The Senate is set to approve it, but what exactly is the Trans Pacific Partnership?

Pat Ranald, University of Sydney

These days it is called the TPP-11 or, more formally, the Comprehensive and Progressive Agreement for Trans Pacific Partnership.

It is what was left of the 12-nation Trans Pacific Partnership after President Donald Trump pulled out the US, after a decade of negotiation, in 2017.

Still in it are Australia, New Zealand, Canada, Mexico, Peru, Chile, Japan, Brunei, Singapore, Malaysia and Vietnam. It’ll cover 13% of the world’s economy rather than 30%.

What’s in it for us?

It is hard to know exactly what it will do for us, because the Australian government hasn’t commissioned independent modelling, either of the TPP-11 before the Senate or the original TPP-12.

A report commissioned by business organisations, including the Minerals Council, the Business Council, the Food and Grocery Council, the Australian Industry Group and the Australian Chamber of Commerce and Industry, finds the gains for Australia are negligible, eventually amounting to 0.4% of national income (instead of 0.5% under the TPP-12).

The report says:

The reason is simple:
Australia already benefits from extensive past
liberalisation, especially with Asia-Pacific partners.

But it says bigger gains would come from expanding TPP-11 to many more members, all using “common rules” and the same “predictable regulatory environment”.

Gradual deregulation

Setting up that predictable environment takes an unprecedented 30 chapters, covering topics including temporary workers, trade in services, financial services, telecommunications, electronic commerce, competition policy, state-owned enterprises and regulatory coherence.

Most treat regulation as something to be frozen and reduced over time, and never increased.

Read more:
The Trans-Pacific Partnership is back: experts respond

It’s a regime that suits global businesses, but will make it harder for future governments to re-regulate should they decide they need to.

Our experience of the global financial crisis, the banking royal commission, escalating climate change and the exploitation of vulnerable temporary workers tells us that from time to time governments do need to be able to re-regulate in the public interest.

International ISDS tribunals

And some decisions will be beyond our control. In addition to the normal state-to-state dispute processes in all trade agreements, the TPP-11 contains so-called Investor-State Dispute Settlement (ISDS) provisions that allow private corporations to bypass national courts and seek compensation from extraterritorial tribunals if they believe a change in the law or policy has harmed their investments.

Only tobacco cases are clearly excluded.

ISDS clauses will benefit some Australian-based firms. They will be able to take action against foreign governments that pass laws that threaten their investments, although until now there have been only four cases. John Howard did not include ISDS in the 2004 Australia-US FTA, following strong public reaction against it.

Read more:
When trade agreements threaten sovereignty: Australia beware

Known ISDS cases have increased from less than 10 in 1994 to 850 in 2017, and many are against health, environment, indigenous rights and other public interest regulations.

If, after the TPP-11 is in force, a future government wants to introduce new regulations requiring mining or energy companies to reduce their carbon emissions, it is not beyond the bounds of possibility that companies headquartered in TPP-11 members might launch cases to object.

Legal firms specialising in ISDS are already canvassing those options.

Even where governments win such cases, it takes years and tens of millions of dollars in legal and arbitration fees to defend them. It took an FOI decision to discover that the Australian government spent $39 million in legal costs to defend its tobacco plain packaging laws in the Philip Morris case. The percentage of those costs recovered by the government is still not known.

A limited role for parliament

The text of trade agreements such as TPP-11 remains secret until the moment they are signed. After that it’s then tabled in parliament and reviewed by a parliamentary committee.

But the parliament can’t change the text. It can only approve or reject the legislation before it.

Read more:
Sovereign risk fears around TPP are overblown

In another oddity, that legislation doesn’t cover the whole agreement, merely those parts of it that are necessary to do things such as cut tariffs.

The parliament won’t be asked to vote on Australia’s decision to subject itself to ISDS, or on many of the other measures in the agreement that purport to restrict the government’s ability to impose future regulations.

Could Labor approve it, then change it?

In the midst of internal opposition to TPP-11, the Labor opposition has decided to endorse it and then try to negotiate changes if it wins government.

In government it has promised to release the text of future agreements before they are signed, and to subject them to independent analysis.

And it says it will legislate to outlaw ISDS and temporary labour provisions in future agreements.

