The imposition of restrictions on the movement of information, particularly financial data or personal data, also risks changing the landscape. I could not have booked my hotels or paid for my car rental, if I had been unable to move my own data across borders. Yet governments are increasingly interested in stopping exactly these types of transactions. Not simply to keep me from traveling, of course, but a collateral impact of many poorly thought-through policies will be to hamper the freedom of consumers to operate globally and for firms to attract customers from anywhere. Even restrictions on the location of data servers could impact my ability to book hotels in Greece. It could easily drive up the costs of delivering services and make it too costly for some smaller firms, like tiny hotels in Arachova, to advertise on some sites.
The WTO at a Crossroads
Having agreements that may not apply to all members also makes using the final agreements trickier for companies. The main reason for negotiating trade rules in the first place is to create common practices for businesses to help reduce risk and uncertainty in the trade environment. However, as the WTO has gotten bigger and as some members have grown bolder in their obsession with using the consensus principle as a means for blocking all actions, the institution has clearly gotten bogged down. One way to move forward is to allow smaller groupings to proceed with issues that matter to them. This process is now, apparently, going to begin again at the WTO. First on the agenda is the start of a possible work program on electronic commerce, supported by about 70 members.
TPP11 and RCEP Compared: A Side-by-Side Update
November 2017: This is an updated version of an earlier post on Talking Trade, modified to reflect the TPP11 changes and the expansion of the agenda in RCEP. However, because RCEP, especially, remains under negotiation, the assessment should be viewed with some caution. For further discussion on how you can use or influence these agreements, please see us soon at the Asian Trade Centre.
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.