TTIP and TPP – A Threat to Latin America?

An article in EconoMonitor (March 21, 2016) titled “TTIP & TPP – A Threat to Latin America?” (http://www.economonitor.com/blog/2016/03/ttip-tpp-a-threat-to-latin-america/) analyzes the impact that the new regional mega-deals will have on different Latin American economies. For years, most Latin American countries have supported their economies on exporting commodities and natural resources. To face the risk that commodities’ prices are variable, these countries have implemented import-substitution industrialization policies, which mean high tariffs to protect domestic industry and discourage imports. With the TPP, it is expected that Peru takes the most advantage of this deal since the agreement could lead to a 2.4% increase in real income. On the other hand Chile and Mexico already have deep trade agreements with most of the TPP members, preventing them from expecting a relevant impact in their economies thanks to the latest commercial deal. Mercosur countries, which are not involved in the TPP agreement, such as Brazil and Venezuela are currently facing economic crisis that need them to reevaluate their access to international markets and enhance their integration in global value chains. Will the TPP members allow any Mercosur country to join the deal in the coming years? How can Chile and Mexico leverage their current position as members of the TPP deal?

 

Chile Minister Wants U.S. concessions in TPP

Unlike most countries involved in the negotiations, I respect Chile for remaining steadfast in their demands.  According to Bloomberg news article (http://www.bna.com/chile-minister-wants-n17179934929/) Chile isn’t going to budge unless the United States gives Chile what it wants.  It seems as if the U.S. has been the “problem child” during the process.  They are demanding so much from the other countries, yet seemed to be the most egregious when it comes to making sacrifices.  For instance, the United States wants to extend the length of patents on biological pharmaceuticals beyond the five years as mandated per Chile’s law.  If Chile agreed to this, there’s no indication as to how much inflation would take place in the pharmacy products in Chile.   The U.S. has also demanded for Chile to have the authority to “revise implementing legislation in member countries.”  However, Chile will not sign anything until the U.S. softens its provisions.  This could definitely prolong the TPP signing, and it may cause other countries to follow suit if Chile decides to back out the process entirely.

 

Feel free to read the article and see Chile’s take on the TPP.

 

Chile Minister Wants U.S. Concessions in TPP

An article in Bloomberg (August 19, 2015) titled “Chile Minister Wants U.S. Concessions in TPP” (http://www.bna.com/chile-minister-wants-n17179934929/) describes some of the main controversial points for Chile of the Trans Pacific agreement. The principle debated topic has been the length of patents on biological pharmaceuticals. While Chile currently enforces 5 years of patents, the U.S through the TPP agreement is pushing for 12 years protection now reduced to 8 years after the most recent rounds of negotiations. Chile’s legislation requires that the state covers the extremely expensive medical expenses of patients from catastrophic diseases. Therefore a longer period of protection for patents represents higher risks and costs for the South American country. With regards to this discussion, U.S has offered the inclusion of the 3 years of required testing within the 8 years demanded but TPP. Will Chile accept the U.S proposal? Will extending the length of patents incentive innovation and balance the trade-off of the implied costs for the countries with their subsidized health programs?