December 8, 2017
TPP: Overview and Current Status
What is it? The Trans-Pacific Partnership (TPP) was a
also negotiating FTAs with a number of Asian states,
proposed free trade agreement (FTA), signed by 12 Asia-
including Japan and Vietnam. To the extent these
Pacific countries on February 4, 2016, after 8 years of
agreements take a different approach on issues such as the
negotiation. In January 2017, the United States gave notice
level of liberalization, intellectual property rights, labor and
to the other TPP signatories that it does not intend to ratify
environment commitments, and new rules like state-owned
the agreement, effectively ending TPP’s potential entry into
enterprises and e-commerce, they could result in provisions
force as written. In November 2017, the remaining 11 TPP
favoring the parties involved and not the United States.
parties announced the broad outlines of the Comprehensive
They could also put U.S. exporters at a competitive
and Progressive Agreement on Trans-Pacific Partnership
disadvantage as these agreements lower market access
(CPTPP). CPTPP would essentially bring a slightly
barriers among the participants.
modified TPP into effect among the 11 remaining TPP
Stakeholders Views on the U.S. Withdrawal. Supporters
signatories. The new agreement freezes a small set of issues
of withdrawal opposed TPP over concerns it would increase
that were included in the TPP, in part, at U.S. insistence.
U.S. imports, lead to job losses, and cede U.S. sovereignty.
These suspended provisions, which include some
Opponents argue that withdrawal has lessened U.S. firms’
commitments on investment and intellectual property
competitiveness in the region, given other countries,
rights, could potentially be reinstated were the United
particularly China, greater influence in establishing regional
States to consider rejoining the agreement.
trade rules, and removed significant incentives for
TPP aimed to reduce and eliminate tariff and nontariff
economic reforms in TPP countries, such as Vietnam, as
barriers on goods, services, and agriculture. It would have
well as potential future participants. Many also argue the
established trade rules and disciplines that expanded on
withdrawal signals declining U.S. political and economic
commitments at the World Trade Organization (WTO) and
engagement in the region in the face of China’s rise and
addressed new issues. The U.S. withdrawal has economic
increasing challenges to the U.S.-led rules-based trading
and foreign policy implications for the United States, and
system.
raises potential strategic issues regarding U.S. trade policy
and broader regional engagement.
Figure 1. 2016 TPP and U.S. Country Demographics
Withdrawal and U.S. Next Steps. President Trump’s
withdrawal from TPP upheld a pledge of his presidential
campaign and reflects his Administration’s view that
previously negotiated U.S. FTAs have had poor outcomes.
In August, the Administration began renegotiation of
NAFTA, the largest U.S. FTA, with Canada and Mexico,
and has held talks with South Korea on potential
modifications to the U.S.-South Korea (KORUS) FTA.
Both NAFTA countries were signatories to the TPP, which
would have essentially modified the decades-old
agreement. The Administration’s stated objectives for the
NAFTA renegotiation, especially on issues such as digital
trade, intellectual property rights, labor, and environment,
draw on TPP provisions to an extent. Moving forward, the
Administration intends to negotiate bilaterally on any new
FTAs, and has suggested TPP countries, particularly Japan,
as among the top candidates. No countries, however, have
formally expressed interest in a bilateral negotiation with
the United States, possibly a reflection of the contentious
tenor of the NAFTA and KORUS talks.
Other Countries’ FTA Negotiations. The remaining TPP
signatories are pursuing various trade initiatives beyond the
CPTPP, including both bilateral trade agreements as well as
other regional pacts. Key among the regional agreements is
the Regional Comprehensive Economic Partnership
Source: IMF World Economic Outlook, April 2017. CRS graphic.
(RCEP), an Association of Southeast Asian Nations
Key Provisions
(ASEAN)-led initiative that includes China and seven TPP
The TPP, as originally signed by the United States,
countries, but not the United States. The European Union is
included 30 separate chapters. Some of its provisions could
www.crs.gov | 7-5700
TPP: Overview and Current Status
serve as a starting point for future U.S. trade negotiations.
