TPP11: Unpacking the Suspended Provisions

The primary difference between the original 12 party Trans-Pacific Partnership (TPP) and the new 11 party version is a set of “suspended” provisions.  This is a list of 20 items that officials from the member countries have agreed to remove temporarily from the free trade agreement texts. These suspended provisions (found in Annex 2 of the CPTPP) are meant to be reinstated at some future date.  In other words, these elements of the TPP may come back into the agreement as originally negotiated.  Between now and then, member governments are not required to implement these rules at the domestic level. Many commentators with an unclear understanding of the TPP have assumed that these suspended provisions are a significant proportion of the document.  The removal of both the United States and the 20 elements, therefore, has been said to make the TPP11 less relevant. Neither is the case.  The TPP11 (or the CPTPP) is extremely important for companies and continues to set the benchmark for future trade agreements globally. 

In other words, all of the existing annexes from the TPP agreement remain unchanged.  All tariff cuts will take place on schedule as planned.  All services open as intended.  All investment is opened as indicated for TPP11 firms.  All procurement access that was originally scheduled will continue. Furthermore, there are zero changes to the legal texts at all (beyond removing references to the United States) in the original chapters for 1-4 (definitions, market access for goods, rules of origin, textiles), 6-8 (trade remedies, sanitary and phytosanitary, technical barriers to trade), 12 (temporary movement of business persons), 14 (electronic commerce), 16-17 (competition, state owned enterprises), 19 (labor), 21-25 (cooperation and capacity building, competitiveness and business facilitation, development, SMEs, regulatory coherence), 28 (dispute settlement).

CPTPP or TPP11 for Trade Nerds

Broken down, the new elements are the inclusion of the suspended bits (discussed more below), the revised entry into force (necessary after the US pulled out), a new section on withdrawal (the necessity of which was made crystal clear after the US pulled out), a new section on accession (since the old one was too vague anyway), a potentially interesting article 6 that seems to review the whole agreement in the future, and article 7 that copies across all of the original commitments and texts from TPP12.  What this means in practice is that the CPTPP or TPP11 has identical schedules and commitments for members to TPP12.  Everyone should start pulling out their TPP12 materials and reviewing documents to refresh memories now.  Firms need to prepare for entry into force which is coming up fast.

It's Alive and Kicking: Preparing for TPP11 in 2018

Proving once again that good ideas cannot be killed, the Trans-Pacific Partnership (TPP) is ready to move into force as soon as next year. Companies had largely given up on the TPP after the withdrawal of the United States.  Now firms will need to scramble to figure out how the agreement matters to their business and what steps they should take to maximize the opportunities and minimize the risks arising from the most important trade agreement in decades.  What makes the TPP so relevant is the deep, interlocking nature of the commitments.  Unlike other free trade agreements (FTAs), the TPP doesn’t simply open up trade in some goods or partially address services or investment.  It manages to better reflect the way that firms actually structure business operations today.  It will allow companies to more seamlessly move goods, services, and investments between and across TPP member markets.  This benefits not just the biggest firms that have always had advantages of scale, but smaller firms that often struggle to sort out complex rules in trade deals. 

Foiled Again: China Fails to Gain Market Economy Status in the US

On the eve of US President Donald Trump’s visit to China, the trade waters have been stirred up further by a pair of rulings issued by the US Department of Commerce late on Friday, October 27.  In a 205-page memo, Commerce officials argued that China remains a non-market economy (NME) because “it does not operate sufficiently on market principles to permit the use of Chinese prices and costs for the purposes of the Department’s antidumping analysis.”  This determination was promptly employed in a case over aluminum foil, where a preliminary determination calculated that Chinese companies will need to pay antidumping duties ranging from 97-162 percent.  The debate over China’s economic status has been long and fraught.  The crux of the issue, to simplify matters significantly, is really two-fold.  First, it is about practical consequences related to classification determinations.   Second, it is about issues of identity and obligations.

RCEP and Digital Services

Larger regional agreements, like RCEP, provide the size and scale in an agreement that can unleash new growth prospects.  To get there, however, requires officials, ministers and leaders to seize the chance and create something special.  RCEP has to address barriers to trade in services, for example.  Services are critically important to the economy of the future.  Even trade in goods requires that services be considered, since blockages on the movement of services across borders can fundamentally impede the growth of trade in physical products like manufactured goods and agricultural items.  Increasingly, services will be provided digitally.  One such example is the rise of online travel agencies (OTAs.)  These service providers represent a new dimension to travel and tourism, as they match up customers seeking things like accommodation, rental cars, or local experiences like cooking classes or photography tours with local providers and vendors of such services.