From cars to cough medicine: why the Trans-Pacific Partnership matters to you – The Guardian

Posted: Monday, October 05, 2015

What is the Trans-Pacific Partnership?

The TPP is a free trade agreement being negotiated between Australia, New Zealand, the US, Peru, Chile, Mexico, Canada, Singapore, Brunei, Malaysia, Vietnam and Japan. Talks began five years ago and are attempting to build on the Trans-Pacific Strategic Economic Partnership Agreement, established in 2006 between Brunei, Chile, New Zealand and Singapore.

What is it for?

The TPP aims to lower trade tariffs between the signatory nations and bring in wide-ranging new regulations for investment, agriculture, intellectual property, labour and the environment. This in turn could mean cheaper food, medicine and everyday household goods for millions of people. It will also help the 12 countries to counter China’s rising economic influence in the region.

Why does it matter?

The countries have a combined gross domestic product (GDP) of US$28,136bn on 2012 figures, which represents almost 40% of the world’s GDP. The emerging countries of the Pacific rim promise to provide billions of new middle-class consumers over the coming decades, providing huge new markets for the goods and services of developed nations. In return, bigger economies will be expected to relax restrictions on cheaper imports.

Barack Obama has made strengthening US ties with the region a foreign policy priority. In his State of the Union address in January, Obama asked for the authority to fast-track the TPP agreement, arguing that the US needed to sell more products overseas: “Today, our businesses export more than ever, and exporters tend to pay their workers higher wages,” he said in his speech, asking Congress to give him authority “to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair”.

That’s the US view. But what about other countries?

Other countries have much to gain from free trade with the US. Japan, the second biggest partner in the grouping after the US, has pushed hard to force the US to lower the duty threshold for automotive parts sold in North America from 62% locally made to more like 30%. This deal, which also involves Canada and Mexico whose industries are closely tied to the US, would help Japanese companies such as Toyota source cheaper parts from Asia for its factories in the Americas. Despite fears that the local auto industry could suffer from a flood of imports, Japan is understood to have won a concession lowering the rate to 45%.

New Zealand is keen to get the agreement over the line so that it can cement the concessions it has negotiated on access to the US for its world-beating agricultural produce. New Zealand trade minister Tim Groser said on Sunday: “We want this deal now because the dangers of unravelling on things that have been advanced here are so extreme.” For example, Fonterra, New Zealand’s biggest company, is responsible for 30% of the world’s dairy exports.

Australian trade within the TPP countries is worth billions of dollars. It also wants to open up new markets for its low-cost agricultural produce as the economy adjusts to the end of the mining boom. But it is wary of giving away too much access in return, particularly to multinational companies eyeing the growth potential of the Australian market.

What has held things up until now?

When the last round of talks collapsed in Hawaii in August, Australian trade minister Andrew Robb said a deal was “98% done”. But although he said the big nations such as the US, Canada, Japan and Mexico were involved in the last sticking points, the main issue seems to have been in the area of medicines and health. Specifically, this involves how long monopoly pharmaceutical companies– mainly American ones – should be given on new biotech drugs. The issue has pitted the US, which has argued for longer protections, against Australia and five others who say such measures would strain national healthcare budgets and keep life-saving medicines from patients who cannot afford them.

For example, the US provides 12 years of exclusivity for drugs like cancer therapy Avastin, developed by Genentech, a US-based firm which is owned by the Swiss pharma company Roche. Australia insisted on five years of protection to control health care costs. A possible two-track compromise would set a minimum threshold of five years during which drug makers would have exclusive rights to clinical data behind new drugs while adding an additional protection of several more years as applications for competing drugs are reviewed. Under a second track, pharmaceutical companies would have eight years of exclusive rights to a new product outright in some countries.

What happens if there is no deal?

They’ll have to try again at another set of talks in the Philippines in November, but that might be the last chance before Obama leaves office in 2016. Without his administration’s strong backing for an agreement the talks might be scuppered. Despite his enthusiasm, many Democrats and labour groups are concerned about what the TPP would mean for jobs in manufacturing and environmental protections. Republicans, including Senator Orrin Hatch, the chairman of the Senate finance committee, have urged the administration to hold the line on intellectual property protections, especially on the pharma issue.

Are these the longest trade talks ever?

They’re not. The world trade talks which began in Doha in 2001 have still not been concluded. Disagreements over a complex range of issues, including the usual suspects of food security and intellectual property, have dogged the negotiations from the outset. However, there is light at the end of the tunnel. With the very future of the World Trade Organisation hanging in the balance, India bowed to pressure in November 2014 and struck a deal with the US over agriculture issues.


Write a Reply or Comment:

Your email address will not be published.*