TPP First Impressions: Investment

Hanoi--Chapter 9 of the Trans-Pacific Partnership (TPP) addresses a critical issue for many firms:  the rules of the game that apply to foreign investors in TPP countries.  Currently, TPP investors can face a complicated thicket of regulations, shifting rules, and informal practices that make it difficult or even impossible to open and maintain businesses and investments in some TPP member countries. 

This chapter aims to simplify and clarify the rules for inward investment by TPP firms.  Doing so should make it easier for firms to operate across TPP countries and help unleash new growth for member countries.  It may ultimately be the most important chapter for a member like Vietnam.

While most of the attention has been given to one aspect of this chapter, Investor-State Dispute Settlement (ISDS), let me begin by highlighting the rest of the rules in the chapter before turning to ISDS specifically.  As in many TPP chapters, the legal language can be dense and should be used with guidance from a good legal team that has experience decoding other trade agreement provisions.

When TPP parties speak of investments that are covered, they have a broad range of activities in mind, including: an enterprise; shares, stock and other forms of equity participation in an enterprise; bonds, debentures, other debt instruments and loans;  futures, options and other derivatives; turnkey, construction, management, production, concession, revenue-sharing and other similar contracts; intellectual property rights; licences, authorisations, permits and similar rights conferred pursuant to the Party’s law; and other tangible or intangible, movable or immovable property, and related property rights, such as leases, mortgages liens and pledges.

The basic point of the chapter is to ensure that investors are granted greater certainty with fewer risks of government action that could negate or destroy their investments. 

Investors are also promised free transfers of things like profits, dividends, proceeds, and payments from the investment in and out of the member country.  Investors are also granted the ability to invest without being subject to certain performance requirements, such as a possible demand that investors export a certain amount, or include a certain percentage of local content, or transfer technology as a condition for investment permission. 

The rules create opportunities for firms, but are not a guarantee of success.  Nothing in the chapter promises profits or will compensate investors for normal business risks and losses. 

What is spelled out in detail, however, are the rules regarding what happens when a TPP member government directly or indirectly seizes property through expropriation (nationalization). Government can, it should be emphasized, continue to make policy in the public interest and render decisions that could invalidate investments.  For instance, a government can legitimately order the demolition of shops if these stand in the way of land needed for new roadways.  However, the TPP makes clear that the government must follow certain policy steps prior to expropriation and provide adequate compensation.   

In most of the rest of the TPP agreement, member states are legally bound to follow the rules.  If they do not, other member governments can challenge their behavior, using the provisions in the dispute settlement chapter. 

Investors also have recourse to another mechanism for ensuring compliance.  Section B of the chapter spells out in detail the rules around ISDS that allows investors to directly sue a government for breach of the agreement (illegal seizure of property).  The lengthy passages devoted to ISDS spell out in detail how investors can claim arbitration to resolve the dispute.

Investors, like all business owners, also have the right to use domestic court procedures to resolve issues.  However, if the government seizes property, it is not unreasonable to assume that some court systems in some countries might not view the matters of the case dispassionately or may hesitate before deciding against their own government.  In these situations, investors have the ability under the TPP to have the matter dealt with by arbitration. 

The concerns about ISDS generally involve a few points.  First, it means that domestic government decisions could be overturned by a foreign entity.  TPP officials were keenly aware of this possibility and have tried to ensure that governments maintain their right to regulate and make laws in the public interest while balancing the needs of investors.  Early versions of ISDS, as found in many of the nearly 3000 bilateral investment treaties (BITs) and free trade agreements (FTAs), had much less precise rules around the use of ISDS.

Second, firms could use ISDS to sue governments with great regularity.  In practice, this has not happened.  Companies do not launch complaints very often.  I would argue that ISDS is a bit like a “nuclear option.”  This is an approach that can only be used when all other approaches have been tried and found lacking, because a company that complains about a foreign government is not likely to find a hospitable environment for doing business in the country in the future. 

Third, ISDS can be used for any type of breach.  This is not correct for the TPP, which takes great care to detail the conditions that warrant the use of ISDS.  Annex 9B spells out in detail exactly what constitutes an expropriation for the TPP. 

Just like the services commitments discussed in yesterday's post, understanding TPP investment provisions requires carefully reading the specific text with the rules that apply to all 12 parties and then sorting through the annexes.  Note that Chapter 9 contains several short annexes in the text—several of which are country specific or applicable to, for instance, Peru, Mexico or Canada.

