Understanding the Trans-Pacific Pact and Its Effects on Australia and the Philippines

  One of the biggest global trade agreements has reached a deal.   The Trans-Pacific Pact (TPP) is a global trade pact between 12 member countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.   The pact is set to enhance trade and investment among TPP partner countries that will in turn promote innovation, expand economy, and support the creation and retention of jobs.   The pact also makes possible the reduction, if not total elimination, of duty taxes between participating countries.   TPP envisions a closer relationship among partner countries based on economic policies and regulatory issues.   This is a major global move:   The US is taking the lead initiative in TPP talks despite the fact that it was originally a pact between four countries namely, Brunei, Chile, Singapore and New Zealand in 2006 known as the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4). By 2008 Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States and Vietnam joined the pact.   For the US, this move may just be US President Obama’s legacy achievement by linking countries that represent two-fifths of the global economy. This may be the key for US growth. In fact, data from 2014 shows that goods traded amounted to $658 billion with Canada alone. Creating a more open trade agreement would possibly increase this amount.   Furthermore, participating countries of TPP are all members of the Asia-Pacific Economic Co-operation (APEC). Combining their population is at 650 million people as of 2013. Their average per capita income in 2011 was at $31,491, their combined gross domestic product stood at more than $20 trillion. It goes without saying that this is a huge open market.   Some also see TPP as a means to buffer China’s rising power.   Mr. Obama is quoted saying “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy….We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment” This is a little too good to be true:   There are several issues surrounding TPP. One biggest issue is transparency, or lack thereof.   Different groups in participating countries would like to have public participation and access on topics that concern them.   Supporters, on the other hand, said that secrecy is necessary because there is no formal agreement yet and this is so to avoid being “pressured” by the different groups.   The 12 country representatives had been meeting for years to debate about policies regarding intellectual property rights, patent enforcement especially in sectors such as medicine, environmental issues, and agreements between countries who export the same goods like Canada and New Zealand with dairy products and US and Japan with Auto trade.   What concerns Australia:   Speaking of such groups, Choice, a consumer group in Australia voice out its concerns regarding TPP. They point out that the country will be worse off as changes are going to sweep across every sector from internet use to medicine prices.   Copyright laws   According to the group, TPP member countries may impose criminal penalties for copyright infringement. Currently, in Australia, copyright infringement is only a civil penalty.   In the group’s view, this may turn a simple selfie into a copyright issue if taken in a movie house. It may also “lock” Australia into the last century than propel it in the future by imposing a copyright system that is not “reformed for the future.”   On the other hand, Annissa Brennan from the Motion Picture Association of America, believes that companies will not promote generation of new work unless a copyright law is made to protect the original.   Food Safety and Labelling   TPP does not require countries to provide information on where food came from.   Matt Levey, spokesperson of Choice believe that “There is a real risk that the TPP will make it even harder for us to get the simple, meaningful food labelling that Australian shoppers want in the supermarket.”   However, the government maintained that TPP will retain rights under the World Trade Organization (WTO). Under WTO, governments can make policies related to human health and safety.   Cost of Medicine   A lot of people are anxious about this. After all, intellectual property and patent has been one of the roadblocks of this trade pact. Several members of the TPP push for a longer pharmaceutical patent.   According to Mr. Levey, this may make prices of medicine go higher and ultimately affect Australia’s Pharmaceutical Benefits Scheme citing academics research that estimates the relation of keeping drugs longer and the increase in price of medicines.   Nevertheless, the group Medicine Australia wrote an open letter to Parliament recommending policy makers to ignore critics stating that this is the same concern of the critics nearly 10 years ago when Australia signed a free trade agreement with the US.   Corporate Tribunals   TPP has a clause on Investor State Dispute Settlement (ISDS). ISDS allows companies abroad to sue signatory governments for loss of future profits, much like the case of Philip Morris, a tobacco company suing the country using the ISDS provision in a Hong Kong-Australia investment agreement.   In Mr. Levey’s opinion, this is unnecessary and dangerous. He added that even the Productivity Commission is concerned that “ISDS is a risk too far, that the benefits don’t outweigh the costs.”   A spokesperson for trade Minister Andrew Robb contradicted this view saying that Australia is “progressively engaged with now 28 countries with investment agreements which include an ISDS … and the sun is still coming up every morning.”   Mr. Robb also said that negations may be kept secret for now but “Once it is agreed between participants, it will be made public and also subjected to parliamentary scrutiny prior to any final ratification.”   He also added that “The Australian Government is not intending to sign up to international agreements that would restrict Australia’s capacity to govern in our own interest.”   TPP is generating a lot of critics and protests in cities of the member countries. Still, many other countries are showing interest to join including the Philippines.   Philippine trade secretary Gregorio Domingo announced that the Philippines is “clearly and irrevocably” joining the TPP.   The Philippines was perceived to be reluctant to join because TPP may require amendments in the country’s constitution, which currently does not allow foreigners to own certain sectors. Constitutional amendments are a sensitive topic in the country and the timing might be difficult considering the elections on 2016.   Still, the US is one of the biggest allies and top trade partner of the Philippines and a bilateral agreement is necessary.   Currently, the Philippines only has a bilateral agreement similar to TPP with Japan. Free trade agreement with countries in the European Free Trade Association is also being pursued.   Other countries who are interested to join are Colombia, Thailand, Indonesia, Taiwan and South Korea.   The real benefits of TPP is yet to be seen, hopefully the advantages will outnumber the disadvantages by a whole lot.
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