Negotiators from the US, Japan and 10 other Pacific Rim countries could put the finishing touches on the most ambitious trade and investment deal in decades when they meet this week in Hawaii.
However, with the details of the Trans-Pacific Partnership (TPP) hidden in intense secrecy, the talks have fueled suspicion that whatever they achieve would benefit powerful corporations but not economies and people generally.
In addition, with China deliberately excluded, it remains to be seen if a 12-country deal would be enough to coax Beijing toward further opening its economy and embracing more international business standards.
Photo: Bloomberg
By most accounts, TPP negotiators have narrowed their focus to a number of key issues and are under pressure from Washington to finalize a deal in the coming months.
That would advance the US agenda for a new international framework for trade in services, investment and protection of intellectual property. Such a framework could also become a model for the even larger Transatlantic Trade and Investment Partnership (TTIP) Washington is negotiating with the EU.
The talks between trade ministers beginning tomorrow on the Hawaiian island of Maui come only after US President Barack Obama won a bruising battle in US Congress for the power to reach a final agreement without interference from the legislators.
The deal would help a whole range of US industries, from farms to shoemakers to movie studios, Obama has said.
There are also significant stakes for the other countries involved: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
However, the secrecy of the TPP talks has also stirred suspicions.
Negotiating documents obtained by WikiLeaks depict a wishlist of US businesses that critics said could raise the cost of drugs, allow investors to sue countries in extra-national tribunals, sharply increase protections for intellectual property while criminalizing small violators, as well as lower protections of a person’s personal information while increasing data-focused companies’ rights to it.
The suspicions are strong enough that WikiLeaks is raising US$100,000 to offer to anyone that can deliver the muckraking Web site the entire TPP text.
“Very little in this agreement is about free trade... In recent years any free-trade agreement has really been about intellectual property protections,” George Washington University political science professor Susan Sell said.
According to a study by the Peterson Institute for International Economics in Washington, it could add US$295 billion in annual global income after the 10-year implementation period. A relatively small part of that would be from traditional goods trade, where global tariffs are already low, one of the study’s authors and economist Peter Petri said.
The TPP aims to open up things such as Japan’s protected auto and farm product markets and generally cut barriers to Vietnam’s exports.
More important, Petri says, is setting global rules that ensure that companies can invest in economies and feel secure that their investments are going to be free of excessive regulation or interference.
“This is the most important trade negotiation we’ve had in more than 20 years,” he told reporters. “It will have very significant indirect benefits in how it will begin to reshape trade rules across the world.”
The TPP grew out of the failure of the WTO to address the interests of advanced economies in areas such as investment standards and dispute resolution, protections for copyrights and patents and issues arising from e-commerce and data-based industries.
TPP would be a platform to build upon.
“The ultimate goal of the process has to be a region-wide system. It doesn’t help either the US or China to divide up the Asia-Pacific into two zones,” Petri said.
China has advanced its own idea for an Asia-wide trade deal — the Regional Comprehensive Economic Partnership (RCEP) that would likely offer much less than the TPP for US companies.
Even so, both Washington and Beijing see the TPP and RCEP as building blocks for a broader Pacific trade deal, dubbed the Free Trade Area of the Asia-Pacific.
However, critics said that does not make the TPP a great deal.
While nothing is clear about how close negotiators are to a deal, the TPP chapters revealed via WikiLeaks showed some significant differences between the 12 countries.
However, pressure is there to reach a final deal within months. With the US facing elections in November next year and voters suspicious of trade treaties, any delay could jeopardize its ratification in Congress.
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