Regulation  

Why we need to sign on the dotted line

Why we need to sign on the dotted line

The finalisation of the Trans-Pacific Partnership after marathon talks in Atlanta, US, is a landmark event in global trade relations which should bring significant economic benefits to its 12 trading partner nations, including the US, Japan, Canada, New Zealand and Australia, as well as numerous developing and emerging states on the Pacific Rim.

Covering 40 per cent of global GDP, the TPP is the largest trade deal since the World Trade Organization was created in 1995. It represents the most significant of the new generation of mega-regional economic integration agreements that have emerged as the counterpoint to the WTO’s faltering progress at the multilateral level.

As a free trade agreement, the TPP will eliminate barriers to trade in goods and services among the signatory states, covering not only traditional barriers such as tariffs but also regulatory barriers in the form of uneven health and safety standards, many of which will be streamlined through international harmonisation. As an economic integration agreement, the TPP also includes stronger commitments for the protection of intellectual property, rules on open government procurement and, perhaps most crucially, protections for foreign investors.

Article continues after advert

The TPP is thought to be worth hundreds of billions of dollars in goods and services for its signatory states each year, dwarfing the achievements of all other regional trade agreements, including the TTIP (EU and US) and CETA (EU and Canada).

Among the agreement’s most controversial features is its investor-state dispute settlement provision allowing multinational firms to bring legal claims directly against host states for actions such as expropriations. This regime is hotly contested, being perceived as an illegitimate way to sidestep local courts by using privately-appointed international and confidential tribunals which operate in secret, which many view as an affront to sovereignty. The debate over ISDS continues to rage in connection with the TTIP, with a number of radical proposals having recently been tabled, including the establishment of a specialised court composed of appointed judges and with a right of appeal.

Others contend that many of the obligations contained in the TPP relating to regulatory transparency and harmonisation, while advantageous for developed states such as the US and Canada, will necessitate costly reforms that could be harmful to developing countries such as Vietnam and Malaysia.

During its negotiations one of the most widely praised features of the TPP has been its provisions on labour rights (the minimum wage and the right to unionise) and environmental protection (preventing over-fishing and controlling pollution). These truly progressive features are subject to enforceable sanctions that may become benchmark legal obligations in future trade agreements. The environmental features of the TPP are expected to combat trade in endangered species – a remarkable achievement for an economically focused treaty.

It is important to recognise that the TPP must still be ratified by each of the signatory states, which is by no means a foregone conclusion. US president Barack Obama, a long-standing proponent of the TPP empowered by the recently-granted fast track authority for trade pact approval, must still push the agreement through Congress, where Democrats have voiced much opposition to the pact in the past. In Canada, where a federal election is looming, one leading challenger has vowed that the TPP will never be ratified if he becomes prime minister – a distinct possibility given that the three main candidates are in a dead heat.