories are required to "combat illegal fishing", "promote sustainable fisheries management practices", and "protect wetlands and important natural areas"."combat wildlife trafficking, illegal logging, and illegal fishing" and "protect the marine environment from ship pollution, including by implementing their obligations under MARPOL (an international agreement to prevent marine pollution)".[50]

In 2013 when TPP was still being negotiated, Sierra Club's director of responsible trade, Ilana Solomon, argued that the TPP "could directly threaten our climate and our environment [including] new rights that would be given to corporations, and new constraints on the fossil fuel industry all have a huge impact on our climate, water, and land."[51] Upon the release of a draft of the Environment Chapter in January 2014, the Natural Resources Defense Council and the World Wide Fund for Nature joined with the Sierra Club in criticizing the TPP.[52] After the announcement of the United Nations Sustainable Development Goals (SDGs) on 25 September 2015 and the finalisation of the TPP a week later, critics discussed the interactions between the SDGs and the TPP. While one critic sees the TPP as providing a mixed bag of benefits and drawbacks to the SDGs,[53] another regards the TPP as being incompatible with the SDGs, highlighting that if the development provisions clash with any other aspect of the TPP, the other aspect takes priority.[54] The Friends of the Earth have spoken out against the TPP.[55][56]

The Venezuelan-backed TeleSUR reported that, when a deal was struck on 5 October 2015, the Sierra Club, NRDC, Greenpeace, 350.org, and Food & Water Watch raised warnings against the deal.[57] However, the White House has cited supportive statements from the World Wildlife Fund, the Nature Conservancy, the Humane Society, the Wildlife Conservation Society, Defenders of Wildlife, International Fund for Animal Welfare, World Animal Protection and other environmental groups in favor of the TPP.[58][59] The Peterson Institute for International Economics argues that the TPP is "the most environmentally friendly trade deal ever negotiated."[60] In regards to ISDS, PIIE analysts note that there is little evidence of constraints on environmental policies resulting from ISDS litigation.[61]

Good governance[edit]

According to the Office of the United States Trade Representative, signatories are required to join the United Nations Convention Against Corruption (UNCAC); criminalize bribery of public officials; have in place a code of conduct for public officials; take measures to decrease conflicts of interest; effectively enforce anti-corruption laws and regulations; and involve private organizations in the fight against corruption.[62]

Human rights[edit]

According to the Office of the United States Trade Representative, the TPP prohibits exploitative child labor and forced labor; ensures the right to collective bargaining; and prohibits employment discrimination.[63] The USTR asserts that "research by the International Labor Organization and the World Trade Organization finds that combining expanded trade opportunities with strong protections for workers can help workers move from informal-sector jobs into formal work in wage-paying, regulated export industries which offer a minimum wage, benefits, and safety programs".[63] The USTR asserts that "research also shows that trade improves human rights conditions by fostering pluralistic institutions and increasing open exchanges of information."[63]

Intellectual property[edit]

The intellectual property section of a leaked draft of the TPP lays out a minimum level of protection parties to the Agreement must grant for trademarks, copyright, and patents.[64] Copyright is granted at a length of life of the author plus 70 years,[64] and requires countries to set criminal penalties for violating copyright protections such as Digital Rights Management.[65]

According to the Office of the United States Trade Representative, the TPP will spur innovation by requiring signatories to establish strong patentability standard and adopt strong copyright protections.[66]

Walter Park, Professor of Economics at American University, argues, based on the existing literature, that the pharmaceutical protections in TPP will potentially enhance unaffiliated licensing in developing countries, lead to tech transfers that contribute to local learning-by-doing, stimulate new drug launches in more countries, expand marketing and distribution networks, and encourage early stage pharmaceutical innovations.[67]

As of December 2011 some provisions relating to the enforcement of patents and copyrights alleged to be present in the US proposal for the agreement had been criticised as being excessively restrictive, beyond those in the Korea–US trade agreement and Anti-Counterfeiting Trade Agreement (ACTA).[68][69]

In May 2015, Nobel prize winning economist Paul Krugman expressed concern that the TPP would tighten the patent laws and allow corporations such as big pharmaceutical companies and Hollywood to gain advantages, in terms of increasing rewards, at the cost of consumers, and that people in developing countries would not be able to access the medicines under the TPP regime.[70] However, Walter Park, Professor of Economics at American University, argues that it is far from clear in economic research that this would necessarily happen: clarifying intellectual property rights on drugs has for some developing countries not led to greater prices and less access to drugs.[67] The Office of the United States Trade Representative notes that the TPP "aligns with the Doha Declaration on TRIPS and Public Health", which allows developing countries to circumvent patent rights for better access to essential medicines.[66]

