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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

The Trans-Pacific Partnership Negotiations and Issues for Congress

Ian F. Fergusson, Coordinator, Specialist in International Trade and Finance

William H. Cooper, Specialist in International Trade and Finance

Remy Jurenas, Specialist in Agricultural Policy

Brock R. Williams, Analyst in International Trade and Finance

January 24, 2013

http://www.fas.org/sgp/crs/row/R42694.pdf

[full-text, 60 pages]

 

Summary

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) being

negotiated among the United States, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New

Zealand, Peru, Singapore, and Vietnam. U.S. negotiators and others describe and envision the

TPP as a “comprehensive and high-standard” FTA, presumably because they hope it will

liberalize trade in nearly all goods and services and include commitments beyond those currently

established in the World Trade Organization (WTO). The broad outline of an agreement was

announced on the sidelines of the Asia-Pacific Economic Cooperation (APEC) ministerial in

November 2011 in Honolulu, HI. If concluded as envisioned, the TPP potentially could eliminate

tariff and non-tariff barriers to trade and investment among the parties and could serve as a

template for a future trade pact among APEC members and potentially other countries. Congress

has a direct interest in the negotiations, both through influencing U.S. negotiating positions with

the executive branch, and by passing legislation to implement any resulting agreement.

 

The 16th round of negotiations will take place in Singapore, between March 4 and 13, 2013.

Three negotiating rounds are scheduled this year prior to the October 2013 APEC summit in

Indonesia, the current target for reaching an agreement. For this deadline to be achieved,

outstanding negotiating positions may need to be tabled soon in order for political decisions to be

made. The negotiating dynamic itself is complex: decisions on key market access issues such as

dairy, sugar, and textiles and apparel may be dependent on the outcome of controversial rules

negotiations such as intellectual property rights or state-owned enterprises.

 

Canada and Mexico participated for the first time in the 15th round of negotiations in Auckland,

New Zealand in December 2012, after joining the talks in June 2012. Japan and the TPP partners

are conducting bilateral consultations on its possible entrance as well. In addition, Thailand

formally expressed its interest in joining the negotiations during President Obama’s trip to the

country in November 2012.

 

The TPP originally grew out of an FTA among Brunei, Chile, New Zealand, and Singapore,

which came into force in 2006. Fifteen rounds of negotiations have occurred since the beginning

of formal talks in 2010. In addition to negotiations on new trade rules among all the parties, the

talks include U.S. market access negotiations—seeking removal of quotas and tariffs on traded

products—with New Zealand, Brunei, Malaysia, and Vietnam as well as market access

negotiations among other parties. The United States has FTAs in force with Chile, Singapore,

Australia, Peru, and with North American Free Trade Agreement (NAFTA) partners Canada and

Mexico, although new disciplines may be negotiated in the course of the talks covering issues

beyond those in the existing FTAs.

 

The TPP serves several strategic goals in U.S. trade policy. First, it is the leading trade policy

initiative of the Obama Administration, and is a manifestation of the Administration’s “pivot” to

Asia. It provides both a new set of trade negotiations following the implementation of the

bilateral FTAs with Colombia, Panama, and South Korea and an alternative venue to the stalled

Doha Development Round of multilateral trade negotiations under the WTO. If concluded, it may

serve to shape the economic architecture of the Asia-Pacific region by harmonizing existing

agreements with U.S. FTA partners, attracting new participants, and establishing regional rules on

new policy issues facing the global economy—possibly providing impetus to future multilateral

liberalization under the WTO.

 

The 11 countries that make up the TPP negotiating partners include advanced industrialized,

middle income, and developing economies. While new market access opportunities exist among

the participants with whom the United States presently does not have FTAs, the greater value of

the agreement to the United States may be setting a trade policy template covering issues it deems

important and which can be adopted throughout the Asia-Pacific region, and possibly beyond.

 

Twenty-nine chapters in the agreement are under discussion. Aside from market access

negotiations in goods, services, and agriculture, negotiations are being conducted on intellectual

property rights, services, government procurement, investment, rules of origin, competition,

labor, and environmental standards and other disciplines. In many cases, the rules being

negotiated are more rigorous than comparable rules found in the WTO’s Uruguay Round

Agreement. Some topics, such as state-owned enterprises, regulatory coherence, and supply chain

competitiveness, break new ground in FTA negotiations.

