What is the Trans-Pacific Partnership Agreement?

The TPP is one of the largest trade agreements ever attempted, covering almost 40% of the world’s economy.

The TPP is said to have been designed to enhance trade and investment among the TPP partner countries, to promote innovation, economic growth and development, and to support the creation and retention of jobs. However, major regional economies such as China and India are not part of the TPP, which raises questions about how much it will be able to boost overall trade in the region.

Among other things, the TPP is promising the lowering of trade barriers such as tariffs, the establishment of a common framework for intellectual property, the enforcement of standards for labour law and environmental law, and the establishment of an investor-state dispute settlement mechanism.

The TPP concluded

On 4 October it was announced the TPP has been successfully negotiated.

The deal has been signed by twelve Pacific Rim countries, including Australia, and covers agriculture, resources and energy, manufacturing, and services.

What will the TPP mean in practice?

At this stage it’s difficult to evaluate the exact effect of the TPP as no full official text of the agreement has ever been made available to the public. Australia also has existing trade agreements and relatively low trade barriers with eight of the countries involved in the TPP, so it’s hard to test the assertions of direct benefits to Australia.

A summary of the TPP has been released by the Office of the United States Trade Representative, but there is not enough detail for a proper analysis.

A draft version of the Intellectual Property chapter of the TPP was leaked by WikiLeaks in 2013, and a draft version of the Investment chapter in early 2015, which has led to some consternation across the nations involved.

Many of the details of the TPP were negotiated behind closed doors, drawing persistent criticism that business and political interests dominated the talks at the expense of the public interest. In an era of increased expectations of government accountability and transparency, this was a poor choice by those involved.

Some of the biggest concerns revolve around the environment, intellectual property, workers’ rights and investor-state dispute settlement.

_{The Trans-Pacific Partnership: The dirtiest deal you’ve never heard of (GetUp!, 27 January 2015)}

So, are all the scary TPP stories you have heard true?

First, it’s not unusual for trade agreements to be negotiated behind closed doors. However, the Australian government’s secretive approach to negotiating the TPP, and their lack of engagement with the community on issues of legitimate concern, especially during a time they were already suffering a serious trust-deficit, has created a cloak of fear and mistrust.

Intellectual property

One of the biggest issues that arose from the discussions on intellectual property rights, is whether US drug companies would be able to weaken Australia’s world-class Pharmaceutical Benefits Scheme. Currently the US allows pharmaceutical companies an exclusive period of twelve years to exploit clinical data behind the approval for new biological drugs, and were pushing for that period to be enshrined in the TPP. Australia allows only five years and considered that position ‘non-negotiable.’ According to reports, Australia’s five-year data protection for biologic medicines will remain unchanged, which would mean no increase in the price of medicines in Australia.

In August the The Medical Journal of Australia noted with concern:

One of the key concerns for doctors is access to medicines. Intellectual property rules proposed for the TPPA, if adopted, are likely to prolong monopolies over new medicines and delay the availability of cheaper generics. Resulting cost blowouts to the Pharmaceutical Benefits Scheme (PBS) would play out for patients in higher copayments and reduced access to expensive new treatments, with disadvantaged patients bearing much of the burden. Changes to PBS processes also proposed for the TPPA could compound these problems by preventing effective price regulation and giving the pharmaceutical industry more say in PBS decision making. In addition, pharmaceutical companies may be able to use the investor–state dispute settlement mechanism to sue, or threaten to sue, governments over their pharmaceutical policies. Pharmaceutical company Eli Lilly and Company is currently using an investor–state dispute settlement mechanism to sue the Canadian Government for invalidating patents for two drugs that were found not to deliver the promised benefits.

The TPPA could also make the shared task of tackling chronic non-communicable diseases such as diabetes and heart disease more difficult. Prevention through supportive environments is an essential corollary to general practitioner-based primary prevention. Nevertheless, the rules of these new trade agreements that are focused on domestic policy can reduce the options available to government for regulating products associated with non-communicable disease prevention, namely tobacco, alcohol and food. For example, proposed rules on transparency and regulatory coherence in the TPPA would enshrine the right of industry (both local and international) to contribute to national nutrition policy making. This works against public health efforts to reduce the influence of vested interests on policy design and implementation. Without strong population-based prevention, such as clear labelling of health risks, limitations on advertising and price incentives to reduce consumption (all strongly opposed by industry), the burden falling on GP-based primary prevention will continue to grow.
_{What doctors should know about the Trans-Pacific Partnership Agreement, by Anne Marie T Thow, Deborah H Gleeson and Sharon Friel, Med J Aust 2015; 202 (4): 165-166}

Despite the apparent success in the negotiations for Australia on this point, developing countries may not fare as well. Medecins Sans Frontieres was less than diplomatic in its response to the conclusion of the TPP:

Doctors Without Borders/Médecins Sans Frontières (MSF) expresses its dismay that TPP countries have agreed to United States government and multinational drug company demands that will raise the price of medicines for millions by unnecessarily extending monopolies and further delaying price-lowering generic competition. The big losers in the TPP are patients and treatment providers in developing countries. Although the text has improved over the initial demands, the TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies.

