The Trans-Pacific Partnership “re-imagined” no longer a mirage?

To adapt one of the literary world’s great quotes it would appear that ‘the news of the death of the TPP had been greatly exaggerated.’

Background on the TPP

As readers would be aware the terms of the agreement for the Trans-Pacific Partnership (TPP) were agreed and announced in Atlanta in early October 2015 and signed in Auckland in February 2016. A useful summary of the terms can be found on the DFAT website. The release of the TPP generally allayed a number of concerns on what could have been in the TPP and acted to dispel a number of conspiracy theories on potential adverse outcomes from the negotiations. Many of those concerns were addressed and dispelled in the examination of the TPP by our Joint Standing Committee on Treaties (JSCOT) whose report ultimately endorsed verification of the TPP.

Earlier reports on the progress of the TPP through JSCOT and its counter-weight against increasing protectionism can be found here.

Issues on ratification of the TPP

However, the progress of the TPP towards ratification was not easy. Although Australia and New Zealand (among others) had subsequently ratified the TPP, the future of the TPP was thrown into question as the Obama administration could not secure its ratification in the US before the end of its term and the Trump campaign included clear messaging that their administration would withdraw the US from the TPP even before it had commenced. The election of President Trump led to the US withdrawing from the TPP and much speculation that without the US, the TPP would not proceed.

Fortunately, after a short period of grieving the other parties to the TPP resisted the temptation to give up, appreciating that the massive amount of effort invested in the TPP and the benefits provided by the TPP, even without the US, warranted pursuit and completion.

Movement towards the CPTPP

The negotiating parties to the TPP actively pursued further negotiations on a revised form of TPP without the US but which could also be improved for the remaining parties once the dominant position of the US was removed. Surviving an apparent last-minute problem when the Canadian Prime Minister, Justin Trudeau failed to attend a crucial set of late negotiations, the remaining 11 TPP parties completed the majority of their negotiations in the margins of the APEC meeting in Da Nang in Vietnam. Collectively they announced the core terms of their new agreement based on the TPP, which is now to be known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Agreement in principle but no deal without final agreement

The precise terms of the CPTPP have yet to be released as there is still some work to be done on some parts of its terms together with some work (no doubt) on new provisions to allow new parties to join, including South Korea and the US. Australia’s Department of Foreign Affairs and Trade (DFAT) has released an update, to be read alongside the Ministerial Statement. The DFAT link also includes links to an outline of the CPTPP and the items from the TPP which are to be suspended. Clearly we do not have a completed deal until the CPTPP is signed and adopted by all parties. It would appear that Canada has the most reservations to completing the CPTPP taking into account some inconsistencies between comments by the Canadian Prime Minister and the Canadian Trade Minister. Some reports suggest that Canada is concerned on a number of fronts including preserving its cultural rights to use French, as well as automotive commitments at a time when it is trying to complete a revised NAFTA. Other countries also have reservations which range from Malaysia’s concerns on State Owned Enterprises, to concerns by Brunei on investment commitments and Vietnam wanting some flexibility on the implementation of labour market provisions.

Some overseas commentary

The announcement has received significant commentary here and overseas including comments from NZ that the CPTPP is significantly superior to the TPP. This article also provides some detail on the issues on which further drafting will be required including narrowing of the investor-state dispute settlement (ISDS) provision and more work on the Rules of Origin provisions.
Even in Canada there has been some positive commentary as in an article in the Toronto Star.

No doubt there are less optimistic views elsewhere but, on balance, I believe the positives overwhelm any negatives – let alone the potential for future improvements without reliance on the US.

Completion of the CPTPP and commencement

There is no timeline yet for the completion of the terms of the CPTPP, arrangements for its domestic approvals in the 11 contracting parties and then to come into effect. For those in industry it raises a few issues on related issues some of which are summarised below.

• Further review and education on the terms of the TPP which are, in large part, to be adopted in the CDTPP, so that parties can take full advantage when it commences.
• Review of the precise terms of the CPTPP when it becomes available.
• Monitoring the domestic approval processes in each of the contracting parties, including whether the CPTPP will require review by JSCOT. That process will be even more interesting given the ongoing uncertainty of the membership of the Federal Parliament.
• Looking for any ’flow on’ effects on the remainder of our FTA agenda. There has been a general expectation that the proposed deal with Indonesia (IA – CEPA) would be concluded by the end of November, but even though Indonesia has been present at the APEC meeting, there has not been any further announcements on progress towards completion of the IA – CEPA. Further, once progress with the TPP appeared in trouble many looked to the ‘alternative’ multilateral deal in the Regional Comprehensive Economic Partnership Agreement (RCEP) which includes India and China as the leading alternative which could switch attention away from the TPP. However the progress with the RCEP has slowed significantly and there appears to be little clarity on when it may be completed at the same time that the negotiations between Australia and India on an FTA appear to have stalled.
• Whether the NAFTA re-negotiations help or hinder the CPTPP. Canada and Mexico are in the middle of complex negotiations and there may be US pressure to discard the CPTPP and focus on NAFTA as the ’main game’. However, it could work the other way Canada and Mexico seeing this as something of an ‘escape valve’ which affords some immediate benefits.

The interaction between economics, national interest and international politics will be a fascinating exercise – both here and overseas.

Not just the CPTPP – more detail on PAFTA emerges

Whatever happens, the APEC meeting in Vietnam operates as a significant contrast to the recent gloom around the FTA agenda including the announcement of agreement of an FTA between Australia and Peru whose terms are summarised in the DFAT commentary and which was the subject of my interview with ABC radio.

Commentary on both agreements are being delivered as part of the CBFCA and Austrade forums at the moment and will continue as more details come to light – and as always, if pain persists, consult your trade lawyer!