The largest trade-liberalizing act of history has been announced by the trade ministers of 12 countries on Monday 5th October, 2015. Ministers from the major economies of the U.S., Japan and Australia called the Trans-Pacific Partnership an ambitious and challenging deal that will cut down the tariff barriers and will set the rules for trade in the 21st century
The US president, Barack Obama said that this deal would eliminate more than 18000 taxes that various countries have put on their products. It also includes more commitments related to labor and environment than any trade agreement in history. The deal is seen as a challenge to China’s growing dominance in the Pacific region. Now, the Lawmakers in TPP countries must approve the deal, setting up congressional wrangling on the deal.
There were worries about the monopoly period of the biologics between the US and Australia, but they were able to come to a compromise. The TPP deal was controversial because of the secrecy to the agreement and how it would affect an array of groups from Mexican auto industry to Canada’s dairy market. The issue which threatened to derail talks was the length of monopolies to developers of new biological drugs.
The United States had proposed 12 years of protection to encourage pharmaceutical companies to invest more in next-generation treatments but Australia, New Zealand and other health groups opposed and sought for a period of 5 years to bring down drug costs and burden on medical programs. Negotiators agreed on a compromise that the agreement would protect the data between five and eight years.
Another issue hovering was protections for dairy farmers. New Zealand wanted to increase access to US, Canada and Japanese markets. This issue was addressed in the final hours of the talks as said by the officials. Separately, the US, Mexico, Canada and Japan have agreed on the rules of origin of auto parts and auto trade within the TPP region to qualify for duty-free status. The TPP would give Japan’s automakers, led by Toyota Motor Corp, a freer hand to buy parts from Asia for vehicles sold in the United States but sets long phase-out periods for US tariffs on Japanese cars and light trucks.
The TPP deal announced on Monday also sets minimum standards on issues ranging from workers’ rights to environmental protection. It also sets up dispute settlement guidelines between governments and foreign investors separate from national courts.
Since the activist groups are still in protest with the TPP deal, it remains to see how the lawmakers handle the situation. Will they vote down the TPP or will it stay?