TPP Negotiators Reach Final Agreement

Ministers from the 12 Trans-Pacific Partnership countries announced on Oct. 5 a final agreement that would cut tariffs and non-tariff barriers to trade across the Asia-Pacific and set standards across a wide range of areas, from customs to labor and e-commerce. Work on the deal, which brings to a close more than five years of negotiations, now goes to the technical stage, after which it must be approved by the national government of each member country before taking effect.

In the U.S., under the procedures mandated by recently-enacted Trade Promotion Authority, Congress will have 90 days, and the public 60, to review the final text of the agreement before President Barack Obama can sign. Before that occurs, negotiators from TPP countries must complete a legal review, translations and drafting and verification of the text, said U.S. Trade Representative Michael Froman at the press conference held Oct. 5 to announce the deal (here). Under TPA, the signed deal would be subject to an up-or-down vote in Congress, unless lawmakers decide the deal does not conform to negotiating objectives set in the law.

Ministers from the countries participating in TPP negotiations, including the U.S., Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, reached the deal during a negotiating round that began Sept. 29 in Atlanta (see 1510010079). Issues still unresolved at the beginning of the round included market access for agricultural goods, intellectual property rights, and trade in automotive products, said Froman at the press conference. Work to resolve the remaining issues wasn't completed until 5:00 a.m. on the morning of Oct. 5, said Froman.

President Obama praised the deal in a statement (here) following its announcement. “This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products,” he said. “It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable, unlike in past agreements. It promotes a free and open Internet. It strengthens our strategic relationships with our partners and allies in a region that will be vital to the 21st century.”

According to a White House fact sheet (here), the agreement eliminates tariff on “every Made in America manufactured product that the U.S. exports to TPP countries,” which can reach as high as 59 percent for machinery. The deal would cut duties on U.S. information and communication technology products from 35 percent in some cases to zero. Tariffs on U.S. automotive products, currently as high as 70 percent in some TPP countries, would also fall to zero, as would tariffs on U.S. poultry products, from 40 percent, soybeans, from 35 percent, and fruit, which are in some cases as high as 40 percent, the fact sheet said.

Tariffs on most textiles and apparel will be “eliminated immediately,” though duties on some sensitive products will be eliminated over longer timeframes, said a USTR summary of the agreement (here). The textiles and apparel chapter includes “specific rules of origin that require use of yarns and fabrics from the TPP region, which will promote regional supply chains and investment in this sector,” along with a short supply list mechanism “that allows use of certain yarns and fabrics not widely available in the region,” it said.

Negotiators were unable to reach a deal to eliminate Japanese beef duties and tariffs on some dairy products, said New Zealand Minister of Trade Tim Groser during the press conference. Canada will retain its supply management system, which U.S. lawmakers have decried as a barrier to U.S. dairy exports (see 1504070006), with Canadian negotiators successfully “protecting the three key pillars of supply management, being production controls, price controls and import controls,” said Canadian Minister for International Trade Ed Fast at the press conference. “We believe the outcome is one that very much reflects Canada’s long term-interests, and will provide the supply-managed sector with a bright future,” he said.

On customs, negotiators agreed to “transparent rules, including publishing their customs laws and regulations, as well as providing for release of goods without unnecessary delay and on bond or ‘payment under protest’ where customs has not yet made a decision on the amount of duties or fees owed,” said the USTR summary. The deal also provides for advance customs rulings, fair customs penalties, and expedited customs procedures for express shipments, it said.

The agreement also provides for a paperless customs process with the same set of criteria for the 12 TPP member countries, said Australian Trade Minister Andrew Robb during the press conference. “In a world with global and regional supply chains, your product might move four or five times,” he said. “If that’s moving in the region, you would only have one set of paperwork to deal with,” which represents a “massive achievement in reducing that red tape.”

The deal includes the “strongest” worker and environmental protections “of any trade agreement in history,” according to the White House fact sheet. Negotiators also reached a parallel agreement to create a forum for TPP countries to discuss currency issues, said Robb.

The final agreement only represents an “important first step” toward implementation of TPP, said Froman at the press conference. The Obama administration will now work closely with Congress to explain the details of the deal and consult on the timetable for next steps. Reactions to the final agreement on Capitol Hill were largely tentative, with most legislators withholding judgement until the release of the final text (see 1510050017). The administration is “confident” that people will see the agreement as a “strong deal, consistent with the objectives of TPA," said Froman. Given the technical work still required to complete the agreement, Congress likely won’t begin consideration of TPP until 2016, he added.