Not So Fast: Maybe America Will Agree to the CPTPP

By Kevin E. Noonan --

On April 12th, various news outlets ("fake" and otherwise), as well as several Senators present at the White House, announced that the Trump administration had changed its position on the Trans Pacific Partnership (TPP) Agreement.  To that end, Mr. Trump has directed National Economic Council Director Larry Kudlow and U.S. Trade Representative Robert Lighthizer to take a "second look" at the TPP, but only if it was a "substantially better" deal (presumably meaning more in favor of the U.S. than the TPP negotiated by the Obama administration).  In addition to these traditional avenues of information, Mr. Trump also announced his intentions on Twitter.

The reason for the change of heart and policy is apparently an effort to ameliorate the effects of the China-U.S. trade war expected to harm farmers and other U.S. industries, and to provide political cover in rural (red) America.

Unfortunately for Mr. Trump and U.S. interests, however, the agreement his representatives are assessing is not the previous Administration's TPP.  On March 8th, the remaining members of the international group of countries who negotiated the TPP (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) signed the agreement, now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.  While mostly the same as the TPP, there have been some changes in the Agreement after U.S. withdrawal (see "Comprehensive and Progressive Agreement for Trans-Pacific Partnership May Differ Significantly from TPP").  Most of these changes have been in provisions relating to its intellectual property provisions, suspending agreement for provisions supported by the U.S. that provided additional protections in areas of American strengths, like pharmaceuticals and biotechnology.  It is ironic that deficiencies in China's protection of American intellectual property is one ostensible reason for recent tariffs and other trade-related actions by the Trump Administration.  Any rapprochement with the (CP)TPP will require further negotiations to have all signatory nations agree to re-implement these IP-related provisions.

Specifically, twenty-two provisions have been suspended or modified in the CPTPP, eleven of which relate to IP while the remainder involve technical changes to accommodate U.S. withdrawal or are related to investor relations and the ability (now suspended) for foreign private entities to sue host governments (another area supported by the U.S. in the TPP negotiations).  The most important changes include suspension of provisions that would have:

• Added patent term for patents experiencing delays in prosecution (Articles 18.46 and 18.48)
• Provided data and market exclusivity for conventional pharmaceuticals and biologic drugs (Articles 18.50 and 18.51)
• Expanded protection for new ways of protecting technology and information, such as technological protection measures, rights management information, encrypted satellite and cable signals, and safe harbors for Internet service providers.
• Extended the copyright term, from life of the creator plus 70 years, now restored in the CPTPP to the creator's life plus 50 years

Overall the CPTPP remains exceedingly similar to the TPP, there being no changes to chapters 1-4 (definitions, market access for goods, rules of origin, textiles), 6-8 (trade remedies, sanitary and phytosanitary, technical barriers to trade), 12 (temporary movement of business persons), 14 (electronic commerce), 16-17 (competition, state owned enterprises), 19 (labor), 21-25 (cooperation and capacity building, competitiveness and business facilitation, development, SMEs, regulatory coherence), and 28 (dispute settlement), except for changes needed to remove reference to the U.S.

Additional examples of differences between the CPTPP and the TPP include Article 5 that provides that, "[a]fter the date of entry into force of this Agreement, any State or separate customs territory may accede to this Agreement, subject to such terms and conditions as may be agreed between the Parties and that State or separate customs territory," suggesting that the parties have contemplated other countries, such as China, may be interested in acceding to the treaty's terms (and indeed this eventuality may be desired).

The changes are nicely summarized here.

Suspension of these provisions removes many of the benefits for biotechnological and pharmaceutical inventions that were part of, and part of the attractiveness of, the TPP as negotiated by the Obama Administration.  While in many ways far less (and in others, for our technological and global age far more) significant than America's withdrawal from the League of Nations after World War I, these alterations of the TPP are the consequence of an abdication of American leadership on intellectual property rights that (despite occasional anomalous decisions by the Supreme Court) have been a consistent part of U.S. innovation policy for over a generation (and arguably throughout our history).

It remains to be seen, of course, whether the signatory countries have any interest in accommodating the U.S. in re-entering the agreement, or any stomach for providing even a fig-leaf basis for any assertion by the Trump Administration that the CPTPP is a "better deal" than the TPP (which was an excellent trade agreement for American interests; see "Why President Trump Is Wrong about Trans-Pacific Partnership Agreement").  Mr. Trump's feckless withdrawal of U.S. participation in the TPP as one of his first acts as President was in fulfillment of an oft-repeated campaign promise.  Now that he has apparently made an about-face on this promise (a change he cannot blame on an uncooperative Congress or judiciary) it is not unfair to Mr Trump to expect (if not demand) he exhibit his self-vaunted prowess as a negotiator to improve on an agreement that more than adequately protected American interests in the first place.

Comments

[MaxDrei]

Kevin, when I read your words:

"..suspending agreement for provisions supported by the U.S."

My eyebrows went up. My own take, from outside the USA, was that the withdrawal of the USA freed the way swiftly to get rid of a large number of unwanted provisions, 22 you tell us, that were only in the draft TPP at the insistence of the USA, alone.

Is that what you meant by "supported by the U.S"?

Similar events are being acted out here in Europe, with the BREXIT from the EU. The UK thinks it can do it cost-free.

Soft power is a funny thing. See how it slowly bleeds away, if you don't nurture it.

[Kevin E Noonan]

Focusing on the 11 IP-related suspended provisions (I am loathe to publicly opine on the financial services ones outside my bailiwick), I think that it may be imprecise to say that they were supported by the US alone but, in view of the US percentage of GDP amongst the group and the necessity in the TPP (modified in the CPTPP) for the treaty to come into force only when the number of signatories who had ratified the treaty represented greater than 40% of group GDP (i.e., requiring US participation), Americans were in a position to have certain provisions included that were priorities for US industries.

BREXIT is another matter. Good luck with that.

And I agree with the "soft power" sentiment. We are learning that here in the US almost daily.

Thanks for the comment.

[MaxDrei]

I hadn't appreciated the ">40% GDP" point. I'm impressed. What a strong measure that is, to assist the bigger Member States of the Group, to get what they want.

I didn't say that support was found only in the USA delegation. For as long as the USA is in the room, lots of minnows will "support" what the big fish wants. Big fish eat for breakfast any little fish that displease them. Soft power, nature red in tooth and claw, call it what you like.

As the UK will discover, after it exits the EU.