The Electronic Frontier Foundation[69] was highly critical of the leaked draft chapter on intellectual property covering copyright, trademarks, and patents. In the US, they believed this was likely to further entrench controversial aspects of US copyright law (such as the Digital Millennium Copyright Act) and restrict the ability of Congress to engage in domestic law reform to meet the evolving IP needs of American citizens and the innovative technology sector. Standardization of copyright provisions by other signatories would also require significant changes to other countries' copyright laws. These, according to EFF, include obligations for countries to expand copyright terms, restrict fair use, adopt criminal sanctions for copyright infringement that is done without a commercial motivation (ex. file sharing of copyrighted digital media), place greater liability on internet intermediaries, escalate protections for digital locks and create new threats for journalists and whistleblowers.[69]

Both the copyright term expansion and the non-complaint provision (i.e., competent authorities may initiate legal action without the need for a formal complaint) previously failed to pass in Japan because they were so controversial.[71] In early 2015 "A group of artists, archivists, academics, and activists ... in Japan [asked] their negotiators to oppose requirements in the TPP that would require their country, and five of the other 11 nations negotiating this secretive agreement, to expand their copyright terms to match the United States' already excessive length of copyright."[71] (The alleged "excessive length," life of the author plus 70 years in most cases, is in the final agreement.)

Ken Akamatsu, creator of Japanese manga series Love Hina and Mahou Sensei Negima!, expressed concern the agreement could decimate the derivative dōjinshi (self-published) works prevalent in Japan. Akamatsu argued that the TPP "would destroy derivative dōjinshi. And as a result, the power of the entire manga industry would also diminish."[72]

Pharmaceuticals[edit]

In May 2015, Nobel prize winning economist Paul Krugman expressed concern that the TPP would tighten the patent laws and allow corporations such as big pharmaceutical companies and Hollywood to gain advantages, in terms of increasing rewards, at the cost of consumers, and that people in developing countries would not be able to access the medicines under the TPP regime.[70] However, Walter Park, Professor of Economics at American University, argues that it is far from clear in economic research that this would necessarily happen: clarifying intellectual property rights on drugs has for some developing countries not led to greater prices and less access to drugs.[67] Park also argues, based on the existing literature, that the pharmaceutical protections in TPP will potentially enhance unaffiliated licensing in developing countries, lead to tech transfers that contribute to local learning-by-doing, stimulate new drug launches in more countries, expand marketing and distribution networks, and encourage early stage pharmaceutical innovations.[67] The Office of the United States Trade Representative notes that the TPP "aligns with the Doha Declaration on TRIPS and Public Health", which allows developing countries to circumvent patent rights for better access to essential medicines.[66]

Pharmaceutical companies have criticized TPP for having too lenient intellectual property protections.[67][73][74][75]

A June 2015 two-page article in the New England Journal of Medicine claimed that potentially increased prices of medical drugs due to patent extensions could threaten millions of lives.[76] Extending "data exclusivity" provisions would "prevent drug regulatory agencies such as the Food and Drug Administration from registering a generic version of a drug for a certain number of years." The article alleged that TPP could theoretically require corporations be paid compensation for any "lost profits" found to result from a nation's health regulations.[76] The article alleges that the provisions in the TPP concerning generic drugs seem to be directly targeting India's pharmaceutical industry.[76] Médecins Sans Frontières (MSF), also known as Doctors Without Borders, expressed in November 2015 that they were "extremely concerned about the inclusion of dangerous provisions that would dismantle public health safeguards enshrined in international law and restrict access to price-lowering generic medicines for millions of people."[77][78] The Australian Public Health Association (PHAA) published a media release in February 2014 that highlighted "the ways in which some of the expected economic gains from the TPPA may be undermined by poor health outcomes, and the economic costs associated with these poor health outcomes."[79]

A number of United States Congressional members,[80] including Senator Bernard Sanders[81] and Representatives Sander M. Levin, John Conyers, Jim McDermott and the now-retired Henry Waxman, as well as[82] John Lewis, Charles B. Rangel, Earl Blumenauer, Lloyd Doggett and then-congressman Pete Stark,[83] have expressed concerns about access to medicine. By protecting intellectual property in the form of the TPP mandating patent extensions, access by patients to affordable medicine in the developing world could be hindered, particularly in Vietnam.[80] Additionally, they worried that the TPP would not be flexible enough to accommodate existing non-discriminatory drug reimbursement programs and the diverse health systems of member countries.[83] In February 2015, former U.S. Labor Secretary Robert Reich stated he opposed the TPP because it would delay cheaper generic versions of drugs and because of its provisions for international tribunals that can require corporations be paid "compensation for any lost profits found to result from a nation's regulations."[84]