But renegotiation won’t be easy. Labour will have to try to negotiate side letters with each of the other TPP governments. If the TPP-11 gets through the Senate, Labor is likely to be stuck with it.The Conversation

Pat Ranald, Research Associate, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Farmers and services industry the winners under the revised Trans-Pacific Partnership trade deal

Giovanni Di Lieto, Monash University

The revived trade agreement, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has finally made it across the line. It’s a considerable win for Australian farmers and service providers, in a trading area worth about A$90 billion.

The 11 remaining countries from the initial Trans-Pacific Partnership agreement finally agreed to go ahead with the deal without the US, at the annual meeting of the World Economic Forum in Davos, Switzerland.

The deal reduces the scope for controversial investor-state dispute settlements, where foreign investors can bypass national courts and sue governments for compensation for harming their investments. It introduces stronger safeguards to protect the governments’ right to regulate in the public interest and prevent unwarranted claims.

Read more:
Australia’s tenuous place in the new global economy

Despite earlier union fears of the impact for Australian workers, the CPTPP does not regulate the movement of workers. It only has minor changes to domestic labour rights and practices.

The new agreement is more of an umbrella framework for separate yet coordinated bilateral deals. In fact, Australia’s Trade Minister Steven Ciobo said:

The agreement will deliver 18 new free trade agreements between the CPTPP parties. For Australia that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei.

It means a speedier process for reducing import barriers on key Australian products, such as beef, lamb, seafood, cheese, wine and cotton wool.

It also promises less competition for Australian services exports, encouraging other governments to look to use Australian services and reducing the regulations of state-owned enterprises.

Read more:
The Trans-Pacific Partnership is back: experts respond

Australia now also has new bilateral trade deals with Canada and Mexico as part and parcel of the new agreement. This could be worth a lot to the Australian economy if it were to fill commercial gaps created by potential trade battles within North America and between the US and China.

What’s in and out of the new agreement

The new CPTPP rose from the ashes of the old agreement because of the inclusion of a list of 20 suspended provisions on matters that were of interest for the US. These would be revived in the event of a US comeback.

These suspended provisions involved substantial changes in areas like investment, public procurement, intellectual property rights and transparency. With the freezing of further copyright restrictions and the provisions on investor-state dispute settlements, these suspensions appear to re-balance the agreement in favour of Australian governments and consumers.

In fact, the scope of investor-state dispute settlements are narrower in the CPTPP, because foreign private companies who enter into an investment contract with the Australian government will not be able to use it if there is a dispute about that contract. The broader safeguards in the agreement make sure that the Australian government cannot be sued for measures related to public education, health and other social services.

Read more:
Why developing countries are dumping investment treaties

The one part of the agreement relating to the temporary entry for business people is rather limited in scope and does not have the potential to impact on low-skilled or struggling categories of Australian workers. In fact, it only commits Australia to providing temporary entry (from three months, up to two years) of only five generic categories of CPTPP workers. These include occupations like installers and servicers, intra-corporate transferees, independent executives, and contractual service suppliers.

The above categories squarely match the shortages in the Australian labour market, according to the Lists of Eligible Skilled Occupation of the Home Affairs Department.

Bits of the original agreement are still included in the CPTPP such as tariffs schedules that slash custom duties on 95% of trade in goods. But this was the easy part of the deal.

Before the deal is signed

The new agreement will be formally signed in Chile on March 8 2018, and will enter into force as soon as at least six members ratify it. This will probably happen later in the year or in early 2019.

The geopolitical symbolism of this timing is poignant. The CPTPP is coming out just as Donald Trump raises the temperature in the China trade battle by introducing new tariffs. It also runs alongside China’s attempts to finalise a much bigger regional trade agreement, the 16-nation Regional Comprehensive Economic Partnership.

Even though substantially the CPTPP is only a TPP-lite at best, it still puts considerable pressure on the US to come out of Trump’s protectionist corner.

It spells out the geopolitical consequences of the US trade policy switch, namely that the Asia Pacific countries are willing to either form a more independent bloc or align more closely with Chinese interests.

The ConversationWill this be enough to convince the Trump administration to reverse its course on global trade? At present, this seems highly unlikely. To bet on the second marriage of the US with transpacific multilateral trade would be a triumph of hope over experience.

