Nothing TPP-ish is Happening with the Doha Development Agenda

At the beginning of October, 12 Pacific Rim countries agreed on the actual Trans-Pacific Partnership (TPP) agreement. The TPP arrangement has been hailed as a milestone trade pact, as it includes many issues that have so far not found their way into the rule of law in the multilateral trading system.

As a reaction to the effective deal, World Trade Organization (WTO) Director-General Roberto Azevêdo announced that the TPP “assists as an inspiration for WTO members” for that forthcoming 10th Ministerial Conference within Nairobi, Kenya. In this article, I argue that neither the process of TPP talks nor the content of the TPP agreement can provide a positive stimulus for the Doha Improvement Agenda (DDA) negotiations.

At first view, the negotiation agendas of the TPP and the DDA look alike. Each mandates cover a wide range of subjects, including “old” topics, such as agriculture and non-agricultural market access (NAMA), in addition to “new” topics, such as e-commerce and competitors. However, whereas the WTO members have been unable to make significant progress on the DDA over the past 15 years, the TPP partners were able to close off a deal within 5 years. How was such an achievement feasible and what do the compromises look like?

The release of the full text from the TPP agreement was at the beginning of The fall of, but its implementation is still impending ratification by the member countries. A first preliminary assessment of the document yields interesting insights.

Gradual opening associated with agriculture and NAMA

First, among the “old” topics, namely agriculture and NAMA, the concessions are tangible, however probably not as ambitious as numerous would have expected. For the most delicate agricultural products, such as sugar, rice, and dairy products, the actual parties did not agree to abolish the quotas, but rather to raise them slowly year by year. For example, Japan agreed to increase the allowance for rice from Sydney from 6,000 plenty to 8,400 tons, over a period of 13 years.

For NAMA, the levels of applied (most favored nation) MFN charges among TPP members were already low (4.0% simple and 2.7% weighted for the year 2014). Furthermore, preferential trade arrangements cover over fifty percent of the trade relations among TPP partners, where the simple applied tariff is 1.7% and the applied tariff less than 1%. Within the final agreement, the TPP partners agreed to further reduce or actually eliminate their tariffs on industrial goods.

Similar to farming, however, the TPP members were able to impose rather long periods with regard to phasing in their tariffs. The most prominent example is the United States (US) tariff on small vans (HS 870422) from Japan, which is presently at 25% and which will become duty free after 30 years. The biggest change for the bilateral industry of industrial goods will thus not be for trade between your developed TPP countries, but rather for trade between the developing and developed countries. Malaysia and Vietnam are among the nations who stand to reap the best benefits through better marketplace access to the US and Japoneses markets.

How are the “new” topics handled in the TPP?

However, the developing nations were the ones who had to compromise most on the “new” topics. For the first time in a regional trade pact, the actual TPP introduces detailed provisions upon e-commerce as well as labor standards. E-commerce among TPP members is thriving, at double-digit annual growth rates, and introducing rules on cross-border exchange the TPP agreement was consequently vital, especially for the developed country members.

The final e-commerce section requires TPP members to maintain a certain level of consumer protection and to ensure cybersecurity. In addition, it stipulates that no TPP member can require companies to store their own data locally when working in that country. Finally, no TPP member can ask foreign companies to share their software code when entering their markets.

Another new topic is actually labor standards. The TPP arrangement introduces for the first time in a regional trade agreement fully enforceable requirements to implement fundamental International Labour Organization (ILO) labor rights. In addition, the US has concluded a number of bilateral agreements with TPP members that comprise additional requirements. For example, inside a bilateral deal, Vietnam agreed to give employees the autonomy to form independent unions—currently, all unions within Vietnam are government affiliated. Similarly, Malaysia has committed to removing limitations on union formation as well as strikes.

Can this TPP package provide inspiration for the DDA?

The TPP showed once again that agriculture remains a very sensitive topic. Even if like-minded countries come together to negotiate a trade deal, compromise is hard to achieve. For the TPP, the conflict had been mainly among the developed countries with a strong interest to make the TPP happen despite diverging interests on farming. In Nairobi, 161 WTO members will spend time at the table with very different views on agricultural market access and with varying degrees of readiness to compromise.

As for NAMA, the actual tariffs are already low, and for some specific products, the opening will again be really gradual. NAMA would probably be the minimum controversial point on the settlement agenda of the Doha Round.

What about the new issues, some of which are also found in the DDA?

The agreement achieved upon these issues carries the strong signature of the US. In the WTO, the views on these topics are extremely much diverging. For example, the chapter on e-commerce would have never have been signed off by the Eu, or the People’s Republic of China.

What can we learn from the negotiation procedure for the TPP?

The contents of the TPP agreement thus provide only very limited guidance, but what can be learned from its negotiation procedure? A distinguishing feature of the TPP talks was the fact that they were not open to the public. Despite wide criticism of this, holding shut negotiations probably helped to advance the discussions more quickly. In contrast, multilateral trade negotiations take place in a far more open and transparent fashion. The so-called “Green Room” meetings, where a small group of large WTO members fulfill together with the director general, have become fewer and the negotiations procedure has become more inclusive.

Another component that probably facilitated the TPP speaks was the US and Japan’s leadership. Both Prime Minister Abe and President Obama were committed to bringing the negotiations to a successful conclusion. For Prime Minister Abe, the TPP deal is an integral part of his reforms, often labelled because “Abenomics.” The TPP agreement will give him or her additional authority to proceed difficult reforms.

For President Obama, the actual TPP agreement is crucial for making certain US interests in the Off-shore. In addition, it will be an important part of their legacy in international matters. Can we expect a similar management for the DDA? The answer is clearly no.

How can the TPP negotiations inspire the 10th WTO Ministerial Conference within Nairobi?

The TPP agreement shows that compromise within sensitive issues can be achieved and provides insight into how new problems can be tackled. However, nor the contents of the TPP arrangement nor the process of the TPP discussions can provide much guidance for that DDA’s multilateral trade talks. The TPP should therefore not be considered as inspiration for the DDA, but rather remember of how much is missing with regard to reaching agreement.

TPP as inspiration for the 10th WTO Ministerial Conference within Nairobi? is republished with permission through Asia Pathways