TPP Countries Gear Up for Ratification Push After Auckland Signing Ceremony

11 February 2016

Signatories to the Trans-Pacific Partnership (TPP) trade pact are ramping up their efforts to build domestic support for the agreement, as they prepare to launch their domestic ratification procedures.

Trade ministers from the 12 TPP countries signed the accord in Auckland, New Zealand, on Thursday 4 February, starting the clock on a two-year ratification window for all members to approve the deal.

While the agreement can still go into effect without all 12 ratifying in that space, at least six countries making up 85 percent of the group’s GDP would need to do so. Otherwise, the entry into force would have to wait until enough countries ratify to pass that threshold.

“After more than five years of negotiations, we are honoured to be able to formalise our collective agreement of TPP which represents an historic achievement for the Asia-Pacific region,” ministers said in a joint statement at the signing ceremony.

“The signing of the agreement signals an important milestone and the beginning of the next phase for TPP. Our focus now turns to the completion of our respective domestic processes,” they added.

Rocky road ahead?

The 12 nations involved in the trade pact vary in size, economic heft, and political systems, with legislative processes varying depending on the country. Some countries are also involved in major political transitions, raising additional questions on the timing of ratification. However, some signatories have already stated their plans to advance the TPP approval process rapidly.

In Auckland, ministers from Australia and Mexico said that they aim to ratify domestically this year, with Australian Trade Minister Andrew Robb confirming plans to table the text in his country’s parliament this week.

“Talking with the trade ministers last night I think most countries, if not all will have it ratified sometime during this year and now I would assume Australia will do the same,” Robb told ABC Radio last week.

New Zealand Prime Minister John Key, in outlining his government’s 2016 priorities to the parliament this week, also presented both the trade deal text and a related National Interest Analysis for review. Subsequent legislation for any domestic law changes required by the trade deal will soon follow, he said.

“TPP offers much better access to large and important markets for New Zealand’s goods and services, and New Zealand has had to make relatively few concessions in return,” he told lawmakers.

However, public sentiment in New Zealand has already proven to be mixed when it comes to the TPP, with the signing ceremony in Auckland prompting protests with over 1000 participants. Other members, most famously the US, have also seen some heated public opposition to elements of the trade deal.

Malaysia, for its part, has already approved the pact, though reportedly still needs to make some changes to domestic law.

Whether Canada will move to ratify the trade deal remains an open question, given that it saw a major political shift of its own with the entry of Justin Trudeau’s government. Trade Minister Chrystia Freeland, who attended the Auckland ceremony to sign the TPP, stressed in an open letter to Canadians last month that “signing does not equal ratifying,” and has pledged to have a “full and open” parliamentary debate. (See Bridges Weekly, 28 January 2016)

The 12 TPP signatories include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US, and Vietnam.

US election dynamics spark concern

The US presidential election has also raised questions over TPP’s ratification prospects, particularly given that the North American nation is the largest economy in the trade deal. Bringing the TPP into force would therefore require US ratification to help meet the 85 percent threshold.

Should the agreement not come to a vote in Congress under US President Barack Obama, whose term ends in January 2017, it would fall to the next administration to decide whether to lobby Congress to approve the pact; to attempt renegotiating parts of the deal; or to put it aside altogether.

So far, the reactions from many top presidential contenders have largely been lukewarm or in outright opposition to the trade pact, in both the Democratic and Republican parties, though some have hinted that they might be more amenable to the trade deal if renegotiated.

“I did hope that the TPP, negotiated by this administration, would put to rest a lot of the concerns that many people have expressed about trade agreements,” said Hillary Clinton, the former Secretary of State who is running for the Democratic Party nomination, in a debate against Vermont Senator Bernie Sanders last week.

“I waited until it had actually been negotiated because I did want to give the benefit of the doubt to the administration. Once I saw what the outcome was, I opposed it,” she added, noting that past trade deals have been renegotiated to reach better outcomes – specifically, the US’ trade agreement with South Korea.

The US-South Korea free trade deal was negotiated under former President George W. Bush, with the deal later re-opened under Obama in order to secure better terms on automobiles and beef. Congress then ratified the deal the following year. (See Bridges Weekly, 17 December 2010 and 12 October 2011, respectively)

Sanders, who is also vying for the Democratic Party nomination, opposes the TPP, saying during the same debate that the deal is one in a long line of trade pacts making it harder for US workers to compete against lower-priced goods from abroad.

“Workers today are working longer hours for lower wages. Trade is one of the reasons for that,” he said, noting that while he does not oppose trade in principle, he does take issue with free trade compared to fair trade.

Republican Party candidates, for their part, have expressed mixed views on the trade deal. Real estate magnate Donald Trump, for his part, has openly lambasted the TPP, suggesting in a CNN interview this week that he would move to renegotiate US trade deals for better terms.

However, Ohio Governor John Kasich, who placed second among Republicans in Tuesday’s New Hampshire primary, has spoken in favour of the TPP.

Many congressional leaders in the United States have already warned that securing TPP approval in Washington could be a long and difficult process, particularly in a year that also has the entire House of Representatives and one-third of the Senate up for election.

“No one should be under any illusions that, because the TPP is being signed today, an up or down vote on the agreement is imminent or that our oversight responsibilities are at an end,” said Senator Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee, last week.

Furthermore, Hatch noted, ratifying trade deals in the US Congress is often a prolonged process. “In fact, it’s not an exaggeration – or even all that remarkable – to say that it can take years to get an agreement through Congress after it is signed.”

China warns against “politicising” TPP

As TPP signatories work to build domestic buy-in for the trade pact, one of the key arguments that continues to be raised – mainly in the US – is that approving such a wide-reaching, comprehensive pact is essential for ensuring continued leadership in trade rule-making, particularly given China’s own efforts in that respect.

China is involved in various other trade initiatives in the region, including a 16-country negotiation known as the Regional Comprehensive Economic Partnership (RCEP), which includes all 10 members of the Association of Southeast Asian Nations (ASEAN), as well as India, South Korea, and three TPP members – New Zealand, Australia, and Japan.

“TPP allows America – and not countries like China – to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific,” said Obama last week, reiterating similar comments on the subject. “Put simply, TPP will bolster our leadership abroad and support good jobs here at home.”

Speaking to reporters on Friday, Chinese Foreign Ministry Spokesman Lu Kang countered such arguments publicly.

“We have never thought that China or any other specific country could decide by itself how to write the rules or agenda or global trade in the 21st century,” he said, adding that countries should continue looking to the WTO for having a “leading role” in setting international trade rules.

“We understand that governments of some countries have to let the business circle and the public of their countries know the pros and cons about relevant free trade arrangements, then just give them the facts. There is no need to politicise the economic issue,” the Chinese official said, warning that such suggestions would be both misleading and could harm Washington’s ties with Beijing.

ICTSD reporting; “Trans-Pacific Partnership trade deal signed, but years of negotiations still to come,” REUTERS, 4 February 2016; “Prime Minister John Key outlines the Government’s priorities for the year,” STUFF.CO.NZ, 9 February 2016; “Trump: ‘I want to win New Hampshire, but I don’t think I have to win it,” CNN, 7 February 2016; “Guvs looking for win in N.H.,” POLITICO, 9 February 2016.

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