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TPP UNPACKED

TPP no done deal; hurdles include interpretation, legislative approval, U.S. election

by

Staff Writer

The full text of the Trans-Pacific Partnership agreement was released this month. The document is a wide-ranging accord between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

Pushed hard by the United States as part of its efforts to compete with Chinese influence in Asia, the agreement is being hailed by its supporters as a victory for free markets and a rules-based economic system.

Its detractors warn it has little to do with free trade, and is more of a corporate power grab that will harm ordinary workers and reduce the power of governments to address domestic health, environment and labor concerns.

In Japan, the potential effects are now being debated in the Diet. Attention is focusing in particular on areas like agriculture, where much of the opposition originates.

Following are questions and answers about the next steps for the TPP.

Is the pact a done deal?

Not at all. The TPP text released in early November says it is “subject to legal review in English, Spanish and French for accuracy, clarity and consistency.”

This “legal scrubbing” will take time, and could create more political concern in the TPP member countries about just what, exactly, they are agreeing on, or if everybody is agreeing on the same thing.

Second, and more importantly, the deal must be ratified by the legislatures of the member countries. In Japan, the government, business community and mainstream media strongly support the deal, but whether the Diet will approve the text before next summer’s Upper House election remains unclear. And the TPP agreement’s approval by the U.S. Congress is much less certain.

Why is Congress worried?

Some Japanese media and political figures say it stems from the opposition to the pact as stated by elements of the Democratic Party and the labor unions that support the party.

But that’s only half the story. Opposition to the TPP in the U.S. is growing and crosses political boundaries because of what is included and what is not. Some worry not only about products like auto parts, but also how the TPP will affect the regulation of the Internet, the health care industry, rules of origin on products, and patents.

Many Republicans are also opposed or skeptical because of last-minute concessions in areas like the length of time drug companies can protect their data and the agreement to exempt tobacco from a new international dispute resolution mechanism called Investor-State Dispute Settlement that makes it easier for corporations to sue governments over health issues. Senate Finance Committee Chairman Orrin Hatch, a Republican, has suggested the TPP will have to be renegotiated to pass Congress.

What might Japan be required to renegotiate?

Many in the U.S. Congress are concerned about the Japanese government manipulating its currency. They worry that while there is language in the negotiated text to prevent that, the enforcement mechanism is insufficient.

This could become a stumbling block between Washington and Tokyo. However, economic revitalization minister Akira Amari, Japan’s lead negotiator, said last week it would be impossible to redo the agreement.

Even if it clears Congress, what about the U.S. presidential election?

The main candidates for the Democratic Party nomination, Hillary Rodham Clinton and Bernie Sanders, have come out against the TPP, although there is great skepticism about Clinton’s position, as she has indicated dozens of times in the past she supported it.

On the Republican side, of the 10 major candidates, Donald Trump, Bobby Jindal and Mike Huckabee are opposed, while Jeb Bush, Marco Rubio and John Kasich have voiced support for the agreement. Others are still sitting on the fence.

If the TPP is passed by the 12 legislatures, what does it mean for Japan?

Given that the negotiated text and annexes run to over 5,000 pages and were just released, the full impact of the 30-chapter agreement on Japan is not yet clear.

However, political and media attention has been on increased agricultural imports. Over the coming years, assuming there are no renegotiations, tariffs on nearly 1,900 agricultural products will be eliminated. This includes tariffs on items ranging from grapes, apples, oranges and tomato juice to margarine, ketchup and sherbet. Tariffs would be incrementally abolished mainly over a period six to 13 years after the TPP goes into effect.

Other agricultural goods will see their tariffs reduced. The tariff for imported beef, currently at 38.5 percent, will fall to 9 percent 16 years after the TPP comes into force. Duties on pork will be reduced to ¥50 (42 cents) per kilogram over a decade from a maximum of ¥482.

New nontariff import quotas will be created for rice from the U.S. and Australia, to be expanded to an annual total of 78,400 metric tons 13 years after the agreement takes effect, and there will be a low-tariff quota for milk powder and butter that will eventually be expanded to a volume equivalent to 70,000 tons of raw milk.

While farmers and Japan’s domestic food industry remain concerned about agricultural imports, especially increased beef, pork, rice and dairy imports, the government has largely muted opposition by assuring farmers and businesses likely to be heavily affected by the TPP that they will receive various forms of assistance to soften the blow against cheaper foreign imports.

What about other areas?

Under the TPP’s rules of origin, up to 40 percent of an automobile’s parts could be manufactured in a non-TPP country like China, contain 40 percent Japanese-made parts and the rest would come from TPP countries like Malaysia, and be exported to the U.S. with preferential tariff treatment.

On the other hand, under a new copyright agreement for TPP members, copyright protection has been extended from 50 years after an author’s death, for example, to 70 years. This means that works by Yukio Mishima, who died in 1970, will not become copyright-free until after 2040 instead of after 2020, while works by Yasunari Kawabata, who died in 1972, won’t be copyright-free until at least 2043.

  • skillet

    Hope it gets blocked

  • Squidhead

    I hope it passes. I like beef.