The TPP Lives On: How Pacific Trade Persisted Without U.S. Involvement
Vol. 40 Associate Editor
Nearly two years ago, the United States withdrew from the Trans-Pacific Partnership (TPP). As the prospective trade deal’s largest economy, the departure of the United States led many to speculate that the deal would dissolve, and in many respects it did. Gone is the massive arrangement comprising nearly $28 trillion in GDP—40% of the global total—and gone are a number of key provisions championed by the United States. However, while the TPP may be dead, a new arrangement has emerged to fill much of the gap left in its wake. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP” or “TPP-11”) is comprised of the remaining eleven nations involved in the original TPP trade negotiations. Following the sixth domestic ratification of the TPP-11 by Australia on October 31, the new agreement is set to enter into force later this year within the ratifying nations. The agreement will enter into force for the remaining signatories sixty days after they have notified all parties of their successful domestic ratification. While undoubtedly different from its larger predecessor and namesake, the TPP-11 maintains the core elements of the TPP and is expected to lead to impressive economic returns for its member states. Where We Started – The TPP The TPP began as a proposed twelve-state free trade agreement between the nations of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. To many, the Agreement was a clear attempt by the United States and its allies throughout the Pacific to curtail the growing economic power of China and to incentivize the largest economy in Asia to play by the rules of trade. The TPP was a contentious arrangement domestically for many of its prospective members, with interests from organized labor, to environmentalists, to medical organizations signaling their opposition prior to the withdrawal of the United States. The United States, as the TPP’s largest prospective signatory, had a great deal of negotiating power throughout the drafting process. As such, some of the more controversial segments of the TPP were incorporated at the request of American negotiators. These included provisions strengthening and lengthening patent protection for new pharmaceutical products, as well as a framework by which investors could “litigate disputes under investment agreements and investment authorizations.” Forging a New Path – The Removal of American Provisions from the TPP-11 Following the withdrawal of the United States from the TPP, the eleven remaining nations continued trade negotiations, ultimately signing the TPP-11 on March 8, 2018. In the absence of the U.S., roughly twenty-two American-sponsored provisions of the agreement were suspended and will not take effect with the larger TPP-11 on December 30, 2018. A number of the more significant changes to the deal include:
- Investment Agreement Arbitration – Disallowing arbitration claims based solely on investment agreements and investment authorizations, rather than based on the expressly stated obligations of the party nations under the agreement.
- Pharmaceutical Requirements – Removing additional requirements for member nations with respect to the use and marketing of data and tests for new pharmaceutical products, including biologics.
- Copyright Duration – Reducing the duration of copyrights from seventy to fifty years following the creation of a product or the death of the individual who created or authored a work.
- Technological Protection Measures – Eliminating provisions requiring ratifying nations to implement criminal penalties for those individuals circumventing “Technological Protection Measures” (TPMs), utilized by “authors, performers, and producers of phonograms” to protect their works from theft or illegal distribution.
- ISP Copyright Infringement Penalties – Removing a provision that would have required each party to create “remedies” against Internet Service Providers (ISPs) found to be facilitating the violation of copyrights, as well as incentives for those ISPs enforcing copyright protections.
- Signal Decryption Technology Penalties – Eliminating a provision requiring members to implement criminal penalties for those who either 1) create technology capable of decoding encrypted signal-carrying technology to which they have no authorized access, or 2) willfully receive or further distribute such signals.
The above provisions largely targeted intellectual property protections favored by the United States. However, the “suspension” of these provisions by the members of the TPP-11, rather than “elimination,” allows some leeway for other members to enter or renegotiate the deal so as to reincorporate the old remnants of the TPP. Additionally, despite the elimination of the twenty-two aforementioned provisions, the vast majority of the agreement remains intact, with roughly “two-thirds of the CPTPP’s 30 chapters” remaining identical to the TPP. Member States are Optimistic for the Future According to the TPP-11 signatories, the remaining TPP provisions will go a long way towards implementing the original agreement’s goals of promoting free trade amongst Pacific nations. Canada, one of the seven nations that have currently ratified the agreement domestically, released a report in which it estimated that the TPP-11 will increase its GDP by roughly $3.4 billion. Australia expressed similar optimism with respect to the agreement, with its Department of Foreign Affairs and Trade noting that the TPP-11 will deliver “major new opportunities for Australian exporters, investors and firms engaged in international business,” while maintain[ing] the ambitious scope and high quality standards and rules of the original TPP.” Despite the rosy forecasts, it remains to be seen how the TPP-11 will impact global trade. The agreement is certainly smaller, with its member states comprising roughly 13.5% of the global economy compared with the TPP’s 40% coverage. However, the core of the agreement – negotiated over the course of seven years – remains the same. With its member states optimistic, and the U.S. sponsored provisions of the TPP “suspended” rather than “eliminated,” the prospect of a broader long-term trade arrangement remains alive amongst Pacific nations. Time will tell whether the U.S. chooses to reenter the agreement, or whether it survives in its current form. Until then, the goals and interests of the original Trans-Pacific Partnership largely live on in the form of the TPP-11.
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