Challenges seen in TPP pact
Saturday, April 21, 2012
NEGOTIATIONS under the Trans-Pacific Partnership (TPP) agreement are
rife with challenges and prospects of meeting its objectives are dim, a
working paper from the S Rajaratnam School of International Studies
states. The paper, written by Deborah Elms, head of the Temasek Foundation Centre for Trade and Negotiations (TFCTN), highlights difficulties faced by the TPP in meeting its objective of "open market with no exceptions".
The paper, titled 'Getting from Here to There: Stitching Together Goods Agreements in the Trans-Pacific Partnership (TPP) Agreement', was released for comments on April 17.
Originally composed of Brunei, Chile, New Zealand and Singapore, the TPP also includes the US, Australia, Peru, Vietnam, and Malaysia. Canada, Japan and Mexico have also indicated their willingness to join the economic grouping.
"The agreement is not finished, so there is still the possibility of a breakthrough in the talks. However, after two years of negotiations in goods, the prospect for an agreement that matches the rhetoric of no exceptions does not look bright," Elms says in the paper.
She points out that the countries under the TPP already have existing multilateral and bilateral agreements, wherein issues on goods trade have already been discussed.
"These deals are the result of carefully crafted compromises at the time of negotiation in each agreement. Any decision on how to negotiate in the TPP would run the risk of upsetting the existing PTA preferences," she notes.
She also highlights challenges in drafting tariff schedules for goods that would be included in the agreement by member countries.
She says TPP members have three options: to have a single schedule that would apply to all countries; to have each country prepare its own market access schedule following negotiations with others; or to combine the two options and have a uniform schedule for tariff reductions for non-sensitive products and separate schedules for sensitive ones.
But she also says: "There are nearly 6,000 tariff lines corresponding to trade in goods. For the nine countries in TPP (except for Singapore which has tariffs at zero on all products except for six lines) the starting point varies tremendously."
She also points out difficulties in opening the markets in new non-agricultural areas. Apparel, for instance, is a sensitive issue between the US and Vietnam, with Hanoi currently facing "a bewildering array of tariffs and exports" to Washington for textile, apparel and footwear exporters.
"Tariff levels of rubber footwear were as high as 37.5 per cent in May 2011," she notes.
"Vietnamese officials would like to see these complicated tariffs reduced. Up until now, most of these textile, apparel and footwear tariffs have not been addressed in American PTA negotiations."
As for market access for agricultural products, Elms notes that negotiations on "extremely sensitive items" under other trade agreements have resulted in the exclusion of certain highly sensitive items as well as the reduction, but not the elimination, of their tariffs.
She also states that other restrictive methods employed by countries were to allow high tariff peaks to remain, or subject these products to extremely long phase-in periods. In addition, countries can use a range of quantitative restrictions that are not generally allowed in other products.
"A high-quality, 21st century TPP with no exceptions should, as far as possible, avoid all these elements," she says.
The paper also raises issues on goods' rules of origin which must distinguish whether they are from TPP member countries.
"The rules must also be capable of distinguishing goods that are not from members to ensure that these non-originating goods are not eligible for the benefits of the agreement.
If these rules of origin were not put into place, any firm from any country could take advantage of any PTA," she states.
The Brunei Times
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