Wednesday, 12 April 2017

Trans Pacific Partnership (TPP)

    The ‘Trans-Pacific Partnership Agreement ‘(TPP) is a free trade agreement concluded on October 5, 2015 by 12 Pacific Rim nations – Australia, Brunei, Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. It includes 30 chapters covering wide sourcing, manufacturing and retailing in the Asia-Pacific region. 
    Elimination or reduction of tariff-non tariff barriers of trade, development of production & supply chain, cross border economic integration integration ,opening up of domestic markets, promoting innovation ,productivity, competitiveness by addressing new issues  of digital economy &role of state owned enterprise in global economy  are some of the key features of TPP agreement. TPP agreement cab be classified into 3 groups.viz, Trade in goods ,trade in services and other  policies that includes labour, Intellectual property, competition policy,, policy for state owned enterprises , SMEs  and also environment relate policies. Some of the highlights of TPP are as follows 
         Under the 'trade in goods' category elimination of  98% of all tariffs on products including beef, dairy, wine, sugar, rice, horticulture and seafood. It also extends to manufactured goods, resources and energy, and services has been proposed. On agricultural products, TPP parties agreed to eliminate or reduce tariffs and other restrictive policies. They will also promote policy reforms, including by eliminating agricultural export subsidies and working together in the WTO to develop disciplines on export state trading enterprises, export credits, and the time frames allowed for restrictions on food exports. For textiles ad apparels,there will be elimination all tariffs, mostly immediately with some special exception for longer-time-frame.‘Yarn forward rule’ requires clothing to be made from yarn and fabric manufactured in one of the free trade partners to qualify for duty-free treatment. ‘Short supply list’ mechanism that allows use of certain yarns and fabrics not widely available in the region.Rules of Origin has been introduced under TPP which might have significant impact on global trade as well as nation to nation relations. It means single set of rules of origin to define whether a particular good is ‘originating’ and therefore eligible for preferential tariff benefits. It includes product-specific rules of origin (PSRs) that are based on the “tariff-shift” approach, which clearly sets out the non-originating materials that may be used in production
      Under the 'trade in services' category, TPP includes core obligations found in the WTO other obligations such as Most Favoured Nations (MFN), national treatment, market access. no quantitative limitation on supply of services, requirement on specific type of legal entity or joint venture and requirement on local presence has been proposed. For Financial Services No member country may require a supplier from another  member country to establish an office or affiliate, or to be resident, in its territory to supply a service. TPP parties adopted a negative list approach to investment, meaning that their markets are fully open to foreign investors except where they have taken an exception in one of two country-specific annexes. The agreement also provides for neutral and transparent international arbitration of investment disputes. I t also advocates ‘minimum standard of treatment’,Prohibition on ‘performance requirement’ such as  local content or technology localization requirements and f ree transfer of fund on investment unless in BOP crisis.
      Various measures has been suggested for E-commerce as well. Free flow of information and data across borders.  No customs duties on electronic Transmission.No favouring of national producers or suppliers through discriminatory measure. There are provisions encouraging TPP parties to promote paperless trading between businesses and the government, such as electronic customs forms, and providing for electronic authentication and signatures for commercial transactions.
     For Intellectual Property related issues TPP establishes standards for patents based on the WTO’s TRIPS Agreement . On trademarks, it provides protections of brand names and other signs that businesses and individuals use to distinguish their products in the marketplace. Specially for pharmaceuticals it provides commitments relating to the protection of undisclosed test and other data submitted to obtain marketing approval of a new pharmaceutical or agricultural chemicals product.
In copyright, the IP chapter establishes commitments requiring protection for works, performances and phonograms such as songs, movies, books and software.inally, TPP parties agreed to provide strong enforcement systems for commercial-scale trademark counterfeiting and copyright or related rights piracy. It will provide the legal means to prevent the misappropriation of trade secrets and establish criminal procedures and penalties for trade secret theft, including by means of cybertheft, and for camcording.
     Other Policies includes Open and transparent policy for visa (labour),To make commercial purchases and sales based on commercial considerations for State owned enterprises (SOEs). It also provides A minimum period for data exclusivity was agreed for biological pharmaceuticals Commitment to protect and enforce copyrights ,patents and related rights, Dispute Settlement mechanism among Parties to resolve conflict.
The following chart shows  key Commitments in TPP agreement . 

Category
Chapter
Key policies








Trade in Goods
Overall
Ø  Eliminate 98% of all tariffs on products including beef, dairy, wine, sugar, rice, horticulture and seafood. It also extends to manufactured goods, resources and energy, and services.
Textile and Apparel
Ø  Eliminate all tariffs, mostly immediately with some special exception for longer-time-frame
Ø  ‘Yarn forward rule’ requires clothing to be made from yarn and fabric manufactured in one of the free trade partners to qualify for duty-free treatment.
Ø  ‘Short supply list’ mechanism that allows use of certain yarns and fabrics not widely available in the region.
Rules of Origin
Ø  Single set of rules of origin to define whether a particular good is ‘originating’ and therefore eligible for preferential tariff benefits.
Ø  Inputs from one TPP Party are treated the same as materials from any other TPP Party
Ø  Include product-specific rules of origin (PSRs) that are based on the “tariff-shift” approach, which clearly sets out the non-originating materials that may be used in production
Other chapters
Ø  Customs Facilitation – improve transparency of customs procedures
Ø  Technical Barriers to Trade (TBT) –transparent, non-discriminatory rules for developing technical regulations, standard and conformity procedures with public participation




Trade in Services
Overall
Ø  Include obligations such as Most Favoured Nations (MFN), national treatment, market access
Ø  No quantitative limitation on supply of services, requirement on specific type of legal entity or joint venture and requirement on local presence.
Ø  Except sectors taken in exception, all other sectors are open to all TPP Party
Financial Services
Ø  No member country may require a supplier from another  member country to establish an office or affiliate, or to be resident, in its territory to supply a service
E-commerce
Ø  Free flow of information and data across borders. 
Ø  No customs duties on electronic Transmission
Ø  No favouring of national producers or suppliers through discriminatory measure

Investment
Overall
Ø  Include  obligations such as MFN, national treatment, ‘minimum standard of treatment’
Ø  Prohibition on ‘performance requirement’ such as local content or technology localization requirements. Free transfer of fund on investment unless in BOP crisis










Other
Policies

Labour
Ø  Open and transparent policy for visa
Ø  All labour laws to be consistent with the International Labour Organization (ILO)
Competition policy
Ø  National  law that prohibit anticompetitive business conduct and apply to all commercial activities in their territories
State owned enterprises (SOEs)
Ø  To make commercial purchases and sales based on commercial considerations.
Ø  National treatment and non-discriminatory to other parties of the TPP
Ø  Does opportunity to favour their domestic SOEs in instances where the SOE is providing a public service.
Intellectual
Properties

Ø  A minimum period for data exclusivity was agreed for biological pharmaceuticals
Ø  Commitment to protect and enforce copyrights ,patents and related rights
Ø  Commitment to provide strong enforcement systems
Environment
Ø  Commitment to work together to address environmental challenges, including
        pollution, illegal wildlife trafficking, illegal logging, illegal fishing and protection of
        marine environment
SMEs
Ø  To create user-friendly websites targeted at SME users to provide easily accessible information on the TPP and ways they can take advantage of it
Other chapters
Ø  Encourage development by regional integration
Ø  Promote transparency in government administration
Ø  Dispute Settlement mechanism among Parties to resolve conflic





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