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[IWS] CRS: THE TRANS-PACIFIC PARTNERSHIP (TPP) NEGOTIATIONS AND ISSUES FOR CONGRESS [7 November 2014]

IWS Documented News Service

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Congressional Research Service (CRS)

 

The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress

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

Mark A. McMinimy , Analyst in Agricultural Policy

Brock R. Williams , Analyst in International Trade and Finance

November 7, 2014

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

[full-text, 59 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, Japan, 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 that aims to liberalize trade in nearly all

goods and services and include rules-based 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 nontariff

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 considering legislation to implement any resulting agreement.

 

In recent months, President Obama has discussed achieving some type of TPP outcome by the

upcoming APEC ministerial in early November 2014, but ongoing differences among negotiating

parties, particularly the United States and Japan, are reportedly making progress challenging.

Outstanding issues involving sensitivities for the participants are expected to require politicallevel

decisions to be made. The negotiating dynamic itself is complex: for example, decisions on

key market access issues on dairy, sugar, and textiles and apparel may depend on the outcome of

rules negotiations involving intellectual property rights or state-owned enterprises, among other

issues.

 

Over 20 chapters are under discussion in the negotiations. 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 regarding disciplines on intellectual property rights, trade in services, government

procurement, investment, rules of origin, competition, labor, and environment, among 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, may 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 restructuring and

reform of the economies of some participants. It also has the potential to spur economic growth in

the region.

 

As a leading trade policy initiative of the Obama Administration, the TPP serves several strategic

goals. It is a manifestation of the Administration’s “rebalance” to the Asia-Pacific, and if

concluded, may serve to shape the economic architecture of the region. It has the potential to

harmonize existing agreements with U.S. FTA partners, attract new participants, and establish

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 have emerged. 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. Different views exist regarding the appropriate

timing of potential TPA legislation relative to the possible conclusion of the TPP. Other issues

include whether the current chapters included in the agreement appropriately address

congressional trade policy concerns and how the potential agreement may impact the multilateral

trading system and other trade negotiations, including for a proposed U.S.-EU Trans-Atlantic

Trade and Investment Partnership (T-TIP) agreement.

 

Contents

Introduction ...................................................................................................................................... 1

The Evolution of the TPP ................................................................................................................ 1

Current Negotiating Status ........................................................................................................ 4

TPP in Strategic Context .................................................................................................................. 5

TPP and U.S. Trade Policy ........................................................................................................ 5

The TPP and the WTO ............................................................................................................... 6

The TPP and the “Rebalance” in the Asia-Pacific Region ........................................................ 7

The TPP and Other Asia-Pacific Trade Agreements .................................................................. 8

Economic Significance .................................................................................................................. 10

U.S.-TPP Trade and Investment .............................................................................................. 12

Core Negotiating Issues: Market Access ....................................................................................... 16

Market Access for Goods and Services ................................................................................... 16

Textiles, Apparel, and Footwear ........................................................................................ 17

Trade in Services ............................................................................................................... 17

Government Procurement ................................................................................................. 20

Agriculture ............................................................................................................................... 21

Market Access ................................................................................................................... 21

Agricultural Issues in Other TPP Chapters........................................................................ 24

Core Negotiating Issues: Rules ...................................................................................................... 28

Intellectual Property Rights (IPR) ..................................................................................... 29

Rules of Origin .................................................................................................................. 33

Technical Barriers to Trade ............................................................................................... 34

Transparency and Pricing of Health Care Technology and Pharmaceuticals .................... 34

Foreign Investment ............................................................................................................ 35

Competition Policies ......................................................................................................... 36

Trade Remedies ................................................................................................................. 37

Labor ................................................................................................................................. 37

Environment ...................................................................................................................... 39

E-Commerce and Data Flows ........................................................................................... 40

Customs and Trade Facilitation ......................................................................................... 41

New and Cross-Cutting Issues ....................................................................................................... 41

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

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

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

Small- and Medium-Sized Enterprises .................................................................................... 44

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

Secretariat ................................................................................................................................ 46

Dispute Settlement ................................................................................................................... 46

A “Living Agreement” ............................................................................................................. 47

The “Noodle Bowl” ................................................................................................................. 48

Issues for Congress ........................................................................................................................ 48

Negotiating a “Comprehensive, High-Standard” Agreement .................................................. 48

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

Negotiating Objectives ......................................................................................................... 49

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

Relationship with the Multilateral System .............................................................................. 52

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

Conclusion ..................................................................................................................................... 53

 

Figures

Figure 1. Trans-Pacific Partnership Countries ................................................................................. 2

Figure 2. Existing FTAs among TPP Countries ............................................................................... 9

Figure 3. U.S.-World, APEC, and TPP Goods Trade ..................................................................... 11

Figure 4. Largest U.S. FTAs—Goods ............................................................................................ 13

Figure 5. Largest U.S. FTAs—Services ......................................................................................... 14

Figure 6. Average MFN Applied Tariffs ........................................................................................ 16

 

Tables

Table 1. U.S. Goods Trade with TPP Countries, 2013 ................................................................... 14

Table 2. U.S. Private Services Trade with TPP Countries, 2013 ................................................... 15

Table 3. U.S. Foreign Direct Investment (FDI) with TPP Countries, 2013 ................................... 15

 

Contacts

Author Contact Information........................................................................................................... 54

Acknowledgments ......................................................................................................................... 54

 

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

 

 

 

 

 

 

 

 




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