Worker Rights. Would require countries to adopt and not
TPP without the CPTPP modifications, would have had the
derogate from laws consistent with core ILO Principles on
following potential outcomes:
freedom of association and elimination of forced labor,
child labor and employment discrimination in matters
Agriculture. Would reduce and eliminate tariff and
related to trade and investment. Includes specific
nontariff barriers on agriculture products and address the
implementation plans for Brunei, Malaysia, and Vietnam.
resolution of disputes regarding sanitary and phytosanitary
standards (SPS). Tariff and quota protections would remain
Environment. Would require countries to enforce and not
on some sensitive products.
derogate from their environmental laws to attract trade and
investment, implement specified multilateral environmental
Autos. Would require eventual elimination of auto and auto
agreements (MEA) they have joined, and prohibit certain
parts tariffs, including U.S. 2.5% auto and 25% truck tariffs
fishing subsidies, among other provisions.
over 25 and 30 years. Special provisions would target U.S.-
Japan trade, requiring Japan to address nontariff barriers
Rules of Origin (ROOs). Would determine whether goods
relating to transparency and distribution, among others.
originate within TPP and are eligible for TPP benefits.
Would establish a yarn-forward ROO for textile and apparel
Currency. Would affirm commitments to transparency and
products with exemptions based on a short-supply list, and
against competitive devaluations. This language is in a joint
45%-55% regional value content ROO for autos and 35%-
declaration, and would not be subject to dispute settlement.
45% for auto parts, depending on the calculation method.
E-Commerce/Digital Trade. Would require free flow of
Services. Would provide core obligations of national
data across borders, with exceptions for public policy
treatment, most-favored nation treatment, market access,
interest regulations. Would prohibit requirements to
and local presence on a negative list basis applicable to all
localize computing facilities or share source code to gain
cross-border services sectors, except those explicitly
market entry, and prohibit duties on digital products.
excepted as NCMs. Includes separate provisions for
Financial services are excluded from the e-commerce
financial services, with added sector-specific exemptions.
chapter, including forced localization commitments, but are
covered by a separate sector-specific data flows provision.
State-Owned Enterprises (SOEs). Includes, with
exceptions, enforceable disciplines on SOEs principally
Government Procurement. Would require transparent,
engaged in commercial activities. Provisions would require
nondiscriminatory treatment toward domestic and foreign
purchases and sales be made on the basis of commercial
firms in purchasing decisions by the U.S. government at the
considerations, impartial enforcement of regulations, and
federal level above certain thresholds. Would open
restriction of noncommercial assistance (subsidies).
procurement markets of Brunei, Malaysia, and Vietnam to
TPP countries for the first time.
“Ministers agree that the CPTPP maintains the high
standards, overall balance, and integrity of the TPP.”
Goods Tariffs. Would immediately eliminate most tariffs
among TPP countries. U.S. tariff commitments were made
CPTPP Trade Ministers Statement, November 11, 2017
on a bilateral basis, and are most significant for countries
without an existing U.S. FTA (Brunei, Japan, Malaysia,
Issues for Congress
New Zealand, and Vietnam). Once fully implemented, on
U.S. TPP withdrawal signals a major shift in U.S. trade
average, 98% and 99% of tariff lines would be duty free for
policy and raises questions for Congress as it works with
U.S. exports and imports, respectively, with these countries.
the Trump Administration on trade agreement negotiations
Intellectual Property Rights (IPR). Contains provisions to
and trade policy priorities. The notification and consultation
protect patents, copyrights, trademarks, and includes new
requirements and U.S. negotiating objectives in the 2015
disciplines on trade secrets to combat cyber-theft. Would
Trade Promotion Authority (TPA) legislation continue to
phase in additional patent protections for medicines for
guide this process. Key questions for consideration include:
developing countries and include for biologics an eight-year
data exclusivity, or alternatively, at least five years with
What role should FTAs have in U.S. trade policy and
possible additional measures that could “deliver a
how should the United States prioritize potential future
comparable market outcome.”
bilateral partners?
Includes prohibitions against
circumvention of technological protection measures and
What aspects of TPP should be incorporated in new or
would require adoption of “notice and takedown”
renegotiated U.S. FTAs? What needs changing?
provisions to address Internet service provider liability.
How do other countries’ FTAs affect U.S. firms’
competitiveness abroad, and what is the best response?
Investment. Would remove barriers and provide protections
for foreign investors in TPP countries, including non-
How important is U.S. leadership in establishing trade
discriminatory and minimum standards of treatment, though
rules in the Asia-Pacific and globally?
each country has exempted some sectors or practices
What are the costs and benefits of a bilateral versus
through non-conforming measures (NCMs). Includes an
multi-party approach to U.S. trade negotiations?
investor-state dispute settlement (ISDS) mechanism with
modifications aimed at ensuring each country’s right to
Brock R. Williams, bwilliams@crs.loc.gov, 7-1157
regulate, and would allow countries to block challenges of
Ian F. Fergusson, ifergusson@crs.loc.gov, 7-4997
tobacco control measures under ISDS.
IF10000
www.crs.gov | 7-5700