Giovanni Di Lieto, Lecturer, Bachelor of International Business, Monash Business School, Monash University

This article was originally published on The Conversation. Read the original article.

The Trans-Pacific Partnership is back: experts respond

Deborah Gleeson, La Trobe University; Belinda Townsend, Australian National University; Kimberlee Weatherall, University of Sydney; Pat Ranald, University of Sydney, and Peter Robertson, University of Western Australia

The latest incarnation of the Trans-Pacific Partnership (TPP) is said to have “fewer bad bits”. But as our experts point out below, there’s still a great deal wrong with, or missing from, the regional free trade agreement.

The new TPP is informally known as the TPP11, after the United States pulled out of the original 12-country bloc earlier this year.

While the agreement has not yet been finalised, the 11 trade ministers have released a statement saying that the “core elements” have been agreed.

Twenty provisions from the original TPP have been suspended, but there are still a few areas to be worked out, including those relating to state-owned enterprises.

The Conversation’s experts respond:

Peter Robertson, Dean and Professor, University of Western Australia Business School:

Trade deals such as the TPP11 that include some countries and exclude others are inherently flawed mechanisms for extracting the most benefit from trade (also known as “gains from trade”).

All trade deals are about “swings and roundabouts”. That is, a redistribution of income from producers to consumers and governments. For example, when we remove tariffs on automobiles, then consumers gain but producers and their employees lose. When we impose a tariff on agriculture, consumers lose by paying higher prices at the grocery store and producers gain.

Under reasonable circumstances there is reason to believe that the sum of the gains exceeds the losses. But when you add up all the potential winners and losers from the TPP11, from an Australian perspective you end up with pretty much zero. Or, to be more precise, an 0.5% increase in GDP by 2030.

The gains are so small because the TPP11 diverts attention away from big trade issues like agricultural protectionism in Europe and the US, and focuses on smaller issues among a few countries who have mostly already liberalised every sector that is possible given the current political willpower.

From a global perspective the TPP11 could even have negative effects because it encourages us to buy from member countries, and not from outsider countries who may in fact have better and cheaper products.

The biggest winners in the world from current protectionist arrangements are the agricultural producers in Japan, the US and Europe where agricultural protection remains extreme and untouchable politically. We need trade agreements that focus on the big issues, not the small ones.

Pat Ranald, Research Associate, University of Sydney:

The TPP11 retains all provisions on Investor-State Dispute Settlement (ISDS) from the previous TPP, except for two narrow improvements which only apply if investors have specific contracts or authorisations with governments.

Despite claimed “safeguards”, ISDS enables all other foreign investors to bypass national courts and sue governments for compensation in international tribunals if they can argue that changes in domestic laws or policies harm their investment. The cases are tried by tribunals composed of investment lawyers who can continue to represent clients. There is no independent judiciary, and no precedents or appeals to ensure consistency of decisions.

Many of the 817 known cases involve public interest laws. Swiss Pharmaceutical company Novartis is suing the Colombian government over the plans to reduce prices on a patented treatment for leukaemia. The US firm Bilcon won its claim against the Canadian government for US$101 million after a provincial government refused to approve a quarry in an ecologically sensitive area. The French company Veolia is claiming compensation from the Egyptian government for a rise in the minimum wage.

Even if a government wins a case, defending it can take years and cost millions. The US tobacco firm Philip Morris shifted some assets to Hong Kong and used ISDS in an Australia-Hong Kong investment agreement to claim billions in compensation for Australia’s plain packaging law. It took more than four years and reportedly cost A$50 million in legal fees for the tribunal to decide that Philip Morris was not a Hong Kong company.

ISDS gives additional legal rights to global corporations to sue governments in unfair international tribunals, undermining democratic regulation in the public interest. Trade agreements should not increase corporate power at the expense of communities.

Kimberlee Weatherall, Professor and Associate Dean (Research),
The University of Sydney Law School

The TPP11 suspends the most controversial copyright provisions. But not everything controversial is out.

The TPP11 will no longer extend the term of copyright to 70 years after the author’s death – a big deal for Canada and New Zealand where copyright lasts 50 years after death.