Investor-state arbitration[edit]

The TPP agreement establishes an investor-state dispute settlement (ISDS) mechanism,[85] which grants investors the right to sue foreign governments for treaty violations. For example, if an investor invests in country "A", a member of a trade treaty, and country A breaches that treaty, then the investor may sue country A's government for the breach.[86] ISDS is meant to provide investors in foreign countries basic protections from foreign government actions such as "freedom from discrimination", "protection against uncompensated expropriation of property", "protection against denial of justice" and "right to transfer capital".[87][88] ISDS cannot overturn local laws which violate trade agreements,[61] but can grant monetary damages to investors adversely affected by such laws.[89] As pointed out by the Office of the United States Trade Representative, ISDS requires specific treaty violations, and does not allow corporations to sue solely over "lost profits".[88]

The TPP specifically excludes tobacco industries from the ISDS process.[90] The carve-out came as a response to concerns about ISDS cases against anti-smoking laws, including Philip Morris v. Uruguay.[91] The exemption of tobacco from ISDS is a first for an international trade agreement.[90]

Economists Joseph Stiglitz and Adam S. Hersh have criticized ISDS provisions of the TPP for interfering with the ability of governments to prevent public harm, alleging that if asbestos been discovered today, governments would have been unable to impose regulations without creating grounds for an ISDS suit.[92] Stiglitz also claimed that the TPP would give oil companies the right to sue governments for efforts to reduce carbon emissions and global warming.[93]

In November 2015, Columbia professor Jeffrey Sachs concluded that the ISDS system of the TPP grants huge power to investors, and damages the judicial systems of all the member countries. He alleges that ISDS has been already used by corporations to upset governments so as to weaken the regulations that have negative effects on their profits.[94] In February 2016, Lise Johnson and Lisa Sachs of the Columbia Center on Sustainable Investment and Jeffrey Sachs of the Earth Institute allege that foreign corporations can sue a national government in international arbitration over a government's actions if the measures (including those for public health, national security, environment, food and drug, and responses to economic crises) have a negative effect on their profits and economic interests.[95] Lori Wallach of Public Citizen's Global Trade Watch raises similar concerns.[96]

The Office of the United States Trade Representative challenges the notion that ISDS challenges "the sovereign ability of governments impose any measure they wish to protect labor rights, the environment, or other issues of public welfare".[88] The White House notes that investment protections are a component of more than 3,000 trade agreements, the vast majority of which have some form of neutral arbitration.[97] The United States is party to at least 50 such agreements, has only faced 13 ISDS cases and never lost an ISDS case.[97] The White House asserts that the ISDS components of the TPP are an upgrade and improvement on ISDS in other trade agreements: TPP makes it absolutely clear that governments can regulate in the public interest (including with regard to health, safety and the environment); TPP includes the ability to dismiss frivolous claims quickly and award fees against the claimant to deter such suits; sham corporations will be prevented from accessing the investment protections; and arbitration proceedings under TPP will be open to the public and allow for inputs from non-parties.[97]

The Peterson Institute for International Economics argues that "the ISDS provisions in the TPP are a significant improvement over those in previous agreements".[61] PIIE notes that the ISDS mechanism in the TPP respects environmental, health, and safety regulation; ensures the transparency of dispute proceedings; and eliminates forum shopping.[61] PIIE asserts that some of the innovations in the ISDS provisions of TPP "are generally disliked by the US business community."[61] PIIE claims that ISDS provisions are necessary, as they boost investment: "empirical evidence has shown that treaties including these provisions have a positive effect on foreign direct investment (FDI) flows between signatory countries."[98] PIIE challenges the claim that ISDS "arbitrators lack integrity", noting that arbitrators take an oath of impartiality and both sides of a case choose arbitrators.[61] PIIE agrees "that secrecy has gone too far" in many ISDS cases, but notes that "TPP negotiators heeded this criticism" and opened up ISDS cases to greater transparency.[61]

Labor standards[edit]