Investors or potential investors will also need to carefully review the country-specific annexes that list all non-conforming measures (NCMs).  Just like the services negotiations, investment commitments were made on the basis of a negative list.  If your sector or industry is NOT listed, it means you have access.

The list of NCMs for investment also contains a range of prohibited investments or restrictions on full access for TPP members.  Some of these restrictions may be problematic as the exemption can be deep and broad while others are likely to be of limited commercial significance. 

Canada, for instance, maintains the right to regulate the sales and marketing for air transportation services, as well as many rules around maritime services and transport, and maintains a possible cultural exception that allows the government to create rules or subsidize books, videos, music and other forms of cultural expression.  Malaysia reserved the right to review materials for consistency with domestic decency standards.

Japan has an odd commitment that allows it to create any measure it wants for “telegraph services, betting and gambling services, manufacture of tobacco products, manufacture of Bank of Japan notes, minting and sale of coinage, and postal services in Japan.”  Vietnam bundled together potential restrictions on the manufacturing of paper and buses with more than 29 seats.  The complicated nature of these commitments—combining things that may not appear logically connected—highlights the importance of reviewing the entire TPP document for hidden barriers.

Malaysia has scheduled a broad exception for Bumiputera policies.  These are the programmes that provide advantages for Malay citizens, somewhat akin to affirmative action programmes used elsewhere.  While considerably less sweeping, several other TPP members also lodged NCMs to protect native peoples.

How much these measures will affect your potential investment depends on whether you had hoped to manufacture buses with more than 29 seats or planned to operate a taxi or create movies you wanted to show in some local theaters.  For most investors, however, the TPP will grant significant new access to investment markets.  Equally important, the investment chapter and its provisions help ensure that the rules that allow such foreign investment will not shift overnight in the future.  For most investors, greater certainty and less risk are always helpful.

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***

Initial TPP Impressions: Trade in Services

While market access for goods in the Trans-Pacific Partnership (TPP) remains subject to some exceptions and complications, the TPP exceeds my expectations for the quality of the services commitments. 

TPP member states might have been expected to exclude some services subsectors, but generally this did not happen.  The services elements of the TPP may turn out to be the most ambitious aspect overall.

Services are increasingly important to today’s globalized economy.  Our research shows that even for manufacturing firms, services account for somewhere between 30-70 percent of the total value embedded in supply chains.  Failure to provide market access with minimal conditions attached would have strangled the efforts of many firms trying to compete across the TPP. 

Services are also a critical mechanism for smaller firms or companies in more remote, geographically distant locations to plug into larger supply chains.  Even micro enterprises can deliver services via e-commerce platforms.

Trade in services is divided into 12 sectors and approximately 160 subsectors, ranging from business services to construction to travel to retail.  In many Asian free trade agreements (FTAs), services commitments are woeful.  Members have opted to keep many sectors and subsectors closed to foreign participation or have opened only areas with limited or even zero commercial importance. 

The TPP does not take the same approach.  Companies should find it easier to deliver services across member states, particularly because the TPP does not allow, for example, quantitative limits to be placed on services.  In other FTAs, members frequently allow in foreign medical clinics, but may limit the total number of such clinics to one or two facilities.  Or caps may be placed on the total number of employees or boards of directors. 

In the TPP, by contrast, foreign companies can deliver services without having to have a representative office or be a resident to serve the market.  The TPP requires that members treat foreign service suppliers just like local service suppliers.

To understand TPP commitments, it is necessary to do two things.  First, the text of Chapter 10 applies to all TPP members.  This section lays out the rules and regulations that member states agree to follow for services.  Note that services and investment provisions are often bound together, particularly in the annex schedules, as some services are difficult to deliver without a presence locally.

Second, in cases where members know that they are not in compliance with these sweeping rules and have no aspirations to change the domestic situation to come into compliance, members can schedule, in their annex, any areas where they are out of line with the incoming rules.  This is called a list of non-conforming measures (NCMs) and they are subject to negotiation among all 12 parties.

Reading these schedules to help determine what services can actually be supplied to any TPP market from another TPP market is trickier than it appears.  If your subsector is NOT listed, then it is opened for foreign competition from TPP partners. 

