Friday, November 25, 2011

What is the TPP - and should it be welcomed?

The first question is easier to answer than the second.

So, first, what is the TPP? It is the Trans-Pacific Partnership – a new free trade community being negotiated by ten countries (Australia, Brunei, Chile, Japan Malaysia, New Zealand, Singapore, Peru, the US, and Vietnam). Initially signed in 2005 by Brunei, Chile, New Zealand and Singapore, it came into effect in 2006. The other countries are negotiating to join.

The TPP hit the world's attention almost without preparation because President Obama lifted it from obscurity, at the recent APEC summit, by suddenly announcing that the TPP is the keystone of his economic programme.

He even called it a "next-generation" trade agreement and suggested that the nations involved commit to concluding it in 2012.

That brings us to the second question: Should the TPP be welcomed? I guess we could take the cue from President Obama and ask the related question: is the TPP a next-generation trade agreement?

Well, the TPP is actually an advance on most current multilateral trade agreements, in the sense that it not only seeks to immediately start reducing tariffs but also to remove them by 2025. However, that sort of thing is normal in free trade agreements. What is “next generation” is that TPP encourages governments to improve market regulation and internal competition, improve market transparency, root out corruption, create a level playing field for private and state-owned companies, allow foreign companies to compete for national or state projects, curb the use of subsidies and credit to support domestic industries – and give companies (not merely governments) the right to seek legal action against unfair practices. Most important, TPP puts in place a requirement for labor rights and environmental protection.

While all that is revolutionary, and takes the TPP to a level far above that of the WTO, the question arises whether, by going beyond the WTO, it does not create a clash between them – for example, WTO specifically prohibits environmental and social considerations from being taken into account. However, if the WTO is going to fall by the wayside, as seems likely or at least possible at present, then TPP provides a much better blueprint for the sort of global organization which should replace that.

I do have one caveat: labour rights are not the same as human rights. While labour rights can be under- or over-protected, human rights are fundamental. President Obama’s avoidance of this issue is worrying. For the New Zealand government’s blockage of this consideration, see

There are other considerations too – for example, on health-related considerations, see

I conclude that the TPP will be a good thing for the countries concerned. The questions regarding it are whether it will override or be overridden by the WTO, and whether the TPP will sufficiently guard human rights, health and related concerns. Sphere: Related Content

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