Trans-Pacific Partnership Agreement A U.S. Perspective Stephen Kho Sally Laing Akin Gump Washington, D.C. President Barack Obama, center, takes part in the Trans-Pacific Partnership meeting at the APEC summit in Yokohama, Sunday, Nov. 14, 2010. (from www.salon.com)

TPP Participants: Overview Original Signatories: Brunei Chile Singapore New Zealand Negotiating (2008-2010): Australia Malaysia Peru Vietnam United States of America

TPP Participants: History of TPP Negotiations Trans-Pacific Strategic Economic Partnership was initiated by Singapore, New Zealand, and Chile in 2003 as a path to trade liberalization in the Asia-Pacific region. Brunei joined negotiations in 2005. The Trans-Pacific Strategic Economic Partnership (P-4) agreement was concluded in 2006. The United States joined the negotiations to conclude outstanding portions of the agreement (investment and financial services provisions) in March 2008. Other potential members (Australia, Peru, and Vietnam) joined shortly thereafter.

TPP Participants: Inclusion of Mexico and Canada Mexico and Canada officially joined the TPP negotiations on October 8 and 9 of this year, respectively. In September 2012, U.S. stakeholders expressed concerns about Mexico and Canada joining the TPP with regards to the following issues: Mexico Intellectual property rights protection Opening of investment and government procurement opportunities Greater market access for beef and poultry products Easing restrictive tax authority audits of textile and apparel products Potential conflict with US copyright proposal Canada Opening of the dairy sector Stronger protection for intellectual property rights Lowering investment barriers with U.S. companies

TPP Participants: Potential Future Participants Japan South Korea Indonesia Thailand Taiwan Colombia Costa Rica China?

TPP Negotiations: Overview The most recent round of talks was held from September 6-15, 2012 in Leesburg, Virginia. At a Global Services Summit panel in Washington, DC on September 19, New Zealand’s Trade Minister stated that about half of the 29 chapters are either almost finalized or contain controversial issues to be settled. The next round of talks will be held in Auckland, New Zealand on December 3-12, 2012. After the New Zealand round, TPP countries will gather in Mexico for an intercessional meeting on regulatory coherence and development. (Date to be determined)

TPP Negotiation: Goals The TPP is intended to be a “21st century agreement.” From the United States’ perspective it will: Strengthen and deepen trade and investment ties among its participants. Influence the emerging trade architecture in the Asia-Pacific region. Support strategic ties and relationships in the region, as part of the “pivot to Asia.”

TPP Negotiation: Goals

Contents of the Agreement: The Issues Cross Cutting Issues Market Access Trade in Services Government Procurement Sanitary and Phytosanitary Standards (“SPS”) Technical Barriers to Trade Intellectual Property Rights Because it is subject to a comprehensive and controversial confidentiality agreement, the authenticated TPP text is not available to the public. The TPP text is almost complete in some areas, but in others, further work is needed on specific, and often controversial, issues. Investment Rules of Origin Labor Environment Temporary Entry Trade Remedies Customs Cooperation and Capacity-building

Contents of the Agreement: Cross Cutting Issues The TPP will address new issues not covered or minimally covered by previous FTAs. These include: Regulatory Coherence: Reportedly a nonbinding chapter that encourages members to establish an internal regulatory entity, that focuses on (1) ensuring the consistency of regulations and (2) reviewing new regulatory measures under a cost-benefit analysis. State-Owned Enterprises: U.S. industry wants to ensure that SOEs do not impair market access or receive non-commercial financing or other advantages from governments. Vietnam, Singapore, and Australia are concerned about the requirements proposed by the U.S. in this chapter. Small- and Medium-Sized Enterprises: Nonbinding, and reportedly focusing on tackling SMEs informational problems, such as a lack of access to foreign tariff schedules and foreign import regulations.

Contents of the Agreement: Cross Cutting Issues E-Commerce: Intended to enhance the viability of the digital economy by reducing impediments affecting consumers and businesses that use e-commerce. Requires serious continued negotiations between the U.S., Australia and New Zealand, mostly related to privacy concerns. Competitiveness and Supply Chains: Business groups want the TPP to include its own chapter on supply chains in order to promote trade facilitation.

Contents of the Agreement: Market Access The TPP is intended to increase market access for all TPP countries to the markets of all other TPP countries. However, due to domestic sensitivities each TPP country has its own offensive and defensive concerns related to market access. These include: Dairy – New Zealand / Canada / USA Footwear - Vietnam Textiles & Apparel - Vietnam / USA Tobacco - USA Sugar – Australia / USA / Mexico

Contents of the Agreement: Trade in Services As a 21st Century trade agreement, the TPP focuses not only on the trade of goods, but also on the trade in services. Financial Services: Intended to improve transparency, non-discrimination, fair treatment of new financial services, investment protections, and dispute settlement related to financial services. Telecommunications: Intended to promote competiveness and access for telecommunications providers. Cross-Border Services: Intended to provide fair, open, and transparent markets for services trade, including services supplied electronically and by small- and medium-sized enterprises, while preserving the right of governments to regulate in the public interest.

Contents of the Agreement: Government Procurement Text will require TPP countries to conduct procurement operations in a fair, transparent, and non-discriminatory manner. TPP negotiators have agreed on the basic principles and are developing the specific obligations. The United States is focusing only on federal government procurement.

Contents of the Agreement: Sanitary and Phytosanitary Standards Text will contain a series of new commitments on science, transparency, regionalization, cooperation, and equivalence. USTR is pressing for TPP commitments that go beyond WTO rules. Trade groups have advocated for “fully enforceable” or binding upon on all TPP countries “WTO plus” commitments. However, in Leesburg, reports surfaced that Australia and the United States have decided to oppose enforceability.

