Claude Barfield wonders whether the Trans-Pacific Partnership is "a model for twenty-first-century trade agreements." In this regard, he notes that:
At the first meeting in Melbourne in March 2010, the negotiators established ten negotiating groups, including industrial goods, agriculture, sanitary and phytosanitary standards, telecommunications, financial services, customs rules of origin (ROOs), government procurement, environment, and trade capacity building. By the third session in Brunei in October 2010, areas were added and subdivided, with the addition of textiles, technical barriers to trade, investment, and intellectual property (IP).
In addition, cross-cutting issues emerged as high-priority areas, including supply-chain management, competitiveness, transparency, regulatory coherence, labor and the environment, development, and small and medium businesses. Pushed by the United States, though strongly supported by Australia and New Zealand, these proposed cross-cutting rules, largely aimed at behind-the-border regulatory barriers, became the basis for proclaiming that the TPP would become the new model for a twenty-first-century FTA. All told, the TPP will consist of more than twenty-five individual chapters.
and that:
At the core of a twenty-first-century FTA are several issues that have become a central priority for the US business community--as well as the corporate heads of companies in developed TPP countries such as Australia, New Zealand, and Singapore. These issues vary in concreteness and novelty. Some, such as supply-chain encouragement and management, would entail customs reform, infrastructure, and trade-facilitation measures. Similarly, measures to strengthen small and medium businesses in trade would involve domestic programs such as limiting onerous regulation and fostering export initiatives. There is general agreement that these new rules should be negotiated on a region-wide basis.
The most concrete trade policy proposals arise in the area of regulatory coherence. The overarching goal of regulatory coherence is the harmonization (or at least mutual recognition) of regulatory measures that exert a major influence on international trade. Among the tentative proposals discussed in the negotiating sessions are pro-cedural rules for transparency (public notice and consultation for new regulations); elimination of duplicative and overlapping regulations; rules against anticompetitive practices, particularly for government monopolies and enterprises; greater use of mutual-recognition agreements for services and health and safety regulation; and clear lines of administrative and judicial appeal. At the outer reach, the United States has suggested that TPP members be required to establish an internal regulatory coordinating body that would act to limit duplication and conflicting regulatory actions. Both civil society groups and some TPP members seem wary of such proposals. This has led to some discussion that negotiators should settle for a set of regulatory principles that would act as a nonbinding guide to individual TPP members. Little has been decided regarding the potential text in a TPP regulatory chapter.
Finally, since January, pushed by some corporate groups and labor unions, the United States has raised the issue of more regulatory discipline for state-owned enterprises (SOEs). In a February 2011 private-sector paper, since leaked to the press, a detailed set of proposals was presented, including a number of provisions to ensure "competitive neutrality" by TPP member governments between SOEs and private-sector corporations. The issue has important implications for TPP members Vietnam and Malaysia, where SOEs occupy an important economic position, and, of greater significance, it sets down markers for China, if and when it applies for TPP membership.
The first thing that jumps out at me in his description of what topics might be covered is the absence of coverage for two core trade issues: trade remedies and subsidies. Without rules on these issues, can we call this a trade agreement? Do we want it as a model? Perhaps the lack of rules in these areas illustrates the continued importance of the WTO, which has very detailed rules on these topics. The WTO negotiations may be going nowhere, but the existing rules in these areas are crucial, and it does not appear that FTAs are going to intrude into the WTO's domain here.
The flip side is all the rules on things other than trade. For example, what would it look like to have rules on the following in binding international agremeents:
- procedural rules for transparency (public notice and consultation for new regulations);
- elimination of duplicative and overlapping regulations;
- greater use of mutual-recognition agreements for services and health and safety regulation;
- and a requirement to establish an internal regulatory coordinating body that would act to limit duplication and conflicting regulatory actions.
As Claude suggests, it's not clear how well all of these extra burdens on the domestic regulatory process will play to various audiences.
