Updated March 9, 2018
TPP: Overview and Current Status
What is it? The Trans-Pacific Partnership (TPP) was a
proposed free trade agreement (FTA), signed by 12 AsiaPacific countries on February 4, 2016, after 8 years of
negotiation. In January 2017, the United States notified the
other TPP signatories that it would not ratify the agreement,
effectively ending TPP’s potential entry into force as
written. On March 8, 2018, the remaining 11 TPP parties
signed the new Comprehensive and Progressive Agreement
on Trans-Pacific Partnership (CPTPP). CPTPP would
essentially bring a slightly modified TPP into effect among
the 11 remaining TPP signatories. The new agreement
would freeze a limited number of provisions (20) that were
included in the TPP, in part, at U.S. insistence. These
suspended provisions, which include commitments on
investment and intellectual property rights, could
potentially be reinstated were the United States to consider
rejoining the agreement.
TPP aimed to reduce and eliminate tariff and nontariff
barriers on goods, services, and agriculture. It would have
established trade rules and disciplines that expanded on
commitments at the World Trade Organization (WTO) and
addressed new issues. The U.S. withdrawal has economic
and foreign policy implications for the United States, and
raises potential strategic issues regarding U.S. trade policy
and broader regional engagement.
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 2017, the Administration began renegotiation of
NAFTA, the largest U.S. FTA, with Canada and Mexico,
and in January 2018 started official 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, significantly draw on TPP
provisions. Moving forward, the Administration intends to
negotiate bilaterally on new FTAs, and has suggested TPP
countries, particularly Japan, as among the top candidates,
in addition to the United Kingdom. More recently,
President Trump announced willingness to negotiate
collectively with the five TPP countries that are not
currently U.S. FTA partners (Figure 1) and to consider
rejoining a revised TPP agreement. To date, no TPP
countries 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 and other
regional pacts. Key among the regional agreements is the
Regional Comprehensive Economic Partnership (RCEP), an
Association of Southeast Asian Nations (ASEAN)-led
initiative that includes China and seven TPP countries, but
not the United States. The European Union is also
negotiating FTAs with a number of Asian countries,
including Japan and Vietnam. To the extent these
agreements take a different approach on issues such as the
level of liberalization, intellectual property rights, labor and
environment commitments, and new rules like state-owned
enterprises and e-commerce, they could result in provisions
favoring the parties involved and not the United States.
They could also put U.S. exporters at a competitive
disadvantage as these agreements lower market access
barriers among the participants.
Stakeholders Views on U.S. Withdrawal. Supporters of
withdrawal opposed TPP over concerns it would increase
U.S. imports, lead to job losses, and cede U.S. sovereignty.
Opponents argue that U.S. withdrawal has lessened U.S.
influence and U.S. firms’ competitiveness in the region,
given other countries, particularly China, greater influence
in establishing regional trade rules, and removed incentives
for reforms in TPP countries, such as Vietnam, as well as
possible future participants. Many also argue withdrawal
signals declining U.S. political and economic engagement
in the region in the face of China’s rise and increasing
challenges to the U.S.-led, rules-based trading system.
Figure 1. 2016 TPP and U.S. Country Demographics
Source: IMF World Economic Outlook, April 2017. CRS graphic.
The TPP, as originally signed by the United States,
included 30 separate chapters. Some of its provisions could
TPP: Overview and Current Status
serve as a starting point for future U.S. trade negotiations.
TPP without the CPTPP modifications, would have had the
following potential outcomes:
Agriculture. Would reduce and eliminate tariff and
nontariff barriers on agriculture products and address the
resolution of disputes regarding sanitary and phytosanitary
standards (SPS). Tariff and quota protections would remain
on some sensitive products.
Autos. Would require eventual elimination of auto and auto
parts tariffs, including U.S. 2.5% auto and 25% truck tariffs
over 25 and 30 years. Special provisions would target U.S.Japan trade, requiring Japan to address nontariff barriers
relating to transparency and distribution, among others.
Currency. Would affirm commitments to transparency and
against competitive devaluations through a joint
declaration, not subject to dispute settlement.
