Proposed Trans-Pacific Partnership (TPP)

Proposed Trans-Pacific Partnership (TPP)

November 19, 2014
Proposed Trans-Pacific Partnership (TPP)
Overview
ability to regulate health, labor, and environmental
standards.
What is it? The TPP is a potential “comprehensive and
high-standard” free trade agreement (FTA) among 12
Country Participation
countries, most recently including Japan, which aims to
liberalize trade in goods and services and remove barriers to
The TPP originated from FTA negotiations among Brunei,
foreign investment. The TPP negotiations cover a range of
Chile, New Zealand, and Singapore. The United States
trade topics and include 29 separate sections or “chapters.”
joined in 2008 and membership has since expanded. Most
recently, Japan joined the negotiations in July 2013, during
What is the current status? The negotiations remain
the 18th round in Malaysia. This followed Japan’s official
ongoing. TPP Ministers and Leaders met on the sidelines of
request to participate and required the consent of the then-
the recent APEC meetings in Beijing, November 7-11, but
11 TPP countries.
no agreement was reached, despite President Obama’s

suggestion of such an outcome earlier in the summer. TPP
The United States is the largest country in the negotiations,
Leaders stated that finishing the negotiations is a top
both in terms of population and gross domestic product
priority and Trade Ministers reported that the pace of
(GDP), with Japan second in both categories (Figure 1).
negotiations has accelerated and outstanding issues are
The United States has existing FTAs in place with six of the
limited, but include state-owned enterprises, environment,
other TPP countries, including Canada and Mexico. It does
intellectual property, and investment, as well as market
not have an FTA with Brunei, Japan, Malaysia, New
access talks with Japan, particularly on agriculture and
Zealand, or Vietnam.
autos. There is no public text of an agreement available at
this time, but TPP Leaders released a broad outline of TPP
Figure 1. TPP Country Demographics
goals on the sidelines of the 2011 APEC forum meetings.
“... [a] common vision to establish a comprehensive,
next- generation regional agreement that liberalizes
trade and investment and addresses new and
traditional trade issues and 21st-century challenges.”
TPP Leaders Statement, November 2011
How would it differ from other U.S. FTAs? First, the
TPP would be the largest regional FTA ever negotiated by
the United States in terms of member countries and
encompassed trade flows. Second, the TPP includes
negotiations on new or expanded commitments on issues
such as state-owned enterprises, global value chains, data
flows, and discriminatory regulatory barriers. Third, TPP
partners envision a “living” agreement that could continue
to incorporate new members and address new trade issues.
What are supporting views? Supporters see an
opportunity for increased geopolitical and economic
engagement with the Asia-Pacific region, through both
establishing new rules and gaining increased market access.

They also cite the potential for increased economic and job
Source: IMF World Economic Outlook, 2014. Graphic created by
growth through greater trade liberalization.
CRS.
What are opposing views? Opponents are concerned about
Key Negotiating Issues
increased import competition from TPP countries in
specific sectors and potential negative employment impacts
Market Access. TPP partners are seeking a comprehensive
in such sectors. They have also voiced concerns over
market access agreement that reduces and eliminates tariff
potential infringement on U.S. sovereignty including the
and non-tariff barriers on all goods, including agriculture,
and services.
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Proposed Trans-Pacific Partnership (TPP)
Rules. The TPP partners also seek to establish disciplines
Services. As one of the most competitive sectors of the U.S.
and rules governing international trade practices among the
economy, U.S. FTAs typically cover services through
parties, across a range of policy issues.
greater market access and disciplines for trade in financial,
professional, e-commerce, telecommunications, and express
New and Horizontal Issues. TPP partners are negotiating
delivery services.
potential disciplines that go beyond those in existing U.S.
FTAs or negotiations at the World Trade Organization
State-Owned Enterprises (SOEs). A new issue of focus in
(WTO). These new or expanded disciplines may cover
the TPP, U.S.-proposed SOE disciplines seek to address
broad categories such as competition with state-owned
concerns expressed by U.S. companies of a competitive
enterprises and regulatory coherence, as well as specific
disadvantage relative to state-backed foreign competitors.
issues such as data flows, where U.S. companies claim new
trade restrictions have emerged.
Economic Significance

 The TPP would be the largest FTA by trade-flows,
In addition, negotiators have flagged certain topics, such as
though over 80% of U.S.-TPP trade is already covered
global supply chains, that relate to disciplines in multiple
under existing U.S. FTAs.
chapters of the negotiations. They are reportedly
approaching each TPP chapter with consideration for how
 Total U.S. trade with TPP countries was more than $1.5
its disciplines may affect these cross-cutting issues.
trillion in goods and $273 billion in services in 2013.
 The 11 TPP partners accounted for 37% of all U.S.
Specific Issue Areas
goods and services trade in 2013 (Figure 2).
Agriculture. Agriculture is an important component of U.S.
More Information
trade and is being addressed in TPP negotiations in terms of
market access in which the United States has both offensive
Figure 2. Shares of 2013 U.S. Trade
and defensive interests, as well as rules, such as sanitary
and phytosanitary standards (SPS).
Customs and Trade Facilitation. Access to foreign markets
depends on facilitating the movement of goods and services
across borders. The TPP includes negotiations on
disciplines that seek to address these issues.
Dispute Settlement. Provisions on dispute settlement
establish the mechanism by which FTA disciplines are
enforced. Not all disciplines of the TPP would necessarily
be enforceable and hence subject to these provisions.
Government Procurement. Government procurement
disciplines aim to ensure transparent, nondiscriminatory
treatment toward domestic and foreign firms when
government entities make purchasing decisions. Debate in
the TPP continues on the range of procurement to be
covered.
Intellectual Property Rights (IPR). Intellectual property
rights protect U.S. innovations in various forms. TPP

negotiations may address the strength of IPR protections in
Source: Analysis by CRS. Data from ITC and BEA.
areas such as trademarks, copyright, patents, trade secrets,
Notes: TPP-9 refers to Australia, Brunei, Chile, Malaysia, New
and others as they relate to traded goods and services.
Zealand, Peru, Singapore, and Vietnam; TPP-11 adds Canada and
Mexico; and TPP-12 adds Japan.
Investment. In addition to goods and services, U.S. FTAs
also include provisions governing investment flows. A key
For more information see CRS Report R42694, The Trans-
issue is the possible inclusion of an investor-state dispute
Pacific Partnership Negotiations and Issues for Congress.
settlement (ISDS) mechanism.
Also see CRS Report R42344, TPP Countries:
Comparative Trade and Economic Analysis; CRS Report
Labor and Environment. Labor and environment provisions
R42772, U.S. Textile Manufacturing and the TPP; and CRS
attempt to address concerns over the protection of workers’
Report RL33743, Trade Promotion Authority (TPA) and the
rights and the environment. Debate continues on their scope
Role of Congress in Trade Policy.
and enforceability in the TPP.
Brock Williams, bwilliams@crs.loc.gov, 7-1157
Rules of Origin. Rules of origin determine how goods with
Ian Fergusson, ifergusson@crs.loc.gov, 7-4997
components from non-TPP countries are treated and will
affect the degree of market openness that is achieved.
IF00001
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