TPP: Three days after negotiations

 •  Filed under China, PIIE, International economics

Roundup of recent articles and statements related to the Trans-Pacific Partnership


White House: Statement by the President on the Trans-Pacific Partnership

China Daily: Experts see China in TPP one day

"Vietnam will be the big winner relative to the size of its economy. Its additional trade will mostly be diverted from China, so China will lose from TPP, but the loss will not be great because China is so much bigger than Vietnam," [David Dollar] wrote in an e-mail.

TPP will not have a direct effect on China but it will have an indirect bearing on talks between Beijing and the US on a bilateral investment treaty, noted Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington.

'The US will be reluctant to sign a treaty that contains anything significantly different from the investment section in the TPP,' Hufbauer said in an interview. He also said that TPP doesn't include a local content requirement for computer servers providing Internet services. 'This will be a benchmark for China,' Hufbauser added.

ChinaFile: What Will the TPP Mean for China?

The Economist: Weighing anchor

In spite of scaremongering on the left, the deal does not obviously exalt the interests of big business over those of lowly consumers. For instance, under pressure from Australia, Chile and Peru, America shelved its demand that certain drugs be protected from generic competition for at least 12 years, settling for five instead. In the same vein, TPP’s dispute-settlement mechanism explicitly bars tobacco firms from claiming compensation for public-health rules that harm their business.

To mollify unions and other likely opponents in richer countries, several of TPP’s 30 chapters are devoted to protections for workers and environmental safeguards. There are clauses that attempt to slow deforestation and overfishing. All parties will also be compelled to follow the International Labour Organisation’s basic principles on workers’ rights. They will be required to set a minimum wage and regulate working hours. Vietnam will have to allow unions independent of the Communist Party. ...

... TPP also attempts to limit the extent to which governments can favour state-owned enterprises. Although there are lots of exceptions, this is quite a concession for the likes of Malaysia and Vietnam. ...

... In the long run, TPP’s impact will depend on whether or not its membership expands, as it in theory might once the deal is up and running. South Korea, not one of the original 12, is pressing for swift accession. The crucial question is China. Many think America only pushed TPP forward in order to bolster its influence in Asia and counter China’s.

Mireya Solís: "TPP is the most effective inducement that the United States has to get emerging powers like China to double down on their market reforms and aim for higher quality trade agreements. In TPP, American leadership and alliances, the future of the trade regime, and the tone of interaction with emerging economies will be measured and tested." (NYT forum)

Petri: Understanding the Estimated Gains from Trade Pacts

Freund: The Pharma Compromise on TPP Is Good for US Consumers

Last year 31 drugs with total estimated sales of $19 billion went “off patent.” The average price difference between a generic and brand drug is 70 percent. Using that figure, potential savings for consumers and insurance companies could have been up to $13 billion had the protection on these drugs expired one year earlier.

Biologic drugs—which are made from living organisms—are the fastest-growing segment of the drug market. They include Humira and Remicade, which are used to treat rheumatoid arthritis and which cost thousands of dollars per treatment. Cancer drugs such as Rituxan and Herceptin are also biologics. The United States and Europe are leading the way in developing them, but companies in Australia, Japan, and Singapore, as well as in China and India, are investing in them.

The US pharmaceutical companies argued that the revenue they earn from the longer period is needed to cover the innovation costs of the drugs. But protecting data comes at the cost of delaying scientific progress on related drugs, because biosimilar products (the generics of biologic drugs) must either wait or repeat costly development and drug trials. Even with the data available, biosimilars are more costly to develop than regular generics.

Nikhil Sonnad and Josh Horwitz: What China will have to do to join the Trans-Pacific trade club

Schott: The TPP Timeline

Pedro Nicolaci da Costa and Cathleen Cimino-Isaacs: TPP Nears the Goal Line: The Trade Deal at a Glance

Branstetter and Hufbauer: The Case for TPP: Rebutting the Naysayers

Trans-Pacific Partnership will ban data localization laws

Politico: What's inside the TPP

The deal would eliminate all tariffs on U.S. manufacturing exports to TPP countries, and most on U.S. agricultural exports—everything from plastics to poultry, seafood to steel, chemicals to cotton, apples to aircraft parts. And while Froman isn’t as eager to tout TPP’s benefits for foreign exporters, he said the agreement would also scrap more than 6,500 U.S. tariffs on imported products ranging from grapefruits to rice to (after 25 years) automobiles.

Jared Bernstein: Don’t confuse trade with trade deals

Paul Krugman: TPP Take Two

What I know so far: pharma is mad because the extension of property rights in biologics is much shorter than it wanted, tobacco is mad because it has been carved out of the dispute settlement deal, and Rs in general are mad because the labor protection stuff is stronger than expected. All of these are good things from my point of view.

Hillary Clinton says she does not support new Pacific trade pact (Reuters, PBS interview)

Reuters: Japan's Abe says TPP would have strategic significance if China joined

"The Trans-Pacific Partnership (TPP) establishes in the Asia-Pacific a free, fair and open international economic system with countries that share the basic values of freedom, democracy, basic human rights and the rule of law," Abe told a nationally televised news conference.

"It would contribute largely to our nation's security and Asia-Pacific regional stability, and it would have significant strategic meaning if China joined the system in the future."