E-Commerce/Digital Trade. Would require free flow of
data across borders, with exceptions for public policy
interest regulations and (like all provisions) national
security considerations. Would prohibit requirements to
localize computing facilities or share source code to gain
market entry, prohibit duties on digital products, and
require privacy regimes. Financial services are excluded
from the e-commerce chapter, including forced localization
commitments, but are covered by a separate sector-specific
data flows provision.
Government Procurement. Would require transparent,
nondiscriminatory treatment toward domestic and foreign
firms in purchasing decisions by the U.S. government at the
federal level above certain thresholds. Would open
procurement markets of Brunei, Malaysia, and Vietnam to
TPP countries for the first time.
Goods Tariffs. Would immediately eliminate most tariffs
among TPP countries. U.S. tariff commitments were made
on a bilateral basis, and are most significant for countries
without an existing U.S. FTA (Brunei, Japan, Malaysia,
New Zealand, and Vietnam). Once fully implemented, on
average, 98% and 99% of tariff lines would be duty free for
U.S. exports and imports, respectively, with these countries.
Intellectual Property Rights (IPR). Would protect patents,
copyrights, trademarks, and include new disciplines on
trade secrets to combat cyber-theft. Would phase in
additional patent protections for medicines for developing
countries and include for biologics an eight-year data
exclusivity, or alternatively, at least five years with possible
additional measures that could “deliver a comparable
market outcome.” Would prohibit circumvention of
technological protection measures and require adoption of
“notice and takedown” provisions to address Internet
service provider liability.
Investment. Would remove barriers and provide protections
for foreign investors in TPP countries, including nondiscriminatory and minimum standards of treatment, though
each country has exempted some sectors or practices
through non-conforming measures (NCMs). Includes an
investor-state dispute settlement (ISDS) mechanism with
modifications aimed at ensuring each country’s right to
regulate, and would allow countries to block challenges of
tobacco control measures under ISDS.
Worker Rights. Would require countries to adopt and not
derogate from laws consistent with core ILO Principles on
freedom of association and elimination of forced labor,
child labor and employment discrimination in matters
related to trade and investment. Includes specific
implementation plans for Brunei, Malaysia, and Vietnam.
Environment. Would require countries to enforce and not
derogate from their environmental laws to attract trade and
investment, implement specified multilateral environmental
agreements (MEA) they have joined, and prohibit certain
fishing subsidies, among other provisions.
Rules of Origin (ROOs). Would determine whether goods
originate within TPP and are eligible for TPP benefits.
Would establish a yarn-forward ROO for textile and apparel
products with exemptions based on a short-supply list, and
45%-55% regional value content ROO for autos and 35%45% for auto parts, depending on the calculation method.
Services. Would provide core obligations of national
treatment, most-favored nation treatment, market access,
and local presence on a negative list basis applicable to all
cross-border services sectors, except those explicitly
excepted as NCMs. Includes separate provisions for
financial services, with added sector-specific exemptions.
State-Owned Enterprises (SOEs). Includes, with
exceptions, enforceable disciplines on SOEs principally
engaged in commercial activities. Provisions would require
purchases and sales be made on the basis of commercial
considerations, impartial enforcement of regulations, and
restriction of noncommercial assistance (subsidies).
“[T]he United States is prepared to negotiate...trade
agreements...[including] the countries in
TPP...individually, or perhaps as a group.”
President Trump, January 26, 2018
Issues for Congress
U.S. TPP withdrawal signals a shift in U.S. trade policy and
raises questions for Congress as it works with the Trump
Administration on trade agreement negotiations and trade
policy priorities. The notification and consultation
requirements and U.S. negotiating objectives in the 2015
Trade Promotion Authority (TPA) legislation continue to
guide this process. Key questions for consideration include:
What role should FTAs have in U.S. trade policy and
how should the United States prioritize potential future
What aspects of TPP should be incorporated in new or
renegotiated U.S. FTAs? What needs changing?
How do other countries’ FTAs affect U.S. firms’
competitiveness abroad, and what is the best response?
How important is U.S. leadership in establishing trade
rules in the Asia-Pacific and globally?
What are the costs and benefits of a bilateral versus
multi-party approach to U.S. trade negotiations?
Brock R. Williams,
Ian F. Fergusson,
TPP: Overview and Current Status
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
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