And Then There Were 11: the TPP Moves on Without the US

Posted by Gary M. Barraco

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TPP_USA_Duty_Management_FTAs.jpgIt was a busy Saturday at the Asia-Pacific Economic Cooperation (APEC) Summit as trade ministers from 11 countries announced an agreement to push ahead with a trade deal whose destiny was uncertain after President Donald Trump dropped out a few months ago. Despite the US decision to pull out of the Trans-Pacific Partnership (TPP) free trade pact to pursue an ‘America First’ protectionist trade agenda, the remaining 11 countries came away with a blueprint to start trading more freely between themselves in a resurrected form of the TPP deal. 

While details are still being worked out, the newly named Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) pact among the remaining bloc — whose trade volumes totaled about $350 billion last year — looks different from when the US was part of the negotiations during Barack Obama’s presidency. In the proposed basic agreement, ministers maintained “the high standards, overall balance and integrity of the TPP while ensuring the commercial and other interests of all participants and preserving our inherent right to regulate, including the flexibility of the parties to set legislative and regulatory priorities.”

The renegotiated pact nearly stalled during the APEC meeting when Canada hesitated to join. The move wasn’t surprising as Canada, along with Mexico, is in the middle of the politically-charged renegotiation of the North American Free Trade Agreement (NAFTA). Canada also never liked some of the TPP’s provisions — including stricter rules enforcing intellectual property rights (IPR) — but in the end, the parties managed to get some of the unfavorable IPR provisions removed, and agreed to join the pact.

America Stands Alone

During the APEC summit, Trump reiterated his stance saying there were “trade abuses” in Asia that hurt the American worker, and that he would not enter into large trade deals, alluding to US participation in the NAFTA. Trump has made clear his preference for bilateral trade agreements, in which the US would usually be the stronger party, rather than pluri-lateral ones in which the US is but one among many.

In coming to the agreement, the 11 countries reached a consensus to suspend 20 clauses in the original TPP document, including 11 on IPR most of which had been inserted by the US before its pullout earlier. The IPR clauses essentially applied US patent laws to other member countries and were originally demanded by the former Obama administration. If the US returns to the pact, the clauses are expected to be re-inserted. 

There are still some sticking points to solve but experts say a final deal could be announced as early as next year. Each country would still have to sign and ratify the deal to be a member of the agreement, but the new pact can take force 60 days after at least six signatories complete domestic procedures. 

While it will be some time before any trade policy changes become law, having digital supply chain management solution that keeps track of the changes will position companies to be one of the first to take advantage of any duty reductions while helping keep on top of compliance requirements. As the new CPTPP or a revised NAFTA enters into force, global companies will need to leverage the technology found in Free Trade Agreement management software solutions like Amber Road to support the process. 

Using a best-of-breed technology solution can help open up new markets for your company by simplifying the compliance and qualification processes. With new FTAs on the horizon or just passed around the world, global trade compliance becomes key to the opportunities ahead.

This post was published on November 17, 2017 and updated on November 17, 2017.

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Topics: Duty Management, Global Trade Management, Free Trade Agreements