Fortunately, in the EU-Singapore FTA ruling, the Court took a relatively narrow perspective. It said that the EU had the authority (or “competence”) to negotiate and approve trade agreements on all topics except a very limited slice of investment (basically portfolio investment) and investor protection. These two issues will need to be approved by the member states. While this approval is being sought for EU-Singapore, nearly all of the FTA can begin. The agreement always had imagined a lengthy approval process, so negotiators planned for a provisional entry into force clause that can now be activated for all aspects of the agreement that fall under EU competence. In practice, this means that 95% or more of the deal will start. Again—for firms, this means the entire EU-Singapore FTA agreement except for commitments on portfolio investment promises and the elements of Chapter 9 on investment called the investor-state dispute settlement (ISDS) will be starting shortly.
The trade ministers from the 11 Trans-Pacific Partnership (TPP) countries will be gathering this weekend in Hanoi to discuss bringing the agreement into force. The Asian Trade Centre and APL Logistics have created a new booklet to highlight some of the specific market access benefits for companies. To see what the TPP with 11 parties delivers in wide range of products, we highlight seafood, wine, plastics, cosmetics and soap, shampoo, wood, furniture, iron and steel and some footwear and textile categories. The product categories were chosen to illustrate the range of different market access commitments made by TPP11 members. Many of these items show tariff cuts from as high as 40% to zero. The TPP continues to offer substantial market access benefits to participating member countries. Firms that operate in and across the TPP will face fewer tariff barriers with lower rates as quickly as the first day of the agreement.
Since work is likely to continue towards solving the final row of the puzzle later, what matters is locking in progress in cracking most of the solution. Getting the final row done feels very satisfying, but more critical is working out how to get the lion’s share of the rows into place. This is true, even if it turns out that the final rows can’t be slotted into place using the existing directions for solving the puzzle. It will still push forward trade across Asia in ways that have not been tried in the region before and deliver economic benefits to companies and consumers. Getting to the end, however, remains a challenging goal. Solving a “normal” Rubik’s cube with four sides is hard enough. Completing one with 16 sides is testing the patience and negotiating skills of everyone involved.
Trade agreements, Ross should certainly understand, are also about much more than just tariff reductions. The best deals cover a wide range of topics of critical importance to businesses and consumers. Creating the right frameworks for trade helps trigger the local growth that communities near the rail lines in India experienced in the 1800s. A good agreement should be the catalyst for domestic level changes necessary to support better integration and sustainable growth. Sensible policies create a mutually reinforcing cycle. Ross has it exactly backwards. It is precisely because the United States has been open and prepared to embrace global networks that it has become so competitive. No one wants to build a railroad to nowhere. Trains only work when they connect to desirable destinations for passengers and cargo.
In Asia, especially, many people are also puzzled about how dumping is determined. After all, costs in this region are much lower than costs in North America. If you are just comparing costs of production, Asia could be found “guilty” all the time of dumping. Ah—this gets to an interesting problem with trade remedies. The methods used for determining “guilt” are, indeed, a major issue. When the US argues that it will engage in tougher enforcement, part of what it means is that it will more aggressively pursue trade remedies. Officials will crack down on firms assumed to be dumping stuff into the American market. Expect to hear a lot more about AD and CVD in the coming weeks and months, including more new and novel ways to interpret trade remedies with potentially serious implications for firms.