NOVEMBER 7, 2015

Tightening Global Trade Rules

The United States wants to impose its rules on much of the world through the Trans-Pacific Partnership.

he Trans-Pacific Partnership (TPP) that has been agreed

to by 12 Pacific Rim countries will, when actualised, usher
in the worlds largest trade bloc. The free trade agreement
(FTA) that is the TPP began taking shape in 2008 when the United
States (US) agreed to engage with New Zealand, Singapore,
Chile and Brunei, the so-called P4 group of countries, which
had concluded the Trans-Pacific Strategic Economic Partnership
in 2006. However, it was not until late 2009 that US President
Barack Obama gave the green signal for the US to join the TPP
negotiations with the goal of shaping a regional agreement
that will have broad-based membership and the high standards
worthy of a 21st century trade agreement.
For six years, the TPP negotiations were held in absolute
secrecy. In an unprecedented move during the eighth round of
the negotiations that was held in Chicago in 2011, each participating country took an oath of secrecy stating that the substance of the negotiations, and other information exchanged in
the context of the negotiations... will be held in confidence, unless each participant involved in a communication subsequently
agrees to its release. This oath of secrecy seems to be holding
good even after the announcement of the formal conclusion of
the TPP negotiations on 5 October, for the details of the various
covered agreements of the TPP are yet to be revealed publicly.
The TPP was negotiated with the aim of comprehensively
liberalising trade in goods and services and to have rules, including behind-the-border measures, that the members of the
grouping would be required to adopt, rules that are well beyond
those established by the World Trade Organization (WTO). One
of the more explicit objectives of the TPP is to establish product
and process standards that are increasingly becoming important
for regulating market access in a world where tariffs are becoming
pass. These product and process standards, based essentially
on those that prevail in the US, could eventually provide the
template for the making of trade rules under the aegis of the WTO.
At the same time, the TPP introduces regimes for the protection
of intellectual property rights (IPRs) and investment, the provisions which require the member-countries to meet the most
onerous commitments ever to have been applied in these areas.
The US trade administration has not shied away from admitting
that the TPP is a critical trade policy initiative of the Obama
presidency, which is intended to serve several of its strategic goals.

Economic & Political Weekly

EPW

NOVEMBER 7, 2015

vol l no 45

Not the least of which is creating market access opportunities in a

region that is the growth hub of the global economy. These are
part of the administrations objective of intensification of its role
in the AsiaPacific region; what was euphemistically termed as
a rebalance to the AsiaPacific. At the same time, the US views
the TPP as a key step towards harmonising the existing FTAs with
its partners in the region and to attract new partners. With China
and India remaining outside this grouping, it hardly needs emphasising that drawing them in holds the key to the future of the TPP.
What can be surmised from the information that is available
in the public domain is that the TPP is a charter of rules and
standards, mirrored on those existing in the US, the essentials
of which are premised on providing greater freedom to the
global corporations to operate and a corresponding whittling
down of the policy space available to the national authorities to
protect public interests. Since the most recent global economic
downturn, multilateral institutions, including the International
Monetary Fund, have repeatedly emphasised the importance of
the policy space that governments need in order to overcome
the vicissitudes of the global marketplace.
While there will be questions asked of several components of the
TPP, the ones that would attract most attention will be the frameworks adopted for IPRs and foreign investors. Both IPRs and foreign
investors are proposed to be granted extraordinary rights vis--vis
state authorities, and these rights cannot be circumscribed even
when these are exercised to the detriment of public interest.
The framework for IPRs in the TPP enhances the rights of the
owners of intellectual property, thus providing a glimpse of what a
TRIPS-plus regime could look like. The first among such features
of the IPR chapter of the TPP is the considerable dilution of the
remedies that can be used if, for example, the patent rights are
in direct conflict with public interest. In the WTO, the developing
countries were able to collectively work together more than a
decade ago and make the Geneva-based trade body adopt the
Declaration on TRIPS and Public Health at the 2001 Doha
ministerial meeting. Included in this framework are provisions for
granting a five-year market exclusivity to the originator firms that
submit test and other data to the regulators for obtaining marketing
approval for new pharmaceutical products. This provision is
intended to extend the period of market exclusivity that producers
of new products would normally enjoy through the patent rights.
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EDITORIALS

The TPP legitimises the highly contested investorstate dispute

settlement mechanism in its framework for the protection of
investors. Although several of the participating countries had
questioned this mechanism, given the spurt in the cases brought
by foreign investors against their host governments before the
international tribunals, the backing for this mechanism by the
US carried the day in its favour.

The significance of the TPP then is more in the rules and provisions it will enjoin on its members, for the US sees the TPP as a
mechanism to impose its own trade rules on a significant proportion of the worlds trading powers, bypassing in the process the
multilateral system. More ominously, the US hopes to eventually
draw China and India into the TPP; if that were to happen the
scuttling of the multilateral trading system will be complete.

NOVEMBER 7, 2015

vol l no 45

EPW

Economic & Political Weekly