For example, the additional monopoly protection provided for biologic drugs will be a new regime for all TPP developing countries. These countries will pay a heavy price in the decades to come that will be measured in the impact it has on patients. As the trade agreement now goes back to the national level for countries’s final approval, we urge all governments to carefully consider before they sign on the dotted line whether this is the direction they want to take on access to affordable medicines and the promotion of biomedical innovation. The negative impact of the TPP on public health will be enormous, be felt for years to come, and will not be limited to the current 12 TPP countries, as it is a dangerous blueprint for future agreements.
_{Statement by Judit Rius Sanjuan, US Manager & Legal Policy Adviser, MSF Access Campaign (5 October 2015)}

The leaked draft Intellectual Property chapter of the TPP also indicated there was an intention to criminalise even minor copyright infringements, as opposed to the current position where such breaches are civil offences in Australia. In a detailed analysis of the leaked draft provisions, Kimberlee Weatherall, Associate Professor at the Sydney Law School flagged many potential concerns:

… the chapter is still radically unbalanced. There are still far too few safeguards for defendants and third parties in the context of IP litigation. The chapter still fails to include basic safeguards such as requirements that remedies in IP infringement be proportional to the seriousness of the infringement. There is a great deal of potential in this text for vastly overreaching claims by IP owners. Even if we trust that, in the end, courts can probably shoot down really excessive claims or demands, there is an increased incentive for litigation, and increased pressure on defendants to settle, in the kind of enforcement world these provisions imagine.
_{TPP – Australian Section-by-Section Analysis of the Enforcement Provisions of the August Leaked Draft, Unpublished}

Environment

The TPP was seen as a potential vehicle for effective action and cooperation on environmental issues.

While we are yet to see the final text of the Environment chapter, a leaked early draft revealed it contained weak obligations without enforcement mechanism, penalties or criminal sanctions, and had the appearance of a public relations exercise.

As we experience a critical junction in our global climate change response, a week chapter in the TPP on the environment would send a terrible message, and set us up for further climate failure, risking future economic development.

Workers’ rights

Both in the US and Australia concerns have been expressed the agreement could be used to erode the conditions and rights of workers.

However, negotiators offered assurances that the parties to the TPP had agreed to protect fundamental labour rights including freedom of association and the right to collective bargaining, elimination of forced labour, abolition of child labour and the elimination of discrimination in employment. Reportedly, they also agreed to have laws governing minimum wages, hours of work and occupational safety and health.

It will be interesting to see what the TPP will mean for workers in countries, such as Vietnam, which currently fail to fully comply with international labour standards.

Investor-state dispute settlement

Also of serious concern are investor-state dispute settlement mechanisms, which allow international corporations to sue governments over policy and law changes that harm their business, or have a negative effect on their business investments.

One of the best known Australian cases that arose from investor-state dispute resolution provisions was the case of tobacco company Philip Morris suing the Australian government over our plain packaging legislation. Philip Morris consequently sued Australia under an investor-state dispute settlement provision in a Hong Kong-Australia investment agreement. The claim has been unsuccessful so far, but costly to fight, and highlights the very valid public concerns about the nature of such provisions in international trade agreements.

The current Chief Justice of the High Court of Australia, the Honourable Robert French AC, noted that investor-state dispute settlement provisions have implications for national sovereignty, democratic governance and the rule of law.

Of course it is possible to safeguard a nation’s interests when incorporating an investor-state dispute settlement mechanism into a trade agreement. For example, exemptions can be included for laws relating to critical areas of public interest such as the environment and public health, and even particular regulatory objectives.

Such public interest exceptions are included in the draft TPP leaked by WikiLeaks. Still, such exemptions may lead to arguments as to whether a particular government action validly falls within those exceptions.

Economic benefits

One the other side of the argument, one major study concluded the TPP would increase our economic growth by 0.5% by 2025, while another put the growth at a lower 0.3%. However, a third US report, by the US Department of Agriculture indicated zero growth benefit from the deal for Australia. The potential benefits are dependant of course on the final terms of the deal.

In a less than encouraging sign, a 2010 study by the Australian Productivity Commission into Australia’s bilateral and regional trade agreements noted ‘[t]he Commission has received little evidence from business to indicate that bilateral agreements to date have provided substantial commercial benefits,’ and it ‘appears that businesses generally have made limited use of the opportunities available from Australia’s existing BRTAs.’

When will the TPP come into effect?

It is expected the final drafting of the document will take a few more months to complete. Then, the US Congress will have three months to review it before it votes on it, by which time the US presidential campaign will be in full swing, with the TPP likely swept up in the political hurricane that will be the 2016 presidential election.

The legislatures of each other member State will also have to approve the TPP before it can be implemented.

Closer to home, a campaign is already taking shape to convince the Senate to reject it. Perhaps that’s a little premature until we get the opportunity to consider the final text of the agreement.

But at least, once the TPP is introduced into Parliament we will be able to see the full final text of the agreement and will be able to form an informed view about its appropriateness.