This mechanism for scheduling TPP openness is actually a far more progressive method than the one used in most other FTAs.  Under the “negative list” approach, members are obligated to open everything, unless they specifically note their objections in the annex at the outset. 

Using a negative list does two important things.  First, it ensures that new services are automatically opened for TPP competition without the necessity of tedious negotiations that might take years to conclude.  Second, it helps governments be more ambitious, since every exception to the rule has to be noted in full and new barriers cannot be easily created later. 

Negotiating on a negative list can be intimidating the first time officials try to use this approach.  The automatic response is to simply list all 160 subsectors as closed and then slowly, slowly peel off subsectors from the initial list as negotiations progress. 

Note that, mirroring World Trade Organization (WTO) handling of services, financial services and telecommunications have their own chapters in the TPP.  Both have long been regarded as “backbone” service sectors which warrants special handling.

Some TPP countries appear to have been extremely cautious in their scheduling and to hedge against potential problems and gain future policy space by claiming a broad NCM.  Note that, for some TPP members, these exceptions may not ever be used. 

In other countries, the NCM may not matter overly much, as they are taken in areas of likely limited interest to other members.  For instance, Japan requires that persons in the motor vehicle disassembling repair business must have a business in Japan.  Assuming that electronic repairs do not count, it could be hard to imagine how a person might disassemble a car from overseas.  Individuals engaged in specifying measurement instruments have a host of rules to continue to follow in Japan.

For countries like Vietnam and Malaysia that have never used a negative list before, I would have expected that the peeling off restrictions exercise would have still left an extremely long NCM list.  However, a glance at Annex 1 shows that both members largely matched the ambition levels of other partners. 

For example, Vietnam (like many other TPP member countries) will continue to have some restrictions in place on foreign lawyers.  Tour guides continues to be a sensitive area for some members, with limited (or no) foreign access. 

But an examination of the schedules also throws up some surprises.  Vietnam has an odd rule that appears to make it more difficult to open up a second (or more) retail establishment, although the measure is meant to expire within five years after the agreement takes effect.  Services attached to agriculture, hunting and forestry still require a local partner.  Major anniversaries in Vietnam must be marked with local film screenings only.  Canada has a surprising number of rules around owning duty free shops. 

My personal favorite—so far—is a rule that allows amusement park investors to come into Vietnam, but only if they invest more than US$1 billion.  Less than that and you are subject to onerous criteria that will likely to make it impossible to build the amusement park of your dreams.   

Other restrictions across TPP members could be more problematic, including a host of rules around broadcasting rights, some restrictions on services and investment in energy or mining, and rules on internal land and sea transport that can prevent TPP parties from delivering these services. 

Over time, it is possible that some of these restrictions will be relaxed.  In the meantime, if a country did not schedule a NCM, it cannot easily create a new one to block market access to TPP member countries in the future. 

In short, like other elements of the agreement, the basic texts have to be read carefully with the country-specific annexes.  While the TPP may appear to have extensive carve-outs or broad exceptions in some specific areas, these are actually significantly fewer in number and cover a handful of subsectors that may be viewed as commercially meaningful to some TPP members.  Certainly, compared to other agreements on services, the TPP may be setting the standard for high quality in this area.

[Note that Japan’s market access schedule for goods is now fixed—it no longer ends, as noted in my last post, at chapter 65 but includes all industrial goods.]

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***

Initial TPP Impressions: Market Access for Goods

I will post materials over the next few days devoted to unpacking the texts and schedules in different elements of the TPP agreement.  In an overall document with more than 1200 pages of texts, plus thousands of additional pages of schedules, plus 58 special “side letters,” a fuller explanation and understanding of different provisions will take time.  Nevertheless, I will do what I can to provide an early analysis of some striking points from goods, services, investment, and other chapters.  For specific information on how the TPP may affect your business, please contact us to start preparing an individualized analysis.

Overall, for many goods firms, the TPP should produce substantial net benefits.  Tariffs are dropping across the board.  If these rates are translated into retail price reductions, consumers stand to win--sometimes with significant savings possible on future purchases.  

Many currently high rates fall as low as 0 as soon as entry into force (EIF).  Even drops in lower tariff rates can be critical for companies if they trade in low margin or high volume goods.  Most of the tariff reduction benefits for goods from one TPP member country into another TPP member country happen quite rapidly, with the vast majority of tariffs for all members falling to 0 on entry into force.  The rules of origin are the same for all (with a few exceptions) TPP countries—once a firm has qualified a product as TPP content, it can ship anywhere across the TPP without reformulation and receive the lower TPP tariff rates or preferences from the agreement.

