TPP-ing over?
Jayant Menon, The Establishment Post
Why is the Trans-Pacific Partnership (TPP) taking so long to conclude? It has already missed three deadlines, the latest being October 2013.
President Barack Obama’s recent Asia visit did not produce the widely anticipated push towards the finish line. And what will the TPP will look like when finally concluded?
Despite WikiLeaks’ best efforts, the negotiations are walled by secrecy. Will the TPP be the comprehensive twenty-first century agreement proponents tout? Or will it wallow as a watered-down compromise, riddled with exemptions, as detractors predict?
A useful starting point in explaining the delay is to look at the countries involved. In 2005, four small open economies — New Zealand, Chile, Brunei and Singapore — began talking about a free trade agreement. It began to grab headlines when the US embraced the TPP in 2009 as part of its ‘pivot to Asia’. Four other nations joined discussions soon after — Australia, Peru, Vietnam and Malaysia — followed by Canada, Mexico and Japan.
These 12 countries are a highly diverse group by any measure. First, unlike other plurilateral cooperation agreements, the TPP is widely dispersed geographically. There is nothing regional about it, with members from four of the world’s seven continents. And it is just as economically diverse. Australia’s per capita income is about 40 times that of Vietnam. The US economy is around 1000 times the size of Brunei. All this diversity suggests finding common ground when negotiating would not be easy.
Of course, the TPP delays are overshadowed by another struggling proposed trade pact — the WTO’s Doha Round. Although there are fewer countries in the TPP compared to the WTO, diversity is not a linear function of the number of countries involved. Where a group includes countries as varied as Vietnam, Mexico, Peru and the US, there is not only a lack of commonality in negotiating positions but negotiators may not even subscribe to broadly similar principles.
Now add to this a wide-ranging, highly ambitious agenda to be tackled as a single undertaking. Because of its lofty ambitions, negotiating diversity can translate into staunch opposition and some items can fall into the ‘too hard’ category.
It is not that the TPP agenda is just highly ambitious — this would make negotiations difficult but worthwhile. But there is the sense of it being unfair. There has never been a plurilateral negotiation where the agenda appeared so skewed in favour of one party. The carrot being dangled is of course improved access to the huge US market, but half the members of the TPP already have an FTA in place with the US, and the rest are trying to conclude one, so the incremental benefit is likely to be small.
At a time when globalisation is blamed for growing inequalities within and across countries, policies seen as transferring enormous resources from consumers in poor countries to a few pharmaceutical multinationals, for example, will certainly face opposition. Similar concerns arise from developing countries when dealing with labour or environmental standards, often seen as an instrument of protection that cuts into their ability to compete.
Just about everyone, except the US, is concerned about the investor-state dispute resolution mechanism, which allows corporations to sue governments. The same is true for the currency manipulation clause, which could be subject to manipulation itself. And the list goes on.
