The full, final, official text of the Trans Pacific Partnership Agreement were released on November 6th. Including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam, the text will be reviewed by each of the 12 member country's governments and will not take effect until all countries have approved it. This agreement, if approved, will be one of the largest trade agreements in history, with its current members comprising 40% of world trade. Further, the Agreement includes the possibility for additional countries to join, as South Korea is rumored to be considering, which means that its significance could grow to impact the majority of international trade.
The goal of the TPP, broadly, is to facilitate freer trade between the member countries. Firstly, it is aimed at reducing tariffs, quotas, and other Non-Tariff Barriers (NTBs) among the participating countries. Additionally, the TPP aims to promote clear and transparent standards across the member countries in areas such as Intellectual Property rights, Import and Export Licensing, and other aspects of trade. On the topic of Intellectual Property, perhaps the most covered topic is the duration of patents for pharmaceuticals. This has been set at a shorter term than the current one in the United States.
Another major clause implements great restrictions on the levying of customs duties. The vast majority of existing customs duties that are applied to members of the Agreement are going to be phased out, and none can be raised or created (except for anti-dumping and countervailing purposes). However, these duties will not disappear overnight. When all participants have ratified the Agreement, then it will come into force, triggering large reductions in the duties, as well as other NTBs. Then, over a period of several years (varying by type of duty and country), the fees will be phased out based on a minimum time table laid out in the Agreement. Countries can choose to accelerate it for themselves either unilaterally or through future agreements.
Furthermore, all customs duties on certain goods will be indiscriminately removed. These include fees on physical ads (pamphlets, posters, etc.), temporary goods not to be used for profit (sports gear for events, cameras for new reports), and any goods worth less than US$1. Customs duties are also not to be levied on goods shipped to a country for the purpose of repair or minor alteration (such as if a recalled car needs a replacement part). These reductions represent significant steps to reducing the costs of transporting goods across these international boarders, promoting freer and fairer trade.
There is a great deal more in the TPP, and so over the coming weeks this article will be followed by others that summarize various sections of the Agreement and analyze its potential effects on member countries and select industries that are particularly exposed to international trade.
The full text is available here, in downloadable PDF format.
By: Jonathan Wood