TIPPING TTIP OVER THE EDGE

Florence Chong's picture

IF a week-long cloister of Trade Ministers from 12 countries in July can close off a deal on the Trans-Pacific Partnership (TPP), signing of a US-EU pact, the Transatlantic Trade and Investment Partnership (TTIP), may not be far behind . . .

TRADE MINISTER from 12 countries, including the United States, Australia and Japan, are due to meet in mid-July at an as-yet undisclosed location in the US for discussions that are likely to extend for a week.
 This will be the final meeting hopefully to conclude negotiations on the proposed Trans-Pacific Partnership (TPP) trade agreement. As Andrew Robb, Australia’s Trade Minister, declared in June:  “We are literally one week of negotiation away from completing this extraordinary deal.”
It will indeed be a huge deal once concluded — and, more importantly, implemented.The TPP includes two of three of the world’s biggest economies — the US and Japan — and collectively, the TPP economies account for some 40 per cent of the world’s economy. Other participating countries are Singapore, Brunei, Chile, New Zealand, Mexico, Malaysia, Australia, Vietnam, Chile and Peru.
 But the last hurdles in trade agreements are always the highest to jump because they cover mostly politically-sensitive industries.
Japanese farmers are currently demonstrating in a last ditch fight to protect their agriculture industry, namely rice.
Canada has yet to table its offer in the dairy sector, while Australia remains concerned over pharmaceutical company demands for access to Government health insurance and so on.
On agriculture, Australian sugar growers are threatening to block the TPP because they will not benefit from the deal. Sugar was also left out of the US-Australia Free Trade Agreement, which led at the time, to criticism from the WTO of an agreement it said was contrary to WTO principles of comprehensive market openings.
 The US wants better access to the Japanese car and agricultural markets through the TPP. Negotiators have also yet to agree on issues over intellectual property, and the question of protection for certain drugs from competition from generic products is yet to be answered. Then there is the tricky question of what constitutes a State-owned enterprise (SoE) and what rules should be developed to cover such organisations.
 Given the political will which now seems evident in various capitals, negotiators could finally clear the last obstacles in July, paving the way for the world’s largest trade deal since the conclusion of the Uruguay Round in 1994. Getting it ratified in the Parliaments of individual countries, however, will be another challenge, as domestic opponents to the TPP will not let up until it is all over.
This is especially true in the US, where unions working with anti-trade Democrats came close to killing the deal. Many anti-Obama commentators gleefully pontificated on the end of Obama’s dream  of clinching the TPP deal when his own party let him down in early June — denying him fast-track authority, known as Trade Promotion Authority, to conclude negotiations.
 After a fortnight of working with pro-trade Republicans, the Obama team regrouped, bypassing some of the most vocal Democrat opponents to get the Bill passed. The Republican-controlled Senate voted 60-37 to close debate on the legislation.
 But the TPP is still not home and hosed for the US. The TPA provides for rest periods, totalling four months after TPP agreement is reached, before Presidential sign-off. That four months is also for the US Congress and the public to have a closer look.
Outstanding legislative matters in the US could also complicate a final deal. There are supporting Bills to the President’s fast track authority. On the Republican side, there is a Bill with a provision prohibiting any trade agreement from forcing action by the US on climate change. Provisions on easing of
immigration and visa rules have also yet to be debated.
 On the Democrat side, there is a trade
adjustment assistance programme, seeking to extend assistance for manufacturing workers, including those in service industries, displaced by the TPP.
 The Australian Government, too, will have a job selling the benefits of TPP. Arguments in Australia against the TPP are not dissimilar to the anti-globalisation push. Many perceive TPP in terms of job losses. So trade unions in particular are against further market opening.
 TPP is bigger than the North America Free Trade Agreement (NAFTA), signed off by Democrat President Bill Clinton in 1994, and second in scope and scale only to the Uruguay Round. The US has long maintained that the TPP will establish a set of “gold standard” trade rules for the 21st century.
 Washington claimed ownership of TPP negotiations — started by three small economies (Singapore, Brunei and New Zealand) along with Chile — when President Obama reoriented US foreign policy towards East Asia. Obama said TPP would provide the economic backbone of the US strategic pivot to Asia and the bid to maintain US leadership in the region.
 In geopolitical terms, TPP is seen as a counter to the rising influence of China, which has responded to TPP with its Regional Comprehensive Economic Partnership (RCEP) with ASEAN countries. Negotiations for RCEP, which has much weaker ambitions, are also due to conclude by the end of this year.
 US business leader and self-proclaimed voice of global business, Terry McGraw, Chairman of the Paris-based International Chamber of Commerce, had no doubt that the pro-trade lobbies would prevail in the US when he told ATI in Turin in June that a deal would be done in “six weeks”.
But multilateralist that he is, he added: “As exciting as that is, the TPP is about 12 countries.  And there are certain countries like Korea, Indonesia, and the Philippines which aren’t in it. They are going to be negatively impacted. We have to get them in there, so this is a starting point.”
Again, McGraw repeated his hope that, ultimately, the world will accept the need for a global — not a regional — trade deal. 
Indeed, some now hope that closure of the TPP may lead to signing of a US and European Union partnership, known as the Transatlantic Trade and Investment Partnership (TTIP). This is another hugely significant deal, but it will be equally complex given the diversity of Europe.
 
* Florence Chong is Editor of ATI Magazine.