According to the Office of the United States Trade Representative, the TPP imposes "binding and fully enforceable obligations" on signatories to "protect the freedom to form unions and bargain collectively" and "eliminate exploitative child labor and forced labor protect against employment discrimination".[99] The obligations include "laws on acceptable conditions of work related to minimum wages, hours of work, and occupational safety and health."[99] The USTR insists that if countries like Malaysia and Vietnam do not enforce provisions relating to forced labor, human trafficking and collective bargaining, they will cease to get the economic benefits of the TPP agreement.[100]

The Peterson Institute for International Economics asserts that "the TPP includes more protections of labor rights than any previous US free trade agreement."[101] In January 2016, Human Rights Watch said that the TPP side agreements with Vietnam, Malaysia, and Brunei "are a unique and significant step in efforts to protect labor rights in trade agreements" but noted that enforcement of these rules remains to be seen: "gauging compliance will require subjective assessments by the US that may take years to carry out and face obstacles arising from foreign policy objectives, commercial interests, and other political considerations."[102]

In May 2015, U.S. congressman Sander Levin argued that it is difficult to enforce trade deals, as he questioned Vietnam's willingness to meet the labour standards of TPP.[103] A report by U.S. Senator Elizabeth Warren said that there was a huge gap between the labor standards of past US free trade agreements and the actual enforcement of those provisions.[103] However, PIIE analysts note that research shows that the presence of "sticks" (a possible suspension of trade benefits) and “carrots” (technical assistance) in trade deals increase the likelihood that labor obligations in trade deals have a positive effect; there are both sticks and carrots present in TPP.[104]

Economic impact[edit]

According to The New York Times, economists are sharply split over the positive and negative effects of TPP.[105] For example, research by the U.S. International Trade Commission, the Peterson Institute for International Economics and the World Bank find that the agreement will lead to net positive economic outcomes for all signatories, while an analysis by two Tufts economists finds that the agreement will adversely affect the signatories.[106][107][108][109]

Effects on economic equality[edit]

In 2013, Nobel Memorial prize-winning economist Joseph Stiglitz warned that based on leaked drafts of the TPP, it presented "grave risks" and "serves the interests of the wealthiest."[110][111] Organised labour in the U.S. argued, during the negotiations, that the trade deal would largely benefit corporations at the expense of workers in the manufacturing and service industries.[112] The Economic Policy Institute and the Center for Economic and Policy Research have argued that the TPP could result in further job losses and declining wages.[113][114] In 2014, linguist Noam Chomsky warned that the TPP is "designed to carry forward the neoliberal project to maximise profit and domination, and to set the working people in the world in competition with one another so as to lower wages to increase insecurity."[115] Senator Bernie Sanders (I-VT) argues that trade agreements like the TPP "have ended up devastating working families and enriching large corporations."[116] Economist Robert Reich contends that the TPP is a "Trojan horse in a global race to the bottom."[117][118]

Economists Peter A. Petri and Michael G. Plummer challenge the view that TPP will primarily benefit the wealthy. Their analysis finds that "the gains from TPP appear to be fairly distributed—labour will gain relative to capital, and cost reductions will favour low-income households. Some workers will need to change jobs, but they constitute a small fraction of normal job churn in any given year, and the national benefits argue for generous compensation for their adjustment costs. The agreement will also benefit workers in TPP's poorest member countries."[119] Research by Harvard economist Robert Z. Lawrence finds that the "percentage gains for labor income from the TPP will be slightly greater than the gains to capital income. Households in all quintiles will benefit by similar percentages, but once differences in spending shares are taken into account, the percentage gains to poor and middle-class households will be slightly larger than the gains to households at the top."[120][121] An opinion piece by Ed Gerwin in the Wall Street Journal argues that the TPP agreement benefits small businesses in the US.[48]

Economists David Autor, David Dorn and Gordon H. Hanson, who have extensively studied US labor markets adjustments to trade competition shocks caused by China,[122] support TPP.[123] They argue that TPP "would promote trade in knowledge-intensive services in which U.S. companies exert a strong comparative advantage", note that "killing the TPP would do little to bring factory work back to America" and argue that it would pressure China to raise regulatory rules and standards to those of TPP members.[123]

Macroeconomics[edit]

World Bank found that if ratified by signatories, the TPP "agreement could raise GDP in member countries by an average of 1.1 percent by 2030. It could also increase member countries’ trade by 11 percent by 2030, and represent a boost to regional trade growth, which had slowed to about 5 percent, on average, during 2010-14 from about 10 percent during 1990-07."[106] The World Bank finds that the agreement will raise real wages in all signatories: "In the United States, for example, changes in real wages are expected to be small as unskilled and skilled wages increase by 0.4 and 0.6 percent, respectively, by 2030. In contrast, in Vietnam, TPP could increase the real wages of unskilled workers by more than 14 percent by 2030, as production intensive in unskilled labor (e.g. textiles) shifts to Vietnam."[106]

