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TPP Negotiations Are Successfully Concluded

by Mike Godfrey, Tax-News.com, Washington

06 October 2015


On October 5, the trade ministers of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam announced the successful conclusion of negotiations for the Trans-Pacific Partnership (TPP), following meetings over five days in Atlanta.

Talks on the extended TPP (originally signed between only New Zealand, Chile, Singapore and Brunei in 2005) began officially in March 2010. Its new format will now cover some 40 percent of the global economy, a market of 800m people, and about one-third of all world trade.

A statement by the trade ministers confirmed that, "after more than five years of intensive negotiations, we have come to an agreement that will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region."

While the text of the agreement remains unavailable, the United States Trade Representative (USTR) has disclosed that the TPP includes 30 chapters covering such trade and trade-related issues as trade in goods; customs and trade facilitation; sanitary and phytosanitary measures; technical barriers to trade; investment and dispute settlement; services; electronic commerce; government procurement; intellectual property; and the environment.

According to the USTR, TPP countries have agreed "to eliminate and reduce tariffs and non-tariff barriers on industrial goods, and to eliminate or reduce tariffs and other restrictive policies on agricultural goods."

Most tariff elimination in industrial goods will be implemented immediately, although tariffs on some sensitive products will be eliminated over longer timeframes. The countries have also agreed not to impose World Trade Organization-inconsistent import and export restrictions and duties, and, if they maintain import or export license requirements, they will notify each other about the procedures so as to facilitate trade flows.

TPP members have agreed to eliminate tariffs on textiles and apparel, which are important contributors to economic growth in several TPP markets. Specific rules of origin are also included that require use of yarns and fabrics from the TPP region, which will promote regional supply chains and investment in this sector.

It appeared that the remaining elements that had held up TPP's final conclusion were an intellectual property issue over the length of time protecting pharmaceutical companies' advanced medicines; more access for dairy products, particularly into Canada; and the rules of origin for auto manufacturers.

To formalize the outcomes of the agreement, negotiators will continue technical work to prepare a complete text for public release, including the legal review, translation, and drafting and verification of the text. The deal will then need to be ratified by lawmakers in each country.

President Barack Obama obtained renewed trade promotion authority (TPA) earlier this year, which should allow completed trade treaties to be fast-tracked through the US Congress. However, there are still questions over whether US lawmakers concur that the TPP agreement follows the negotiation criteria set by Congress for TPA to become operable.

In his statement following the successful conclusion of negotiations, President Obama noted that the TPP "levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products. … It's an agreement that puts American workers first and will help middle-class families get ahead. I look forward to working with lawmakers from both parties as they consider this agreement."

TAGS: environment | tax | Brunei | Chile | commerce | intellectual property | tariffs | trade treaty | Australia | Mexico | Singapore | food | agreements | manufacturing | Canada | Malaysia | New Zealand | Peru | United States | import duty | trade | Japan | Vietnam | services | Asia-Pacific

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