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What You Need to Know About the TPP

By Casey C. Sullivan, Esq. on October 08, 2015 | Last updated on March 21, 2019

It's the largest regional trade agreement in history, encompassing 12 Pacific Rim nations, 800 million people, and 40 percent of global GDP. It took years of negotiations and a special act of Congress before terms of the Trans-Pacific Partnership could be finalized on Monday.

The TPP could significantly change how business is done from the Straight of Magellan to Kuala Lumpur. That is, if it makes it through. The agreement faces strong opposition from environmentalists, unions, human rights advocates, and, as of Wednesday afternoon, Hillary Clinton. Here's what you need to know about the TPP:

1. It's Big in Reach, Big in Scope

The Trans-Pacific Partnership is an ambitious agreement. The dozen nations involved represent $28 trillion in GPD and a third of all world trade. Those countries are: Chile, Peru, Mexico, the United States, Canada, Japan, Vietnam, Brunei, Singapore, Malaysia, Australia and New Zealand. The agreement could be expanded in the future to include other countries. Colombia, the Philippines and Thailand, for example, have all announced their interests in the TPP.

The agreement is more expansive than most trade agreements, covering not just tariffs, but intellectual property, labor and environmental standards, and trade dispute resolution.

2. It's Still Pretty Secretive

Negotiations over the TPP have been criticized for their secrecy and lack of transparency. U.S. Trade representatives have explained that "discretion and confidentiality" as needed to preserve frank negotiations. The negotiated text still is not publicly available and may not be for at least a month, according to The New York Times. But, most of the TPP's major points are widely known.

3. It Will Shake Up Tariffs and Quotas

As a free trade agreement, it's no surprise that the TPP takes aim at longstanding tariffs and quotas. Under the agreement, countries would reduce or eliminate trade barriers meant to protect many domestic industries. This includes reducing tariffs on imported shoes in the U.S. and imported milk abroad. Japan's agricultural industry and America's auto industry are expected to be particularly affected.

4. It Seeks to Establish Basic Environmental and Labor Standards

Many critics of neoliberal trade agreements have argued that they undermine domestic labor and environmental standards. By making cross-border trade easier, the argument goes, companies can evade countries with higher standards, creating a "race to the bottom" where manufacturers seek out areas with the lowest labor standards and least environmental restrictions. Additionally, trade mechanisms have been used to actually strike down environmental protections, as when the World Trade Organization ruled that U.S. dolphin-safe tuna rules were an illegal restriction on trade.

In response to those criticisms, the TPP is seeking to "level the playing field" by including binding labor and environmental standards. On the green front, the TPP will establish rules for wildlife trafficking, illegal logging, and sustainable fishing while reducing tariffs on environmental goods like solar panels. When it comes to labor, it seeks to require compliance with fundamental labor rights recognized by the International Labor Organization.

Despite the promises, many environmentalists and labor advocates aren't convinced.

5. It Establishes an Investor-State Dispute Resolution Mechanism

If the TPP is going to have teeth, here's where you'll find them. The agreement will allow parties, whether they're hedge funds or the government of Australia, to bring trade disputes before a binding resolution panel. In an important development, panelists who decide disputes will face a code of conduct. Hopefully, that code will prevent lawyers who work with specific industries from also ruling on trade disputes affecting their clients, as has happened in other international panels. 

Dispute settlement rulings are enforceable through "trade retaliation," such as the imposition of tariffs, much as with the WTO.

6. It Aims for More Coherent Intellectual Property Systems

The TPP brings patents, trademarks, copyrights and other intellectual property into its fold, seeking to create international standards. Its patent standards are based on the WTO's TRIPS agreement and allow for geographical indications for patent protections.

This is also the part of the agreement dealing heavily with pharmaceuticals. Under the TPP, countries would agree to prevent the spread of cheaper, generic equivalents to cutting-edge "biologics" for 12 years -- less than the U.S. wanted, but more than international health advocates believe is acceptable.

7. It's Not Law Yet

Despite ten years of negotiations, the TPP isn't enshrined in law just yet and it may never be. It's facing a fare amount of domestic skepticism, from politicians on the left like Elizabeth Warren who view it as a give away to big business, to those on the right, who want stronger protections for the U.S. tobacco industry. Congress has months to deliberate and even with fast track negotiating status, the deal could wait until next April to see a vote.

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