TPP trade in goods is not free.  There are a host of potentially complicated issues that must be sorted out.  For sensitive sectors like agriculture, textiles and certain machinery products, using the TPP will provide benefits that may take longer to phase in and are often extremely complicated to understand and use.  However, since many of these highly sensitive products are normally just excluded or carved out of trade agreements, firms may still receive significant cost savings from the agreement compared to the status quo.  Benefits of the TPP are also substantial, as might be expected, for specific markets like Vietnam where tariff rates have been much higher overall (regularly set at 10, 20, or 40%) than other markets. 

There are three key elements of the TPP for any firm trading goods between TPP members.  First, the specific rules related to trade in goods.  This is shown in Chapter 2 of the agreement.  Second, the individual tariff schedules for each of the TPP member countries, plus any other country-specific annexes (that explain, for instance, the tariff rate quotas used by some members and explained further below).  Finally, tariff cuts do not matter if the rules of origin (ROOs) employed in the deal make it difficult or nearly impossible for firms to qualify for tariff benefits.  Hence, firms also need to check the associated ROOs for their goods in Chapter 3 (and any additional annexes related to ROO issues). 

The fine print is important.  For example, buried in the 67 pages of texts for market access for goods is a provision to allow Vietnam to continue to prohibit the importation of a wide range of used items.  Malaysian firms may be able to access new markets overseas, but will have to check carefully the long list of allowable export duties, taxes and other charges that may negate any new tariff savings.  Food and beverage producers will need to be aware of rules around food and food safety (SPS) in Chapter 7 that may impact their goods.

With these caveats in mind, many of the textual provisions in the agreement are quite helpful for companies.  For instance, firms can receive, repair and return goods without having to pay new duties and companies can more freely temporarily import goods for trade shows or performances.  The rules tighten up the procedures for countries that want to impose import or export license requirements.  There are many provisions related to trade in food and agricultural products intended to provide greater certainty for farmers and producers.

The tariffs schedules are extraordinarily complicated in the TPP.  Every country has their own format for showing the tariff benefits.  For some countries, like Malaysia, the schedule shows basically four columns:  the HS or product code, the product description, the current or base rate of tariffs, and a staging category that applies to all TPP members (with some variations in TRQs).  Many other schedules break out the TPP members specifically, with columns for each individual member country.  While most of these columns are blank (same benefit applies to the whole lot), some have country-specific commitments.

Equally confusing, because the TPP negotiators cannot currently say when the TPP will come into force (fastest schedule could be late 2016 or 60 days after last of the 12 parties finish domestic ratification or potentially 2018 or beyond—see entry into force rules in Chapter 30), the schedules are written with codes.  A bewilderingly complex set of codes is explained in the country specific general notes to each member’s annex.  A notation like B4 in the American schedules means that whatever the current tariff is, it will be cut down in four equal stages to arrive at 0 duties on the first day of the 4th year of the agreement.  [I assume that, during the 60 day period between signing and entry into force, all these notations will be converted to actual dates in the document, making them easier to understand.]

For many firms, the level of tariff reductions is impressive.  Vietnam, for instance, will drop tariffs to 0 on entry into force for items currently set at 18-20% on most fish varieties; fruits from 30%; or many paints with 24% tariffs.  Mexico’s numbers look extremely impressive with many categories dropping from 20% or higher to 0 on entry into force.  [Of course, since Mexico has so many existing FTAs, not all firms currently pay MFN rates, making some of these tariff cuts less impressive in practice.]  Australia appears to have been highly ambitious, with nearly all tariffs dropping to 0 immediately and fewer complicated mechanisms for the remainder. 

And then we get to the United States and Japan.  While there are some very impressive tariff reductions included in these schedules (note that Japan’s schedules as posted are incomplete with tariffs ending at product category 65 out of 99), there are also a host of complications embedded within the schedules. 