 

As the negotiations proceed, a number of issues important to Congress are emerging. One is

whether the United States can balance its vision of creating a “comprehensive and high standard”

agreement with a large and expanding group of countries, while not insisting on terms that other

countries will reject. Related to this may be what concessions the United States is willing to make

to achieve a “comprehensive and high-standard” agreement overall. Another issue is how

Congress will consider the TPP, if concluded. The present negotiations are not being conducted

under the auspices of formal trade promotion authority (TPA)—the latest TPA expired on July 1,

2007—although the Administration informally is following the procedures of the former TPA. If

TPP implementing legislation is brought to Congress, TPA may need to be considered if the

legislation is not to be subject to potentially debilitating amendments or rejection. Finally,

Congress may seek to weigh in on the addition of new members to the negotiations, before or

after the negotiations conclude.

 

Contents

Introduction ...................................................................................................................................... 2

The Evolution of the TPP ................................................................................................................ 3

The TPP in Context .......................................................................................................................... 3

The TPP and U.S. Trade Policy ................................................................................................. 4

The TPP and Other Asia-Pacific Trade Agreements .................................................................. 4

The TPP and the WTO ............................................................................................................... 7

The TPP and the “Pivot” in the Asia-Pacific Region ................................................................. 8

U.S. Economic and Trade Relations with TPP Countries ................................................................ 9

U.S.-TPP Trade—Aggregate Overview .................................................................................. 10

U.S.-TPP Trade—Bilateral Trends .......................................................................................... 11

Australia ............................................................................................................................ 12

Brunei ................................................................................................................................ 12

Canada ............................................................................................................................... 13

Chile .................................................................................................................................. 13

Malaysia ............................................................................................................................ 14

Mexico ............................................................................................................................... 14

New Zealand ..................................................................................................................... 15

Peru ................................................................................................................................... 15

Singapore ........................................................................................................................... 16

Vietnam ............................................................................................................................. 16

Core Negotiating Issues: Market Access ....................................................................................... 18

Market Access for Goods and Services ................................................................................... 18

Textiles, Apparel, and Footwear ........................................................................................ 18

Trade in Services ............................................................................................................... 19

Government Procurement ................................................................................................. 21

Agriculture ............................................................................................................................... 22

Market Access ................................................................................................................... 22

Agricultural Issues in Other TPP Chapters........................................................................ 27

Core Negotiating Issues: Rules ...................................................................................................... 31

Intellectual Property Rights (IPR) ..................................................................................... 31

Rules of Origin .................................................................................................................. 35

Technical Barriers to Trade ............................................................................................... 36

Transparency in Health Care Technology and Pharmaceuticals ....................................... 36

Foreign Investment ............................................................................................................ 37

Competition Policies ......................................................................................................... 38

Trade Remedies ................................................................................................................. 38

Labor ................................................................................................................................. 39

Environment ...................................................................................................................... 40

Horizontal and Cross-Cutting Issues ............................................................................................. 41

Regulatory Coherence ............................................................................................................. 41

State-Owned Enterprises ......................................................................................................... 42

E-Commerce ............................................................................................................................ 44

Competitiveness and Supply Chains ....................................................................................... 44

Small- and Medium-Sized Enterprises .................................................................................... 45

Institutional Issues ......................................................................................................................... 46

Secretariat ................................................................................................................................ 47

Dispute Settlement ................................................................................................................... 47

A “Living Agreement” ............................................................................................................. 48

Japan .................................................................................................................................. 49

The “Noodle Bowl” ................................................................................................................. 49

Issues for Congress ........................................................................................................................ 50

Negotiating a Comprehensive, High-Standard Agreement...................................................... 50

The Role of Trade Promotion Authority (TPA) and Congressional Trade Negotiating

Objectives ............................................................................................................................. 50

Institutional Issues ................................................................................................................... 51

Relationship with the Multilateral System .............................................................................. 51

The Potential Impact of the TPP on U.S. Trade Policy ........................................................... 52

Conclusion ..................................................................................................................................... 52

 

Figures

Figure 1. Trans-Pacific Partnership Countries ................................................................................. 1

Figure 2. Existing FTAs among TPP Countries ............................................................................... 6

Figure 3. U.S.-World, APEC, and TPP Goods Trade ..................................................................... 10

Figure 4. U.S. Goods Trade with Largest Current and Potential FTA Partners ............................ 11

Figure 5. U.S. Services Trade with Largest Current and Potential FTA Partners ......................... 11

Figure 6. Average MFN Applied Tariffs ........................................................................................ 18

 

Tables

Table 1. U.S. Agricultural Trade with TPP Countries and World, 2011 ........................................ 23

Table A-1. U.S. Goods Trade with TPP Countries, 2011 ............................................................... 54

Table A-2. U.S. Private Services Trade with TPP Members, 2010 ................................................ 54

 

Appendixes

Appendix. ....................................................................................................................................... 54

 

Contacts

Author Contact Information........................................................................................................... 55

 

 

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