The U.S. International Trade Commission estimates that "TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy".[107] By 2032, U.S. annual real income would increase by 0.23%, real GDP would be $42.7 billion or 0.15% higher, employment would be 0.07% higher, US exports would increase 1%, and imports would increase 1.1%.[107] The report added, "TPP would generally establish trade-related disciplines that strengthen and harmonize regulations, increase certainty, and decrease trade costs for firms that trade and invest in the TPP region."[107] Vietnam is often seen as the biggest beneficiary of TPP.[124][125][126] The U.S. International Trade Commission identifies the following US industries as net beneficiaries of TPP: Passenger cars; Apparel, Dairy production; Retailers and Wholesalers; and Business services; and as net losers: Auto parts; Textiles; Soybean production; Transportation and tourism; and Chemicals and drugs.[107][127]

Economists Peter A. Petri and Michael G. Plummer of the Peterson Institute for International Economics project that the TPP would increase incomes in the U.S. by $131 billion annually, or 0.5 percent of GDP. Exports from the U.S. would increase by $357 billion annually, or 9.1 percent, as a result of the agreement.[108] However, two Tufts University economists argue that the research by Petri relies on unrealistic assumptions such as full employment: lost jobs will be immediately replaced in other industrial sectors.[109] According to Harvard economist Dani Rodrik, "Petri and Plummer assume that labor markets are sufficiently flexible that job losses in adversely affected parts of the economy are necessarily offset by job gains elsewhere. Unemployment is ruled out from the start – a built-in outcome of the model that TPP proponents often fudge."[128] Rodrik notes that "the Petri-Plummer model is squarely rooted in decades of academic trade modeling, which makes a sharp distinction between microeconomic effects (shaping resource allocation across sectors) and macroeconomic effects (related to overall levels of demand and employment). In this tradition, trade liberalization is a microeconomic "shock" that affects the composition of employment, but not its overall level."[128]

Tufts University researchers project the TPP would have a negative impact on employment: 450,000 US jobs, 75,000 Japanese jobs, 58,000 Canadian jobs and 5,000 New Zealand jobs would be lost by 2025.[109] According to the report, 771,000 jobs would be lost in total and positive economic effects would be negligible for participating countries.[109][129]

Harvard economist Robert Z. Lawrence says that the model used by the Tufts researchers "is simply not suited for credibly predicting the effects of the TPP" and argues that the model used by Petri and Plummer is superior.[130] Lawrence argues that the model used by the Tufts researchers "does not have the granularity that allows it to estimate variables such as exports, imports, foreign direct investment, and changes in industrial structure. As a result, its predictions ignore the benefits to the TPP economies that occur through increased specialization, the realization of scale economies, and improved consumer choice."[130] Lawrence also notes that the model used by the Tufts researchers finds that the TPP will cause GDP to fall by 5.24% in non-TPP developing countries, such as China, India, and Indonesia, which Lawrence is highly skeptical of: "It is not believable that a trade agreement of this magnitude could cause the rest of the world to plummet into recession."[130] Harvard economist Dani Rodrik says that the Tufts researchers do "a poor job of explaining how their model works, and the particulars of their simulation are somewhat murky... the Capaldo framework lacks sectoral and country detail; its behavioral assumptions remain opaque; and its extreme Keynesian assumptions sit uneasily with its medium-term perspective."[128]

According to the Congressional Research Service, "The Tufts study has drawn particular criticism as an unconventional framework for analyzing trade agreements, whereas Computable General Equilibrium (CGE) models, such as that used in the Peterson study are standard in trade policy analysis."[49] Fabio Ghironi, Professor in Economics at the University of Washington, describes the models used by the World Bank and the Peterson Institute in more favorable terms than the Tufts analysis.[131]

Geopolitics[edit]

TPP is likely to bring China's neighbours closer to the United States and reduce their dependence on Chinese trade.[124][125][126][132][133][134][135] If ratified, TPP strengthens American influence on future rules for the global economy.[132] TPP also increases the likelihood that Japan undertakes economic reforms to revive its economy, which coupled with potential South-Korean accession to the TPP, might have an economic impact on China.[132] By making the Chinese economy less competitive and Chinese leadership less likely to write the rules of trade in East and Southeast Asia, the Chinese regime will be under great internal and external pressure to liberalize its economy.[132] Japan's prime minister, Shinzo Abe, believes that future Chinese accession to TPP would have a major pacifying impact on the Asia-Pacific region.[133]

