Trans-Pacific Partnership

Nowadays the realization of the Trans-Pacific Partnership (TPP) seems to be a likely scenario. On October 5, the interminable negotiations between the representatives of the twelve nations that will be part of the historical trade agreement were completed. After one month, it was released for the first time to the public the full version of the agreement, that in the years of its formation was kept secret to give more autonomy to negotiators. In this regard, critics say the process of drafting the TPP is deeply flawed since negotiations were conducted in secret, with well-connected interest groups having access to more information — and more opportunities to influence the process — than members of the general public. The content was published online at the beginning of November and consists of more than five thousand pages organized in thirty chapters. The beginnings The origin of the TPP date back to 2006, when Singapore, the Sultanate of Brunei, Chile and New Zealand put in place an economic and strategic partnership. Only two years later the USA, Australia and Peru made explicit request to start a negotiation on free trade with these countries. Later on, in 2010, Malaysia and Vietnam entered the agreement, followed by Mexico and Canada in 2012. Lastly, Japan acceded the TPP in 2013.  It took more than five years of negotiations to form the body of the agreement. During that time nineteen institutional meetings were held in the major cities of the Pacific Rim. Today, significant obstacles remain to finalize the approval of the TPP. Each of the twelve States will have to proceed with a legal review of the agreement and then proceed to its approval and subsequent ratification. Among the major threats to the realization of the TPP there are undoubtedly the intricate political and strategic interests. The geopolitical value of the TPP is immeasurable. The TPP will affect twelve nations that represent approximately 40% of global GDP. The image below shows the magnitude of the TPP, focusing on volumes of goods traded between the USA and the other eleven nations of the Agreement. What is the TPP? The Trans-Pacific Partnership is a trade agreement among countries bordering the Pacific Ocean. The TPP is expected to reduce trade barriers among these countries, lowering tariffs on goods. But it will do a lot of other things, too. The agreement could require countries to adopt stricter labor and environmental rules, provide stronger legal protections to drug companies, lengthen the term of copyright protection, give foreign investors a new way to challenge countries’ laws and regulations, and much more. In short, modern trade deals like the TPP are about a lot more than just trade. They’ve become one of the major ways the world hashes out the rules of the global economy. And that’s a big reason the deal has become controversial. For example, digital rights groups and global health advocates who are not normally focused on trade issues have warned that the deal could negatively impact digital innovation and the global effort to combat AIDS, among other things. The participants and the main implications of the agreement In the United States President Obama is strongly pursuing the approval process of the TPP, wishing to leave to the country a new political and commercial landscape. According to Obama’s vision it should be a starting point to reinforce commercially the country and to limit the ongoing economic expansion of China. In the USA the debate is vibrant. The battleground on which Obama will play is hostile because of the presidential elections that will take place in the next November. Democrats and Republicans -represented respectively by Mrs. Clinton and Mr. Trump – are hindering the TPP with harsh criticism and this won’t certainly facilitate the approval of the agreement by the Congress. The opponents of the TPP focus their disappointment on those that would be plausible negative effects of the agreement on the labor market, either in terms of employment level or wage level. At the business level, the tobacco industry is one of the fields on which Obama risks to lose more. Why? Final TPP agreement allows countries to ban tobacco companies from using the ad hoc private tribunals, as wanted by the Investor-state dispute settlement (ISDS). In a nutshell, the Investor-state dispute settlement (ISDS) is an instrument of public international law, that grants an investor the right to use dispute settlement proceedings against a foreign government. Provisions for ISDS are contained in a number of bilateral investment treaties and in certain international trade treaties. If an investor from one country (the “Home State”) invests in another country (the “Host State”), both of which have agreed to ISDS, and the Host State violates the rights granted to the investor under public international law, then that investor may bring the matter before an arbitral tribunal. Except for tobacco companies, the right to make use of the ISDS will instead be available to all the other industries involved in the treaty. Thus, as said on December 3 by Dave Reichert, the chairman of the House Ways & Means trade subcommittee, roughly 15 House Republicans would oppose TPP over its treatment of tobacco. The Republicans have also spoken out against other hot topics regarding different industries within the American economy. Among them, the pharmaceutical sector has caused a heated debate. Few other arguments in the course of the long negotiations for the formulation of the TPP have generated such controversy. Even the difficult chapter on intellectual property hasn’t been so much discussed. The stakes are very high in the field of pharmaceutical products. For this reason, the pharmaceutical industry has lobbied hard for rules that would limit competition in the drug market, arguing that stronger protections were needed to allow drug companies to finance research and development. Those provisions have raised the ire of public health groups, which say that making drugs more expensive will deny millions of people access to potentially lifesaving medicine. There are two specific ways the TPP would make drugs more […]