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Tweet[IWS] CRS: THE TRANS-PACIFIC PARTNERSHIP (TPP) NEGOTIATIONS AND ISSUES FOR CONGRESS [30 January 2015]
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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
January 30, 2015
http://www.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.
The TPP negotiations have been ongoing for nearly five years and may be concluded in the near
term, although several challenging issues remain unresolved. These issues are likely the most
sensitive for negotiating parties and may require political-level decisions to reach final
agreement. The negotiating dynamic itself is complex. For example, decisions on key market
access issues on auto, 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) ..................................................................................... 28
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 ........................................................................... 43
Small- and Medium-Sized Enterprises .................................................................................... 44
Institutional Issues ......................................................................................................................... 45
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 .............................................................................. 51
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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