Secretary of Defense Ash Carter has claimed the passage of TPP to be as valuable to the United States as the creation of another aircraft carrier.[126] President Obama has argued "if we don’t pass this agreement — if America doesn’t write those rules — then countries like China will".[136] According to the Congressional Research Service, "many Asian policymakers—correctly or not—could interpret a failure of TPP in the United States as a symbol of declining U.S. interest in the region and inability to assert leadership... failure to conclude TPP could, in effect, allow China to shape regional rules of commerce and diplomacy through its own trade and investment initiatives, potentially creating regional rules and norms less beneficial for U.S. interests."[49] Michael J. Green and Matthew P. Goodman argue that "history will be unforgiving if TPP fails... If Congress rejects TPP, trying to negotiate a similar arrangement in Asia would reopen demands on the United States—and in the meantime, would likely give impetus to alternative arrangements like RCEP that exclude the United States. Momentum behind the U.S.-led international order would shift to momentum against it. Future generations of historians will take note of U.S. leadership at this moment."[126] Dan Ikenson, director of Cato's Herbert A. Stiefel Center for Trade Policy Studies, argued in July 2016 that the "failure of Congress to ratify the Trans-Pacific Partnership this year would do more to subvert U.S. regional and global interests than anything China is capable of doing."[137]

South Korea did not participate in TPP "largely out of a concern to maintain balance in its economic relations with China and the United States" but have shown greater interest in joining TPP after Japan, its biggest economic competitor, decided to participate.[126]

Since formal TPP negotiations began in 2010, China's attitude towards TPP has "swung from disdain to suspicion to cautious embrace... Conclusion of a TPP agreement in early October has sparked a lively debate in Beijing, with the weight of elite opinion seeming to tilt toward eventual membership; for example, the head of the Chinese-sponsored Asian Infrastructure Investment Bank (AIIB), Jin Liqun, announced his support during a speech in Washington shortly after the TPP deal was announced."[126]

TPP may give renewed impetus to trade negotiations among China, Japan, and Korea, and increase the likelihood of Regional Comprehensive Economic Partnership (RCEP) which could provide a possible pathway to a free trade area of the Asia-Pacific.[126]

In January 2016, the National Association of Manufacturers announced its support for TPP, saying "without such an agreement, the United States would be ceding economic leadership to other global powers, letting them set the rules of economic engagement in the region".[138]

A 2016 study by University of Maryland political scientists Todd Allee and Andrew Lugg suggests that if the TPP becomes standard legal text, it will shape future trade cooperation and agreements.[46]

Non-TPP party opinions[edit]

On 30 January 2015 Philip Hammond, the former Foreign Secretary of the United Kingdom, described the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership as "potentially important liberalising steps forward".[139]

The European Centre for International Political Economy (ECIPE), a think tank on European policies, predicted in 2012 that the TPP would be a "deadly threat to European exporters of agricultural products in TPP countries".[140]

ECIPE has said in 2014 that TPP "will be the first ‘competing’ economic integration that is large enough to have a considerable negative impact on Europe. In the long-term, the negative effects will come from dynamic impact, e.g. on investment, productivity and competitiveness".[141] Pascal Lamy called the TPP ‘the last of big old-style trade agreements’.[141]:2

Criticism[edit]

Nobel Memorial Prize-winning economist, Paul Krugman has said that "there isn't a compelling case for this deal, from either a global or a national point of view."[142]

Dartmouth economics Professor Emily J. Blanchard argues that while the TPP has been roundly criticized on the political left, progressives should actually be supportive of the TPP: "The TPP’s promise of a new progressive rule book – one that includes enforceable agreements against child labor and workplace discrimination, measures to punish illegal logging and trade in protected species, and protections against consumer fraud – would mark a substantial step forward in the progressive policy agenda on the global stage."[143]

Currency manipulation[edit]

Some critics and even supporters of the TPP wanted the deal to contain measures that would crack down on nations that manipulate currency.[144] However, Daniel Drezner, professor of international politics at Tufts University, has argued that the trade deal was never likely to include restrictions on currency manipulation, as it would have restricted U.S. monetary policy.[145] Harvard economist Jeffrey Frankel has argued that the inclusion of currency manipulation language in TPP would be a mistake.[146] Frankel noted that currency manipulation would be hard to enforce (in part because it is impossible to tell whether a currency is overvalued or undervalued); "currency manipulation" can often be legitimate; China, often alleged to be a major currency manipulator, is not party to the TPP; currency manipulation accusations are often meritless; and because it would restrict U.S. monetary policy.[146]