For example, both countries take substantial advantage of tariff rate quotas (TRQs) to shield domestic producers.  Under TRQs, TPP members will have a set quantity of a good that can be sold at a lower tariff.  Everything above this rate is charged a significantly higher duty.  For both in- and out-of-quota rates, the TPP does cut down the levels and usually provides some (or all) of the TPP members with additional access to the in-quota allocation.  The complexity of this system can be shown by a quick glance at the TRQ annexes for various individual members.  Japan’s TRQ schedule is 79 pages long.  The annex for the United States is 49 pages in length.

To make matters worse, both countries also have a separate document, an annex on tariff differentials.  These are essentially the marking rules first used in NAFTA that are intended to provide an additional layer of protection to sensitive sectors.  I am way over my own word count quota for this post and cannot go into more detail here, but just note that companies will also need to examine these annexes carefully to determine how they might apply to their inventory for shipment into the U.S. and Japan.

Most of the rules of origin (ROOs in Chapter 3) are product specific.  This means that product categories have a corresponding ROO shown in the annex that must be followed to receive the tariff cut.   In many cases, the TPP requires that the good be classified into a different tariff category (usually at the 4 or 6 digit level which is less helpful for firms) than the original inputs to qualify.  In others, the agreement requires a certain percentage of content from TPP members to be included in the final product.  Note that textiles and footwear into the U.S. (in particular) have very complicated ROOs that must be followed to qualify for some very substantial reductions in tariff levels.

To sum up, the TPP is likely to provide a range of benefits for many firms.  The cost savings for some companies could be significant and firms might become highly competitive in new, untapped markets.  But the complexity of the agreement means that firms will also have to expend significant effort to comb through this massive agreement to determine which benefits apply and which might not.  Firms may have to shift sourcing and production to take full advantage of the TPP, which means that companies should start planning for TPP entry into force now.

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***

It’s Out! The Complete TPP Texts and Schedules Are Now Available

We will follow up with more in-depth analysis later, but wanted to quickly alert our subscribers that the TPP agreement is out and publically available!

The full text, plus all associated schedules, is available through the following website:  http://www.mfat.govt.nz/Treaties-and-International-Law/01-Treaties-for-which-NZ-is-Depositary/0-Trans-Pacific-Partnership-Text.php

New Zealand has always served as the official repository (keeper of documents) for the TPP.  New Zealand went first in publishing the documents, followed rapidly by other TPP members. 

Note that the TPP documents have to be read in two ways—1) the legal texts that describe the specific provisions and rules that all members have agreed to follow and 2) the country-specific commitments (if any) for each chapter.

If there are no specific annexes, it means the chapter applies to all (such as rules of origin). 

As anticipated, the TPP includes commitments on: goods, rules of origin, textiles, trade facilitation and customs procedures, trade remedies, SPS (food and food safety), technical barriers to trade or TBT, investment, services, financial services, temporary entry of business persons, telecommunications, e-commerce, government procurement, competition policy, state owned enterprise rules, intellectual property, labor, environment, cooperation and capacity building, competitiveness and business facilitation, development, small and medium enterprises, regulatory coherence, transparency and anti-corruption, administration (but not, sadly, a Secretariat:( ), dispute settlement, exceptions, and final matters (including addition of new members in the future). 

The documents published today are apparently still subject to potential minor changes, particularly in footnotes, to make sure the entire document is legally consistent.  It is still being translated into French and Spanish.  The English-language version, however, is the official document.  All subsequent disputes will refer to the English language copy only.

Stay tuned for updates as I read through this monster… 

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***

Gearing Up for the TPP Text Release

The moment trade geeks have been waiting for is nearly here—after close to six years, the texts and schedules of the Trans-Pacific Partnership (TPP) are supposed to be released this week. 

The release will be accompanied by much hyperventilating by a handful of companies and NGOs that believe they have been negatively affected or who believe that the TPP agreement is insufficient in one way or another.  The TPP is a carefully crafted deal that managed the nearly impossible task of making all 12 participating countries equally satisfied (or unsatisfied) with the results.  It cannot be reopened and, I would argue, if it were, some member states risk losing substantial benefits elsewhere in an ultimately futile attempt to make everyone happy.

The best quote of the year, courtesy of New Zealand Trade Minister Tim Grosser, assessed the TPP outcomes this way: “It means both of us are swallowing dead rats on three or four issues to get this deal across the line.”  The art of compromise is critically important to reach an agreement with 12 member states in so many areas.

