The Trans-Pacific Partnership Agreement (TPPA) - “Defining The Rules Of The Road”

Legal News & Analysis – Asia Pacific - Malaysia – International Trade

12 October, 2015

 

On October 5, 2015, the largest pact governing international commerce was reached between the United States and 11 Pacific countries, encompassing 40% of the world’s economic output. The TPPA aims to set new precedents and reinvigorate an expansion of global commerce by breaking down trade barriers such as tariffs, quotas and regulatory red tape – over time.

 

• With the commitment of TPP countries to improve the investment environment, this could attract more foreign investment into the region. 

Will the TPPA be open to other countries? 

• Yes, in the future the TPPA would be open to other countries including China. Indonesia, South Korea and the Philippines have also expressed their interest to join the TPPA. 

Watch this space • To date, the complete and official text of the TPPA has not been made available. Once it is in the public domain, it will 

be presented to the parliaments of TPP countries for debate. 

• With the commitment of TPP countries to improve the investment environment, this could attract more foreign investment into the region. 

Will the TPPA be open to other countries? 

• Yes, in the future the TPPA would be open to other countries including China. Indonesia, South Korea and the Philippines have also expressed their interest to join the TPPA. 

Watch this space • To date, the complete and official text of the TPPA has not been made available. Once it is in the public domain, it will 

be presented to the parliaments of TPP countries for debate. 

Here’s what we know so far: 

When was the agreement reached? Between? 

• The TPPA was reached on October 5, 2015. 

• Countries involved: - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and United States. 

How big is it? What does the TPPA aim to do? 

• The TPPA will form the biggest trade zone in the world, spanning four continents and representing 40% of the world’s economy. With huge economies like the US and Japan in the pact, it is economically and strategically significant both in trade and political terms. 

• The TPPA would cut trade barriers and set common standards from Vietnam to Canada. 

• It also creates new rules for the digital economy, such as restricting government’s right to shut off data flows. 

What does it cover? 

The text of the TPPA and any reservations or exemptions for specific countries has yet to be disclosed. However in general, the TPPA aims to achieve the following: 

  • Investor-State Dispute Settlement – A special arbitration panel will be set up which will make it easier for corporations to sue sovereign states over laws that affect their businesses. 

  • Labor & environmental protection – the TPPA sets minimum standards on issues ranging from workers’ rights to environmental protection. Member countries have agreed to have laws governing minimum wages, hours of work, 

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and occupational safety. They have also pledged to maintain environmental laws and cooperate to cut carbon emissions. 

  • Intellectual Property Rights – the TPPA would require stronger intellectual property protections for example through the establishment of standards for patents. 

  • Financial services and telecommunications –there will be easier access to foreign markets by encouraging free flow of data. Preference will be given for digital transactions such as e-payments and the use of electronic customs forms. Measures will be put in place for the protection against fraud and spamming as well as protection of privacy and confidentiality of data. 

  • Automotive – Auto trade rules have been agreed upon between US, Mexico, Canada and Japan. The auto trade rules will determine how much of a vehicle must be made within the TPP region to qualify for duty-free status. 

  • Food & Agriculture – the TPPA will provide for reduced tariffs on meat and dairy and simplified inspection rules on fruits and vegetables. 

  • Currency – A forum will be established under the TPPA for finance ministers from participating countries to discuss currency policy principles. There are no indications however as to whether negotiators have sufficiently addressed these issues. 

If ratified the TPPA will... 

• Re-write the rules of commerce by providing duty free trade on most goods and reduced tariffs on others. With markets being significantly opened, the TPPA would have far reaching impact on goods and services. 

• Establish mechanisms to handle disputes between foreign investors and governments. 

• Provide mutual recognition of regulations including exclusivity periods for biologic drugs for a period of at least 5 years. 

• Require governments to treat foreign companies on an equal footing in its procurement practices. 

• Facilitate professionals working abroad for example through the streamlining of regulations for financial service 

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For further information, please contact:

 

Datuk Nik Norzrul, Partner, ZICOlaw

nik.norzrul.thani@zicolaw.com