Contents of the Agreement: Technical Barriers to Trade Text will promote existing rights and obligations under the World Trade Organization Agreement on Technical Barriers, as well as build stronger and more efficient TBT measures. United States tabled language that urges countries to set up a mechanism to facilitate coordination and review of new regulatory measures at the central government level. Reports state that text will reflect the WTO TBT Agreement with more explicit guidance in some areas – such as defining characteristics of international standards bodies.

Contents of the Agreement: Intellectual Property Rights Pharmaceuticals & Access to Medicines IPR related to pharmaceuticals is a controversial area which will need to balance the interest of pharmaceutical companies with national health care systems and consumers. The United States is advocating a proposal known as “Trade Enhancing Access to Medicine” which will provide mandatory 5-year period of data exclusivity, patent term restoration and patent linkage provisions. Drug pricing and reimbursement are also significant issues. Biologics Issues related to the length of biologics protection continue to percolate. The United States employs a 12 year period of biologic protection, but it is unclear what will or has been suggested during TPP negotiations.

Contents of the Agreement: Intellectual Property Rights Other Intellectual Property Rights Issues Internet Providers & Copyright Trade Secrets Geographic Indications

Contents of the Agreement: Investment Text will provide substantive legal protections for investors and investments of each TPP country in other TPP countries. U.S. hopes to promote the ability of U.S. companies to invest overseas while also providing such companies protection. Australia demands exclusion from the U.S.’s investor-state dispute settlement mechanism.

Contents of the Agreement: Rules of Origin TPP countries have agreed that the TPP rules of origin will be objective, transparent and predictable. In the U.S., sugar producers are expressing concerns that the TPP benefits may be used by major sugar producers outside of the Agreement if rules of origin provisions are insufficiently stringent. In textiles and apparel rules of origin, the United States proposed a yarn-forward rule, but such a rule would cut much of Vietnam’s apparel imports off from trade benefits.

Contents of the Agreement: Labor & Environment Text may include commitments on labor rights protection and mechanisms to ensure cooperation, coordination, and dialogue on labor issues of mutual concern. Controversial issues include whether labor rights commitments will be subject to dispute settlement provisions and whether requirements on minimum wage and the reduction of products made from child labor will be adopted. U.S. labor proposal tabled in late 2011 would require countries to enforce their own labor laws but also reflect the five fundamental labor in the 1998 International Labor Organization Declaration on Fundamental Principles and Rights at Work and its Follow-Up. Environment Text should include effective provisions on trade-related issues that would help to reinforce environmental protection. U.S. proposal places environmental obligations under the dispute settlement mechanism and contains commitments on conservation, but other countries find the extended protections too prescriptive.

Side Bar: What is the May 10th Agreement? On May 10, 2007, a bipartisan group of congressional leaders and the Bush Administration released a statement on agreed principles in four policy areas: Labor – requires acceptance and enforceability of International Labor Organizations 1998 Declaration on Fundamental Principles and Rights At Work; Environment protection – requires adhere to seven major multilateral environmental agreements; Intellectual property rights – agreements must include provisions related to patents and approval of pharmaceuticals for marketing; and Foreign investment – each of the FTAs to state that none of its provisions would accord foreign investors greater substantive rights in terms of foreign investment protection than are accorded U.S. investors in the United States. The principles were to be reflected in provisions in four U.S. FTAs—with Colombia, Panama, Peru, and South Korea and form the baseline of U.S. negotiations going forward.

Contents of the Agreement: Temporary Entry & Trade Remedies Provisions are designed to promote transparency and efficiency in the processing of applications for temporary entry. Text will likely include provisions on technical cooperation between TPP authorities and may include specific obligations related to business persons. Trade Remedies TPP countries will affirm their WTO rights and obligations for trade remedy measures including antidumping remedies, countervailing duty remedies, and safeguard actions.

Contents of the Agreement: Customs & Capacity-building TPP text will work to ensure that goods are released from customs as quickly as possible while preserving the ability of customs authorities to strictly enforce customs laws and regulations. U.S. supports text that would create an expedited customs process for reviewing shipments sent by express delivery separately from normal shipments while Australia believes this is unnecessary. United States has requested a “de minimis” level of two hundred dollars for express shipments in the customs chapter. Cooperation & Capacity-building Several cooperation and capacity building activities have already been implemented and additional activities are being planned to assist developing countries in achieving the objectives of the agreement.

TPP United States Political Issues Obama Administration's failure to ask Congress for Trade Promotion Authority (TPA expired in 2007) Senate Republicans’ dissatisfaction with the labor and environmental protection proposals of the TPP Civil society groups’ complaints regarding the confidentiality of the negotiation process Chief U.S. Negotiator Barbara Weisel speaks with a stakeholder at the TPP Stakeholder Engagement Event in San Diego, California (from http://www.ustr.gov/tpp). TPP protestors in New Zealand.

Side Bar: What is Trade Promotion Authority? Trade Promotion Authority (“TPA) (also called “fast track”) is a short cut for trade agreement approval in the United States. Generally, TPA is a statutory mechanism under which Congress Defines negotiating objectives and requirements in advance; Requires certain consultative procedures; and Authorizes the President to enter into trade agreements on tariff and nontariff barriers. If the President follows the statutory obligations, the Agreement will receive expedited consideration from Congress, including Expedited legislative procedures; Limited debate; No amendments; and An up or down vote. TPA preserves the constitutional role of Congress while bolstering the negotiating credibility of the Executive Branch.

Future Negotiations & Developments The 15th round of Negotiations will be held December 3-12 in Auckland, New Zealand. TPP officials from several countries have stated that the agreement will not be finalized at the end of 2012. Negotiations will continue into 2013. Thank you! Do you have any questions?