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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

August 21, 2013

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

[full-text, 64 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. On March 15, 2013, Japanese Prime Minister Shinzo Abe

announced that Japan would seek to participate in the TPP negotiations. On April 24, 2013, the

Obama Administration gave Congress notice of its intent to negotiate with Japan in the TPP, and

Japan participated for the first time in the round of negotiations in Malaysia during late July 2013.

U.S. negotiators and others describe and envision the TPP as a “comprehensive and highstandard”

FTA that aims to 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 18th round of negotiations concluded in Kota Kinabalu, Malaysia on July 24, 2013, and the

19th round is scheduled to be held in Bandar Seri Begawan, Brunei on August 23-30. The current

goal is to reach an agreement by the end of 2013. 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.

 

Twenty-nine chapters in the agreement are under discussion. The United States is negotiating

market access for goods, services, and agriculture with countries with which it does not currently

have FTAs: Brunei, Japan, Malaysia, New Zealand, and Vietnam. Negotiations are also being

conducted on disciplines to intellectual property rights, trade in services, government

procurement, investment, rules of origin, competition, labor, and environmental standards and

other issues. In many cases, the rules being negotiated are intended to be more rigorous than

comparable rules found in the WTO. Some topics, such as state-owned enterprises, regulatory

coherence, and supply chain competitiveness, break new ground in FTA negotiations. As the

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

income, and developing economies, the TPP, if implemented, may involve substantial

restructuring of the economies of some participants.

 

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. 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.

 

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. 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 .......................................................................................................................... 4

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

The TPP and Other Asia-Pacific Trade Agreements .................................................................. 5

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

The TPP and the “Rebalance” in the Asia-Pacific Region ........................................................ 9

U.S.-TPP Economic and Trade Relations ........................................................................................ 9

U.S.-TPP Trade—Aggregate Overview .................................................................................. 11

U.S.-TPP Trade—Bilateral Trends .......................................................................................... 12

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

Brunei ................................................................................................................................ 13

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

Chile .................................................................................................................................. 14

Japan .................................................................................................................................. 14

Malaysia ............................................................................................................................ 16

Mexico ............................................................................................................................... 17

New Zealand ..................................................................................................................... 17

Peru ................................................................................................................................... 18

Singapore ........................................................................................................................... 18

Vietnam ............................................................................................................................. 19

Core Negotiating Issues: Market Access ....................................................................................... 21

Market Access for Goods and Services ................................................................................... 21

Textiles, Apparel, and Footwear ........................................................................................ 21

Trade in Services ............................................................................................................... 22

Government Procurement ................................................................................................. 24

Agriculture ............................................................................................................................... 25

Market Access ................................................................................................................... 26

Agricultural Issues in Other TPP Chapters........................................................................ 30

Core Negotiating Issues: Rules ...................................................................................................... 35

Intellectual Property Rights (IPR) ..................................................................................... 35

Rules of Origin .................................................................................................................. 39

Technical Barriers to Trade ............................................................................................... 40

Transparency in Health Care Technology and Pharmaceuticals ....................................... 41

Foreign Investment ............................................................................................................ 41

Competition Policies ......................................................................................................... 42

Trade Remedies ................................................................................................................. 43

Labor ................................................................................................................................. 43

Environment ...................................................................................................................... 45

New and Cross-Cutting Issues ....................................................................................................... 46

Regulatory Coherence ............................................................................................................. 46

State-Owned Enterprises ......................................................................................................... 47

E-Commerce ............................................................................................................................ 48

Competitiveness and Supply Chains ....................................................................................... 49

Small- and Medium-Sized Enterprises .................................................................................... 50

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

Secretariat ................................................................................................................................ 51

Dispute Settlement ................................................................................................................... 52

A “Living Agreement” ............................................................................................................. 52

The “Noodle Bowl” ................................................................................................................. 53

Issues for Congress ........................................................................................................................ 54

Negotiating a Comprehensive, High-Standard Agreement...................................................... 54

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

Objectives ............................................................................................................................. 54

Institutional Issues ................................................................................................................... 55

Relationship with the Multilateral System .............................................................................. 55

The Potential Impact of the TPP on U.S. Trade Policy ........................................................... 56

Conclusion ..................................................................................................................................... 56

 

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. Largest U.S. FTA’s - Goods ............................................................................................ 11

Figure 5. Largest U.S. FTAs - Services ......................................................................................... 12

Figure 6. Average MFN Applied Tariffs ........................................................................................ 21

 

Tables

Table 1. U.S. Agricultural Trade with TPP Countries and World, 2012 ........................................ 27

Table A-1. U.S. Goods Trade with TPP Countries, 2012 ............................................................... 58

Table A-2. U.S. Services Trade with TPP Countries, 2011 ............................................................ 58

 

Appendixes

Appendix. ....................................................................................................................................... 58

 

Contacts

Author Contact Information........................................................................................................... 59

 

 

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