CPTPP or TPP11 for trade nerds

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Asian Trade Centre | 11 November 2017

CPTPP or TPP11 for trade nerds

by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore

Read Ministerial Statement on TPP11 here.

Our matching Talking Trade post for today highlights the importance of the agreement for businesses. We have also published a new booklet for firms to help figure out how to plan for TPP11 implementation.

This post, however, is for trade nerds who want to dig deeper into the agreement announced this morning in Danang.

So what happened and what is new?

For a start, the agreement appears to have been renamed. It is officially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The TPP11, however, is essentially identical to the original document. The new version has seven elements:

Preamble

Article 1: Incorporation of the Trans-Pacific Partnership Agreement

Article 2: Suspension of the Application of Certain Provisions

Article 3: Entry into Force

Article 4: Withdrawal

Article 5: Accession

Article 6: Review of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Article 7: Authentic Texts

Broken down, the new elements are the inclusion of the suspended bits (discussed more below), the revised entry into force (necessary after the US pulled out), a new section on withdrawal (the necessity of which was made crystal clear after the US pulled out), a new section on accession (since the old one was too vague anyway), a potentially interesting article 6 that seems to review the whole agreement in the future, and article 7 that copies across all of the original commitments and texts from TPP12.

What this means in practice is that the CPTPP or TPP11 has identical schedules and commitments for members to TPP12. Everyone should start pulling out their TPP12 materials and reviewing documents to refresh memories now. Firms need to prepare for entry into force which is coming up fast.

The changes can be found in Article 2, which suspends some of the rules from TPP12. The list is nearly all agreed, except for four provisions. These are the four areas still apparently under discussion:

Items to be Finalised by the Date of Signature by consensus among all Parties for suspensions to take effect

1. State Owned Enterprises, Annex IV (Malaysia)

2. Services and Investment Non-Conforming Measures, Annex II - Brunei Darussalam - 14 – Coal – paragraph 3

3. Dispute Settlement (trade sanctions) – Article 28. 20 (Vietnam)

4. Cultural Exception (Canada)

Some of these issues are narrow and locked down, others are broad (items 1 and 4).

The key for some firms (but not so many, really) is which provisions are suspended in TPP11. The list is the following:

1. Express Shipments – Article 5.7.1(f) - suspend second sentence

2. Investment Agreement and Investment Authorisation (ISDS applies to these)

9.1 Definitions - suspend “investment agreement” and “investment authorisation” and associated Footnotes (5 - 11)

9.19.1 Submission of Claim to Arbitration - a(i) B and C; (b)(i) B and C (investment authorisation or investment agreement), chausette, footnote 31

9.19.2 Submission of Claim to Arbitration, footnote 32

9.19.3 Submission of Claim to Arbitration - (b)delete investment authorisation or investment agreement

9.22.5 Selection of Arbitrators

9.25.2 Governing Law

Annex 9-L Investment Agreements

3. Express Delivery Services – Annex 10-B - suspend paragraph 5 and 6

4. Minimum Standard of Treatment in Article 11.2 – suspend sub-paragraph 2(b); footnote 3 and Annex 11-E

5. Resolution of Telecommunications Disputes - Article 13.21.1(d)

6. Conditions for Participation - Article 15.8.5 - Commitments relating to labour rights in conditions for participation

7. Further Negotiations - Article 15.24.2 - suspend “No later than three years after the date of entry into force of this Agreement” *

* footnote: The Parties agree that negotiations referred to in Article 15.24.2 shall commence no earlier than five years after entry into force of this Agreement, unless the Parties agree otherwise. Such negotiations shall commence at the request of a Party.

8. National Treatment - Article 18.8 footnote 4 – suspend last two sentences

9. Patentable Subject Matter - Article 18.37.2 and 18.37.4 (Second Sentence)

10. Patent Term Adjustment for Unreasonable Granting Authority Delays - Article 18.46

11. Patent Term Adjustment for Unreasonable Curtailment – Article 18.48

12. Protection of Undisclosed Test or Other Data- Article 18.50

13. Biologics - Article 18.51

14. Term of Protection for Copyright and Related Rights - Article 18.63

15. Technological Protection Measures (TPMs) - Article 18.68

16. Rights Management Information (RMI) - Article 18.69

17. Protection of Encrypted Program-Carrying Satellite and Cable Signals - Article 18.79

18. Legal Remedies and Safe Harbours - Article 18.82 and Annexes 18-E and 18-F

19. Conservation and Trade (measures ‘to combat’ trade) - Article 20.17.5 – suspend “or another applicable law” and footnote 26

20. Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices - suspend Annex 26A - Article 3 on Procedural Fairness

What does this list mean? As expected, the biggest hit overall can be found in the IP chapter 18. However, note that the chapter as a whole continues forward. Officials instead have struck off temporarily only certain provisions. In some cases, only parts of sentences were put on hold.

As an example, consider item 14. What this sentence means is that copyright in the TPP12 had extended the protection term to life of the author plus 70 years. Under TPP11, this is suspended. Countries that protect for 50 years can continue to do so under TPP11 for now. If the TPP, in the future, lifts this suspension, this will revert to life plus 70. If it never gets lifted, members can remain at life plus 50 years.

Most of the suspended provisions were items that the United States fought for, of course, and other members felt less passionately about protecting after US withdrawal.

The net impact of these suspended items will depend on individual firms.

Note, however, what was NOT suspended. The e-commerce chapter remains. Data flow continues. The IP chapter as a whole continues. While ISDS also took a hit, most of the provisions remain intact. All member country commitments (except possibly Malaysia SOEs and Canada culture?) are still in place.

Many are asking if the TPP11 is worthwhile. The answer is a resounding “yes.” Members have managed the near-impossible task of holding on to the high quality, ambitious agreement despite tremendous headwinds. The final agreement is nearly identical to the original.

Is the agreement perfect? Of course not. Is it what members would have negotiated had they known what would happen in the end? Probably not. But we would never had gotten to this point had all these twists and turns not been followed.

We should pay tribute here to the tireless efforts of a few key officials—to Barbara Weisel and Michael Froman of the US, who managed to drag this forward over years of work, to the entire Japanese delegation who seized the opportunity after January to continue to promote high quality trade in Asia, to the New Zealand delegation for doggedly working behind the scenes in March and June and beyond to line up support, to the Australians for maintaining enthusiasm, and to Vietnam who—despite developmental challenges—took on the task of agreeing to ambitious outcomes and stuck with it to the bitter end in Danang.

It will be worth it.

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