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TPP Talks: Second Round, Square One

Last week, the second* round of talks in the Trans-Pacific Partnership (TPP) negotiations were held in San Francisco.  Although generally the negotiators are tight-lipped about what is happening at the negotiating tables behind the closed doors, a few snippets of information have trickled out.  A big open question going into these first rounds of talks has been how to handle the tangled “spaghetti bowl” of existing trade agreements between the TPP negotiating partners. The U.S. alone has FTAs with four of the TPP countries already.  In total, there are 11 FTAs already in force between all the countries (to see a list of the 11 agreements, check out page 5 of our January comments on the TPP).  So, do you throw out these trade agreements and start from a clean slate, leave them intact and negotiate around them, or do something in between the two?

Well, we’ve already had two rounds of talks and the negotiators can’t yet decide on this fundamental issue, according to Inside U.S. Trade (subscription only).   The USTR favors keeping the existing agreements intact, but Australia, New Zealand and Singapore want to re-open all the old rules in those agreements for the TPP:

[Australia, New Zealand and Singapore] would all prefer plurilateral market access negotiations between all TPP members that would result in a single, unified market access schedule. Through this approach, it would be at least theoretically possible to establish common tariffs among TPP members, sources said.

Likewise, those countries would prefer to “reopen” existing FTA market access schedules. Under this approach, everything would be on the table, and Australia could look to increase its sugar market access into the U.S., even though sugar was excluded from the U.S.-Australia FTA.

Given these difficulties over even the basic structure of the TPP, it seems unlikely that a TPP will be signed before November 2011, which is when the lobbyists for big business want it finished. There may be a reason why the big business lobbyists want the negotiations to be finished so quickly.   They just want the old awful NAFTA text to be copied and pasted into the TPP, which won’t take long at all. However, if the Office of the U.S. Trade Representative (USTR) fulfills President Obama’s campaign promises and negotiates for an agreement based on a new pro-worker, pro-environment trade model, it won’t be as quick as the good old copy-paste that we’ve seen with the recent FTAs.

Meanwhile, the USTR has tried to tout the alleged economic benefits of the TPP, claiming that “The Trans-Pacific Partnership offers tremendous opportunities for U.S. exporters,”  but in reality the TPP is small potatoes economically. Of the seven countries that are chatting in San Francisco this week, four of them (Australia, Singapore, Chile, and Peru) already have an FTA with the U.S. in force.  The remaining three (Brunei, Vietnam, and New Zealand) constitute only 14 percent of the total GDP of the TPP negotiating partners (excluding the U.S.).  To put the economic consequence of these nations in sharper relief, these three countries combined account for less than one half of one percent of global economic activity. 

Given these facts, the USTR should recognize that the most important role of the TPP in U.S. trade strategy will be in changing the FTA model rather than having a big economic impact.  The USTR should ensure that any TPP text will include strong environmental and labor protections and exclude harmful invest-to-state lawsuit provisions, unreasonable drug patent restrictions, and financial service deregulation.

*In reality, the Bush administration participated in three rounds of TPP talks with Brunei, Chile, New Zealand, and Singapore in 2008, seeking to deregulate financial services – all the more reason for the USTR to start from scratch with a new trade model.

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