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President Obama announced on 14 November that the United States will engage with the Trans-Pacific Partnership (TPP) countries “with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement”. While the negotiation will be of wide interest as a route to a more open trade relationship with the US, from a larger perspective its greatest potential is as a pathfinder for wider regional economic integration.
The Trans-Pacific Strategic Economic Partnership Agreement (TPP, previously known as ‘P4’) between Brunei Darussalam, Chile, New Zealand and Singapore was signed in 2005. The first round of negotiations to expand the TPP to include the United States, Australia, Peru and Viet Nam was scheduled to take place in March 2009. However, in February 2009, the US requested a postponement of the first set of talks to allow time for a review US trade policy and priorities. The 14 November announcement signals that the US is now ready to proceed with the negotiation. The first round of negotiations is now expected to take place in March 2010.
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The TPP has emerged as having potential as a platform for a regional trade agreement and is expected to expand further in future. The current participants agree on the need to maintain and improve upon the standards and comprehensiveness of the existing Agreement (P4). This is important for the longer-term goal of achieving a high-quality regional agreement.
Public consultation, including a call for public submissions, took place in late 2008 and early 2009 prior to the postponement of the first round. Officials will undertake further consultations following the first round in March.
The Trans-Pacific Strategic Economic Partnership Agreement was signed by New Zealand, Chile and Singapore on 18 July 2005 and by Brunei on 2 August 2005, following the conclusion of negotiations in June 2005. A binding Environment Cooperation Agreement and a binding Labour Cooperation Memorandum of Understanding, which had been negotiated as part of the Trans-Pacific package, were signed concurrently.
The original Trans-Pacific Agreement negotiations were launched by Chile, New Zealand and Singapore at the APEC leaders’ summit in 2002. After attending a number of rounds as an observer, Brunei joined the Trans-Pacific Agreement as a “founding member”. It was given some flexibility to implement its commitments in light of its late joining. For example, it was given more time to negotiate its services and government procurement schedules. Negotiations on those schedules took place in 2008, and Brunei completed its ratification process in July 2009.
Following the passage of implementing legislation and regulations in March and April 2006, the Trans-Pacific Agreement entered into force on 1 May 2006 for New Zealand and Singapore. Brunei deposited an instrument of provisional application on 12 May 2006 – the Trans-Pacific Agreement provisionally applied to Brunei from 12 June 2006 and came into full force in July 2009. The Agreement entered into force for Chile on 8 November 2006.
On entry into force, duties were eliminated on 90% of New Zealand’s exports to Chile, (representing an immediate duty saving of NZ$1.9million) and on 92% of New Zealand’s exports to Brunei. All of Chile’s remaining tariffs on New Zealand’s exports will be phased out by 2017 and to Brunei by 2015. In return New Zealand will phase out all its tariffs by 2015. Under the existing New Zealand-Singapore Closer Economic Partnership (NZSCEP), tariffs between New Zealand and Singapore are already zero.
The NZSCEP (which entered into force on 1 January 2001) will continue to remain in force. In an arrangement between New Zealand and Singapore, exporters from both countries will be able to choose the better of the treatment afforded under either the NZSCEP or the Trans-Pacific Agreement. This is designed to ensure that no trader is left worse off.
One of the objectives of the Trans-Pacific Agreement was to create a trade agreement that could be seen as a model within the Asia-Pacific region and could potentially attract new members. The agreement is open to accession “on terms to be agreed among the parties, by any APEC economy or other state”.
As part of the original outcome of negotiations in 2005 it was agreed to begin negotiations on financial services and investment within two years of entry into force. Those negotiations began in March 2008, with the United States participating while it considered whether to enter into negotiations to join the Trans-Pacific Agreement on a comprehensive basis. On 22 September 2008, comprehensive negotiations for the United States to join the Trans-Pacific Agreement were announced. Australia, Peru and Viet Nam also intend to participate in negotiations.