Secrecy of negotiations[edit]

As with many trade agreements, until being finalized, negotiations for the TPP were conducted with significant secrecy. Drafts of the agreement were kept classified during negotiations, and access to the working text was significantly restricted even for government officials and business representatives involved in the talks.[147] Despite this, some sections of TPP drafts were leaked to the public by WikiLeaks, which published an intellectual property chapter draft in 2013,[148][149] an environmental chapter draft in 2014,[150] and the final intellectual property chapter in 2014.[151]

In 2012, critics such as Public Citizen's Global Trade Watch, a consumer advocacy group, called for more open negotiations in regard to the agreement. U.S. Trade Representative Ron Kirk responded that he believes the Office of the United States Trade Representative (USTR) conducted "the most engaged and transparent process as we possibly could", but that "some measure of discretion and confidentiality" are needed "to preserve negotiating strength and to encourage our partners to be willing to put issues on the table they may not otherwise."[152] He dismissed the "tension" as natural and noted that when the Free Trade Area of the Americas drafts were released, negotiators were subsequently unable to reach a final agreement.[152]

On 23 May 2012, U.S. Senator Ron Wyden, Democrat of Oregon, introduced S. 3225, which would have required the Office of the U.S. Trade Representative to disclose its TPP documents to all members of Congress.[153] Had it passed, Wyden said that the bill would increase Congressional access to information about USTR activity.[154]

Michael R. Wessel, former commissioner on the U.S. Trade Deficit Review Commission claimed in May 2015 that "cleared advisors" like himself were "prohibited from sharing publicly the criticisms we’ve lodged about specific proposals and approaches". He claimed that only portions of the text had been provided, "to be read under the watchful eye of a USTR official", that access on secure government-run website did not contain the most-up-to-date information, and that for cleared advisors to get that information, he had "to travel to certain government facilities and sign in to read the materials" and "even then, the administration determines what we can and cannot review and, often, they provide carefully edited summaries rather than the actual underlying text, which is critical to really understanding the consequences of the agreement."[155]

In June 2015, U.S. Senator Rand Paul, Republican of Kentucky, opposed fast-tracking the TPP bill on the basis of secrecy.[156]

Industry influence[edit]

Senator Elizabeth Warren has alleged that corporations and industry exert disproportionate influence on U.S. trade negotiators.[157] She asserted in July 2016 that 85% of seats on U.S. trade advisory committees were held by "senior corporation executives or industry lobbyists", and that the members of the committees “whisper in the ear” of negotiators.[157]

Michelle Ye Hee Lee, a fact-checker for The Washington Post, wrote that Warren used "misleading language" in describing the TPP. While Warren implied that "28 trade advisory committees were formed" specifically to influence the TPP the advisory committees were actually created as part of the Trade Act of 1974; only the membership of the trade committees had changed during the Obama administration and the early phases of the TPP. Regarding Warren's claim that trade advisers secretly "whisper in the ear of our trade negotiators", Lee wrote: "while the direct meetings take place in private, committees still have to submit written reports to Congress and provide written recommendations and advice that are made public."[157] Furthermore, Lee wrote, "it is true that industry representatives make up a large number of the total membership, but it is worth noting that there is a labor committee in the second tier, labor representatives in the first tier and that the industry groups have a narrow focus (to give technical advice)."[157]

In response to criticisms about transparency and the large representation from industry representatives, USTR announced it would create a Public Interest Trade Advisory Committee.[157]

Non-compete clause[edit]

Dean Baker argued that Article 18.78, under which countries should ensure that they protect trade secrets and impose criminal procedures for violators, could be used to enforce non-compete agreements.[158] Baker points out that California's success can partly be attributed to the fact that the state did not allow for the enforcement of non-compete agreements, making it easy for tech workers to quit their jobs and start to work for another company.[158]

Protests[edit]

A protest in Wellington, New Zealand in November 2014
"Stop Fast Track" rally in Washington D.C., April 2015
Protesters of the 4 February signing at SkyCity Events Centre in Auckland, New Zealand.

