On February 4, the United States and 11 other Pacific Rim countries signed the Trans-Pacific Partnership, a sweeping free trade agreement that eliminates customs duties on thousands of products and sets rules on cross-border trade and investment.
While marking the end of the negotiations, the signing also initiated a potentially contentious battle to ratify and implement the agreement within each participating nation’s legislature, including the U.S. Congress. But denying President Barack Obama’s top trade achievement would prove a significant mistake, said Fordham Law Adjunct Professor Matt Gold, because it ensures American products, services and investment capital access to the other TPP markets, and protects our intellectual property after arrival in those markets, all while allowing America to deny our market to unsafe products, fraudulent services, and unfair trade practices of those countries.
“In the 22 years since NAFTA entered into force, the United States’ free trade agreements have greatly improved with regard to both the quality and enforceability of their provisions. And, the TPP has the highest standards of any FTA we have concluded,” said Gold, a former Deputy Assistant U.S. Trade Representative for North America, who managed the separate processes by which Canada and Mexico joined the TPP negotiations in 2012.
“A modern FTA also improves foreign labor and environmental practices both by setting minimum standards and by accelerating the development of its poorer members. And it has strong mechanisms that guarantee our partner countries will comply with these obligations, just as we do,” said Gold.
Congress and presidential candidates have painted a political bulls eye on the TPP for several reasons. GOP lawmakers want to ensure that tobacco companies have access to special tribunals to settle disputes, financial companies have flexibility on where they can store their data, and drug makers can keep their intellectual property protected longer. Democrats contend the accord doesn’t provide adequate protections for workers, consumers or the environment.
The central downside to any free trade agreement, Gold said, is that the larger number of jobs gained will be in different sectors than the smaller number of jobs lost. Still, he asserts, the TPP is an extraordinary achievement.
“The Trans-Pacific Partnership will be the largest free trade area ever created outside a political or economic union,” and “will become a significant strategic asset,” according to Gold. Its terms include a process by which new countries, such as Korea, Taiwan, Thailand, Philippines and Indonesia can join the partnership. “When TPP membership inevitably becomes an economic imperative for China and Russia, the United States will have unprecedented leverage to force their compliance with their preexisting trade obligations to the U.S., and with the tougher terms of the TPP, both as conditions of TPP entry,” argues Gold.
Gold also contends that “the TPP offers a possible paradigm shift for the world’s progress toward global free trade. Until now, the presumption has been that global free trade would eventually be achieved by continued liberalization of the global normal trade relations treaties that are managed at the World Trade Organization. Rather than moving vertically to further liberalize the already-global WTO treaties that govern the normal trade relations, the world could move horizontally to expand participation in the already-free trade terms of the TPP to one day make them global.”
Until Congress approves and implements the TPP, however, expect more foreboding and fortunetelling in the news, in Congress, and on the hustings, according to Gold, who also works as a consultant advising U.S. businesses on the protection of United States’ investments in foreign countries under international trade treaties.
His main hope for the TPP: “That the Congress votes to approve the agreement and enact its implementing legislation before the end of the year and the current Congress,” he said. The Obama Administration expects to submit the deal to Congress for the first time this spring, together with a report by the U.S. International Trade Commission on the agreement’s economic impact.
During a February 10 panel on the TPP and investor-state disputes hosted by Fordham Law’s Asian Pacific Law Students Association, Thomas Lee, the Leitner Family Professor of International Law, said that the TPP trade provisions would attempt to increase the levels of free trade beyond the WTO. “But beyond the economic reasons for it is the political imperative of stitching together a regional system of states that offsets China’s political influence based on its growing economic clout,” he said, pointing to Singapore’s participation as an interesting development given the city-state’s close relationship with China. “China can, of course, join, but it would be joining a U.S.-led system.”
Predicting that Vietnam might emerge as the TPP’s biggest winner thanks to textile and other tariff concessions on its exports, Lee noted that another political reason for ratifying the TPP was a closer relationship between the U.S. and Vietnam. “Given the death and turmoil the United States caused in its misguided war there, for which reparations were never paid, it’s long overdue,” he added.
“Negotiating the TPP was a herculean task.” Gold said. “The Congress should perfect that effort by voting to approve it and its implementing legislation, which will allow the Trans-Pacific Partnership to enter into force and stand as one of the great achievements in the history of American economic diplomacy.”