Last October, 12 Pacific Rim countries gave their blessing on the Trans-Pacific Partnership (TPP) agreement, hailed as a landmark trade pact as it includes many issues that have so far not found their way into the rule of law in the multilateral trading system. World Trade Organization (WTO) Director-General Roberto Azevêdo announced that the TPP “will serve as an inspiration for WTO members” at the upcoming 10th WTO Ministerial Conference on 15–18 December in Nairobi, Kenya.
I however believe that neither the content of the TPP agreement nor the process of the TPP talks can provide a positive stimulus for the Doha Development Agenda (DDA) negotiations.
At first sight, the negotiation agendas of the TPP and the DDA look alike. Both mandates cover a wide range of topics, including “old” topics, such as agriculture and non-agricultural market access (NAMA), as well as “new” topics like e-commerce and competition. However, while WTO members have been unable to make significant progress on the DDA over the past 15 years, the TPP partners were able to seal a deal within 5 years. How was such an achievement possible and what do the compromises look like?
The full text of the TPP agreement was released at the beginning of November, but its implementation is still pending ratification by the member countries. A first preliminary assessment of the document yields interesting insights.
First, among the “old” topics—namely agriculture and NAMA—the concessions are tangible, but probably not as ambitious as many would have expected. For the most sensitive agricultural products like sugar, rice, and dairy the parties did not agree to abolish quotas, but rather raise them slowly year by year. For example, Japan agreed to increase the quota for rice from Australia from 6,000 tons to 8,400 tons over a period of 13 years.
For NAMA, the levels of applied most-favored nation tariffs among TPP members were already low – 4.0% simple and 2.7% weighted for 2014. Furthermore, more than half of the trade relations among TPP partners are covered by preferential trade arrangements, where the simple applied tariff is 1.7% and the applied tariff is less than 1%. In the final agreement, the TPP partners agreed to further reduce or even eliminate their tariffs on industrial goods. Similar to agriculture, however, the TPP members were able to impose rather long periods for phasing in some of their tariffs.
For the first time in a regional trade pact, the TPP introduces detailed provisions on “new” topics. The TPP e-commerce chapter requires TPP members to maintain a certain level of consumer protection and to ensure cybersecurity. In addition, it stipulates that no TPP member can require companies to store their data locally when operating in that country. On labor standards, the TPP agreement introduces for the first time in a regional trade agreement fully enforceable requirements to implement fundamental International Labor Organization labor rights. Furthermore, the US has concluded several bilateral agreements with TPP members that define additional requirements. For example, in a bilateral deal, Viet Nam agreed to give workers the autonomy to form independent unions.
The TPP negotiations revealed once more that agriculture remains a highly sensitive topic. Even if like-minded countries come together to negotiate a trade deal, compromise is hard to achieve. In Nairobi, 161 WTO members will sit at the table with very different views on agricultural market access and with varying degrees of willingness to compromise. The agreements achieved in the TPP on the “new” issues have broken new ground, but likely to offer little guidance for the DDA negotiations because of the diverging views on these topics among the WTO members.
The content of the TPP agreement thus provides only very limited guidance, but what can be learned from its negotiation process? A distinguishing feature of the TPP talks was the fact that they were not open to the public. In contrast, multilateral trade negotiations take place in a more open and transparent fashion. Another factor that facilitated the TPP talks was the US and Japan’s leadership. Both Japanese Prime Minister Shinzo Abe and US President Barack Obama had a strong political interest in bringing the negotiations to a successful conclusion. Can we expect similar leadership from the largest stakeholders for the DDA? The answer is clearly no.
In summary, the TPP agreement shows that neither its content nor the process of the negotiations can provide much guidance for the DDA multilateral trade talks. The TPP should therefore not be considered as inspiration for the DDA, but rather as a reminder of how much is missing for reaching agreement.
This blog was first published in Asia Pathways.