Firms and sectors (and consumers) that are likely to benefit from the deal will be more muted, particularly because they may actually be trying to read the agreement.  It will run to hundreds of pages of dense legal language accompanied by thousands of pages of various member country schedules.  Decoding it all and sorting out what the TPP might mean for any particular company will take some time and considerable effort. 

Because the TPP is not a standard trade agreement (certainly compared to many in Asia), determining the implications of TPP commitments for companies is tougher than might be expected.

As an example, let me use a firm I met with last week at a YPO event in Jakarta.  This company creates industrial lubricants in Vietnam.  They seem to be enthusiastic users of free trade agreements (FTAs), since tariffs on many of their products can be substantial enough to cut into profits.  But using existing agreements is not straightforward.

To qualify for benefits, firms have to show that goods were manufactured in or use materials from FTA member countries.  Without strict rules of origin (ROOs) in place, companies could import goods from somewhere else, relabel the products, and export using the FTA benefits.  This would be very problematic for competitors that are trying to legitimately use the agreement to support domestic production.

The firm currently has to carefully formulate or reformulate every product in their inventory depending on the final destination of each item.  Products shipping to Japan, for example, require one type of formulation to meet the requirements of the ASEAN-Japan FTA.  The same item going to Australia may need a slightly different set of raw materials or require the items to be sourced from different places to meet the criteria of ASEAN/Australia/New Zealand (AANZFTA). 

To add to the complications, the paperwork needed to track each product is extensive.  The firm has to ensure that it carefully meets each and every rule in different FTAs or it could be subject to substantial fines for non-compliance (and even face retroactive enforcement of past mistakes).

Under the TPP, however, this firm will have just one rule of origin to meet for each item in its inventory that it intends to ship to all 12 TPP member markets.  The exact same product can go to Japan or to Australia without a change.  Just as important for this firm, the paperwork is identical (and the firm might qualify for an additional benefit that obviates the need for special customs paperwork at all). 

If these were the only benefits for the firm, sorting through the TPP texts and associated schedules might not be challenging.  But since the TPP is deep and broad, benefits for the firm could be scattered across multiple chapters.  The company will also have better access to TPP services providers, potentially providing improved legal or accounting services or logistics or distribution services.  Its investment opportunities will expand dramatically.  Other provisions in the agreement could result in fewer tests for products, as the firm might be able to submit test results from one jurisdiction directly into another without retesting.

Figuring this out will take some time.  In addition, savvy firms will also be trying to anticipate what the TPP will do to overall trade flows in their particular sector.  They may be figuring out what the TPP might do (or not) to their competitors.  The impact could vary by market.  In short, it will be complex but for most, the benefits ought to be significant.

For nearly all the other firms that are likely to squeal loudly when the texts get released, the TPP could still represent an improvement off the status quo.

As an example, consider dairy.  There will be deep unhappiness in some export markets about the fact that dairy is not completely opened across TPP member countries.  The academic in me, of course, would like to have seen full access with no exclusions.  But the real world often demands compromises and the final agreement has to be compared with the current status quo.

Compared to now, dairy exporters still come out ahead.  Tariffs will fall over time.  Quotas are expanded.  (Neither, I might add, happen so quickly in some markets that vulnerable domestic firms will not have time to adjust to new market conditions.)  The agreement creates a benchmark for potential improvements at some future negotiation. 

Another complaining industry will be pharmaceuticals who will bang on loudly about renegotiation needed to give further protection to biologic drugs.  This is frankly crazy.  The United States fought for more than five years and nearly derailed the entire agreement with a dogged insistence on moving patent extensions to 12 years. 

Twelve years is a non-starter.  The other TPP member countries refused to budge, no matter what sort of promises and threats the Americans employed. 

Again, compare the TPP to the status quo.  Currently, five member countries do not protect biologics at all.  Four members have five years of protection.  Only two (Canada and Japan) provide eight years of protection now.  The United States law provides 12 years of protection, but the budget covers seven years only. 

This math alone suggests no compromise at 12 years would ever be possible.

Any attempt by disaffected firms to insist that the deal be renegotiated risks opening up a Pandora’s box of changes.  It will not just be one member that wants something else included/excluded. 

This is the deal. 

After we have all poured over the texts and schedules, we can have a discussion about the gains and losses that will actually accrue in implementation.  Enjoy your reading!

***Talking Trade is a blog post written by Dr. Deborah Elms, Executive Director, Asian Trade Centre, Singapore***