It also suspends the anti-circumvention provisions, which means the TPP11 won’t make avoiding access measures (for example, technology that locks your ebooks or movies to a particular device) a crime. Although there’s a sting in the tail for Australia here – the TPP text on anti-circumvention is less restrictive than our free trade agreement with the US, and so we lose the benefit of that extra flexibility.

The incredibly complex safe harbours provisions are also suspended – this leaves members with more flexibility to adjust copyright in the digital environment (but also potentially means no protection for online service providers for the acts of their infringing customers).

Also suspended is a funny little footnote that might have given TPP11 authors a claim on payments from some cultural funds (such as Canada’s). However, a provision that encourages copyright to be balanced is not suspended, so that’s good news.

But there is still a cornucopia of enforcement procedures and remedies, and very broad criminal liability for infringing copyright – including liability for “aiding and abetting” others’ infringement. There are broad provisions that allow right holders to claim any equipment used to infringe copyright.

And, beyond copyright, the ministers haven’t suspended a controversial provision (a first of its kind internationally) on the theft of trade secrets, and they’ve retained some key provisions on geographical indications and trade marks that are going to complicate efforts by countries in the region to use geographical indications (such as “Manuka honey”) to develop local artisan and agricultural communities.

So while I’m happy to celebrate some realisation that the intellectual property chapter of the original TPP had serious problems, there is still quite a lot to dislike about what remains.

Deborah Gleeson, Senior Lecturer in Public Health, La Trobe University,
Belinda Townsend, Research Fellow, Australian National University:

The list of 20 items ministers have agreed will be suspended in the re-branded TPP includes several of the intellectual property rules for pharmaceuticals that were demanded by the US but deeply unpopular amongst the other TPP countries. These rules would have made medicines less affordable in the Asia-Pacific region.

Importantly for Australia, the provisions specifically targeting biologic medicines were on the list of suspended items. Our recent study found that this expensive class of drugs cost Australian taxpayers more than A$2.2 billion in 2015-16. Suspending the biologics rules means fewer barriers to making lower-cost treatments for conditions like cancer and rheumatoid arthritis available – at least for now.

Also suspended were rules requiring countries to provide patents for new uses, methods and processes of using existing products; extensions to patent terms; and what is known as “data exclusivity” – monopolies on clinical trial data submitted to regulatory agencies like the Therapeutic Goods Administration. These provisions would have primarily impacted developing countries, delaying access to generic medicines. They would also have cemented existing monopolies on new medicines in developed countries, including Australia – making it more difficult to reform our patent laws in future.

There is no doubt that suspension of these rules is a positive development. But simply putting them on ice for later implementation if the US re-joins the accord could just mean delaying their effects until a later time.

Despite the suspension of these specific items, there remain other provisions in the intellectual property chapter that could reduce access to medicines in the region. A better option than freezing a limited list of selected provisions would be to remove, or at least suspend, the whole intellectual property chapter.

There are many other parts of the TPP that could affect health, which have not been suspended or renegotiated. One example is the TPP’s alcohol labelling rules, which remain unchanged. These may create difficulties for countries wanting to mandate effective health warnings or other types of health information on alcohol containers.

Worse, there only seems to be some minor tinkering around the edges of the investment chapter being considered. The changes don’t appear to affect the chances that claims could be brought by corporations against governments over health and medicines policies. It’s a shame the TPP11’s negotiators haven’t taken the opportunity to exempt all health policies from potential investor-state disputes – tobacco control measures remain the only health policies that countries can elect to explicitly exclude.

There is still time for a more comprehensive reassessment of the TPP, including its likely impact on health and human rights: the agreement has not yet been finalised.

The ConversationSuspending a small number of the worst provisions doesn’t mean an agreement that is good for health.

Deborah Gleeson, Senior Lecturer in Public Health, La Trobe University; Belinda Townsend, Research Fellow, NHMRC Centre for Research Excellence in the Social Determinants of Health Equity, School of Regulation and Global Governance, Australian National University; Kimberlee Weatherall, Professor and Associate Dean (Research) The University of Sydney Law School, University of Sydney; Pat Ranald, Research Associate, University of Sydney, and Peter Robertson, Professor, University of Western Australia

This article was originally published on The Conversation. Read the original article.