A number of global health professionals, internet freedom activists, environmentalists, trade unions, advocacy groups, and elected officials have criticized and protested against the treaty, in large part because of the secrecy of negotiations, the agreement's expansive scope, and controversial clauses in drafts leaked to the public.[110][159][160][161][162]

On 5 March 2012, a group of TPP protesters disrupted an outside broadcast of 7News Melbourne's 6 pm bulletin at Melbourne, Australia's Federation Square venue.[163] In New Zealand, the "It's Our Future" protest group was formed[164] with the aim of raising public awareness prior to the Auckland round of negotiations, which was held from 3 to 12 December 2012.[165] During the Auckland negotiations, hundreds of protesters clashed with police outside the conference venue and lit a fire in the streets.[166]

A poll conducted in December 2012 showed 64 percent of New Zealanders thought trade agreements, such as the TPP, which allow corporations to sue governments, should be rejected.[167]

In March 2013, four thousand Japanese farmers held a protest in Tokyo over the potential for cheap imports to severely damage the local agricultural industry.[168]

On 21 February 2014, Malaysian protesters dressed as zombies outside a shopping mall in Kuala Lumpur to protest the impact of the TPP on the price of medicines, including treatment drugs for HIV. The protest group consisted of students, members of the Malaysian AIDS Council and HIV-positive patients—one patient explained that, in Malaysian ringgit, he spent between RM500 and RM600 each month on treatment drugs, but this cost would increase to around RM3,000.[169]

On 29 March 2014, 15 anti-TPP protests occurred across New Zealand, including a demonstration in Auckland attended by several thousand people.[170] The New Zealand Nurses Association was particularly concerned that the TPP could prevent government decisions that could benefit public health.[171] On 8 November 2014, further protests occurred in 17 New Zealand cities, with turnouts in the thousands.[172][173]

In January 2015, various petitions and public protests occurred in the U.S. from progressives.[174] On 27 January 2015, protesters hijacked a US Senate hearing to speak out against the TPP and were promptly removed by capitol police officers.[175]

On 15 August 2015, protests were held across New Zealand in Auckland, Christchurch, Wellington, as well as several smaller cities. An activist claimed that over 25,000 people collectively protested against the TPP free trade deal throughout the country.[176] The protests were peaceful; however, police were forced to protect the steps of the Parliament building in the capital of Wellington, after an estimated 2000 people marched to the entrance.[177][178][179]

On 15 September 2015, an estimated 50 protesters blocked a lane of Lambton Quay in the central business district of Wellington, New Zealand. It was reported that up to 30 people were arrested after forming a block on the road, and were taken away in police vans. The group was attempting to enter the Ministry of Foreign Affairs and Trade headquarters, in attempt to seize documents related to the TPPA. They criticized the secrecy surrounding the negotiations, chanting "democracy not secrecy".[180] They were stopped by a police barricade, which later extended to a lock down of the road.[176]

On 23 January 2016, two protests against TPP occurred at Dataran Merdeka and Padang Merbok in Kuala Lumpur, Malaysia. PAS deputy president Tuan Ibrahim Tuan Man estimated the crowd to be about 25,000 people at Padang Merbok alone. However, Malaysiakini estimated the number for both Padang Merbok and Dataran Merdeka in Kuala Lumpur city centre at 5,000 maximum and called the protest a "dud".[181]

On 30 January 2016, in Wellington, thousands of people joined anti-TPP rallies, and about five hundred people presented a petition calling for a binding referendum on the TPP before New Zealand's government ratifies the TPP.[182]

On 4 February 2016, trade ministers from the twelve negotiating countries met at the SkyCity Events Centre in Auckland, New Zealand.[183] Between 2,000 and 15,000 protesters were estimated to have marched down Queen Street at midday, including additional rallies in Aotea Square and outside of SkyCity.[184][185] Groups of protesters blocked central city intersections and motorway ramps during the day, including an incident where 100 protesters ran onto a section of the central city motorway.[183][184] Protesters in Auckland were joined by the annual Waitangi Day hikoi,[186] and an additional 250 people protested at the Wellington Cenotaph outside of parliament in Wellington.[184]

In early April 2016, New York Mayor Bill de Blasio joined an anti-TPP rally, and explained why he stood up and fought against the TPP.[187] As de Blasio noted, NAFTA was a disastrous trade pact: under NAFTA, about one million US jobs and tens of thousands of New York jobs were lost, and the decent standard of living for the US middle class was eroded. He argued that the TPP would damage US as NAFTA did, suggesting that the TPP would worsen US's income inequality.[187]

In April 2016, more than twenty lawmakers in Washington agreed that the US Congress should oppose the TPP. The lawmakers expressed concern that the TPP would have negative impacts on various things: availability of life saving drugs, protections of the environment and natural resources, jobs, labor standards and human rights. They sent a letter to Washington State Members of Congress, urging them to reject the TPP.[188][189]

See also[edit]

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