TPP Negotiations Conclusion: Strategic and Economic Outcomes
By Sinclaire Prowse
After eight years and 19 rounds of negotiations, the Trans-Pacific Partnership Agreement (TPP) has been concluded in Atlanta.
The TPP will create a free trade zone among 12 pacific nations. Together, these nations account for 40% of global GDP and 24% of the world’s trade in services.
The deal is significant economically because it will eliminate 98 percent of all tariffs levied by signatory countries. These are extended to products including beef, wine, sugar, dairy, rice, horticulture and seafood. It will also be extended to manufactured goods, resources and services. The TPP will set minimum standards for goods, set up a common dispute resolution framework for members and make consistent the rules of regional trade.
There has been much commentary since the Agreement was signed, both in support of the deal and critical of it. Two areas in particular are receiving a great deal of attention; the Investor State Dispute Settlement (ISDS) clause, and IP provisions. I have previously argued that concerns regarding the impact of ISDS on state sovereignty are overstated.
When the text is released, intellectual property provisions will be closely scrutinised. The full text of the agreement is expected to be released within the next 30 days. No doubt many are reserving judgement until this occurs.
In Australia, much focus has been placed on the potential gains in the agriculture and services industries. Both of these industries are in need of this well-timed boost. Alongside the ISBS and IP concerns that are apparent in many countries, it has been suggested that the deal could increase the price of medicines for Australians, but this has been refuted by the Department of Foreign Affairs.
There are a number of important challenges ahead for the Agreement, including domestic ratification. The deal will face opposition in each national legislature, not least the U.S. Congress. It has also been widely suggested that Japan and Canada will face significant domestic hostility, particularly related to agricultural liberalisation provisions.
Another significant challenge ahead is moving towards the potential inclusion of China in the Agreement. For some, the inclusion of China is seen as the only way of ensuring the strength and inclusiveness of the Agreement in the region. TPP party nations have not ruled out the eventual inclusion of China in the Agreement.
Officially, China is staying fairly neutral on the TPP. A spokesperson from China’s Commerce Ministry said the TPP is one of several important trade agreements in the Asia-Pacific region; China hopes the agreement will help push forward other regional trade deals.
China has started playing a leading role in the region in its own way. The AIIB and Silk Road initiatives have successfully stamped its influence in the region and will contribute to regional prosperity. The ASEAN plus six is another area where China is proving a major player.
Importantly, the conclusion of the Agreement solidifies the United States’ strategic ‘pivot’ to Asia in the 21st century. This is important when we consider the fraught Asian geostrategic backdrop against which recent negotiations have taken place. To many of the U.S. allies and new-found partners in Asia, U.S. presence in the region has been important to ensuring peace and stability in the region, and this deal will help ensure that its presence continues, and ally some of the fears in the region that the rhetorical resolve has not been matched by the actions.
Multi-national trade agreements always see winners and losers within each nation involved. What is clear is that the deal aims to raise the collective prosperity of member nations and the region itself. It is now up to the party nations to ensure that this occurs.
Sinclaire Prowse is a Non-Resident Fellow at Pacific Forum CSIS. She writes on threat perception in the Asia Pacific region and has a specific research interests in Taiwan and China. Sinclaire currently lives in Sydney, Australia.