Presentation for the AmCham-COCUSA-TRADE Roundtable on TPP and the Philippines AmCham Conference Hall September 1, 2015 The Trans Pacific Partnership and the Philippine Economy: Joining the Big League Cielito F. Habito Chief of Party Trade-Related Assistance for Development (TRADE) Project
TPP: What is it? An ambitious new generation, highstandard trade agreement Currently with 12 participating countries on both sides of the Pacific having: Combined population of 800 million GDP of $28 trillion (40% of global GDP) $9 trillion in merchandise trade; $2 trillion trade of services (30% of world trade)
TPP: Who are in it? Australia (2008) Singapore (2005) Brunei (2005) United States (2008) Chile (2005) Vietnam (2008) Canada (2012) Japan (2013) Malaysia (2010) Mexico (2012) New Zealand (2005) Peru (2008)
TPP & Existing FTAs Current TPP members already form part of a growing network of Asia-Pacific FTAs. Source: WTO FTA database and websites of TPP countries trade ministries. Trade data from IMF.
TPP & Existing FTAs Notes: TPP goods trade, both imports and exports, as reported above. ASEAN also includes countries outside the TPP: Burma (Myanmar), Cambodia, Indonesia, Laos, the Philippines, and Thailand. TPP goods trade covered by existing FTAs, as depicted above, reflects all goods trade between FTA partners. This measure slightly overstates trade covered under FTAs, as most FTAs exclude market access for at least some goods. Source: WTO FTA database and websites of TPP countries trade ministries. Trade data from IMF.
TPP: Who are hoping to come in? Second Wave Countries South Korea Taiwan Thailand Colombia Indonesia Philippines
TPP: What will it do?
Comprehensive Market Access Eliminate tariffs and other barriers to trade in goods & services and investment to create new opportunities for workers and businesses, and immediate benefits for consumers. Fully Regional Agreement Spur development of production & supply chains across members, creating jobs, raising living standards, improving welfare and promoting sustainable growth among them.
New Cross-Cutting Trade Issues Regulatory Coherence Promote more & efficient trade across borders seamless Competitiveness & Business Facilitation Enhance domestic/regional competitiveness; push economic integration (via regional supply/value chains) Small & Medium-Sized Enterprises Internationalize SMEs and raise their utilization of FTAs Trade & Development Strengthen economic devt & governance institutions via comprehensive & robust market liberalization, trade & investment enhancing disciplines
New Trade Challenges Promote trade & investment in innovative products and services, including those related to the digital economy and green technologies Living Agreement Enable updating of the agreement as appropriate to address new emerging trade issues and new issues arising from inclusion of new members
The TPP Agreement: What will it address?
Core Negotiating Issues Market Access Goods & Services - Textiles, Apparel & Footwear - Trade in Services - Government Procurement Agriculture - Sanitary & Phytosanitary Standards (SPS) - Tobacco - Geographical Indications (GIs) - Agricultural Competition
Core Negotiating Issues Rules Intellectual Property Rights (IPR) - Copyrights & Patents - Access to Medicines - Biologics, Trade Secrets Rules of Origin Technical Barriers to Trade (TBT) Transparency and Pricing of Health Care Technology & Pharmaceuticals
Core Negotiating Issues Rules Foreign Investment Competition Policies Trade Remedies Labor Environment E-Commerce and Data Flows Customs and Trade Facilitation
New and Cross-Cutting Issues Regulatory Coherence State-Owned Enterprises Competitiveness and Global Supply Chains Small- and Medium-Sized Enterprises Institutional Issues Secretariat Dispute Settlement Living Agreement The Noodle Bowl
Chapter Highlights Trade in Goods Expand market access thru elimination of tariff & non-tariff barriers; provisions on import licensing, import/export restrictions, temporary importations, goods re-entered after repair, and commercial samples. Rules of Origin (ROO) Objective, transparent and predictable rules for establishing origin within TPP; rules/treatment that apply to certain products/goods (e.g. fungible materials, spare parts, packaging materials)
Chapter Highlights Services and Investment - Covers wide range of sectors; all existing measures affecting cross-border trade in services; investors and their investments - Adopts negative list approach - Commitments scheduled at the level of regulatory application - Ratchet mechanism to lock in future reforms Competition Policy Establish competition laws & competition authority, with obligations on enforcement, transparency, consumer protection & private rights
Chapter Highlights Government Procurement - Basic principles & procedures for conducting procurement in a fair, transparent, and nondiscriminatory manner - Defines coverage of procurement and specifies obligations on use of electronic means for procurement, conditions of participation, publication of notices, time-period and modification and rectification - Re-affirms rights and obligations under the WTO- GPA; adopts APEC Non-binding Principles on GP
Chapter Highlights Telecommunications Services Competitive access; non-discriminatory interconnection; transparency of regulatory process; right of appeal E-Commerce Customs duties; authentication of transactions & e-signatures; consumer protection; free flow of information and paperless trading
Chapter Highlights Cross-Border Services Open & transparent cross-border services trade among TPP Customs Procedures Predictable and transparent rules & procedures on automation, risk management, express shipment & advance rulings Sanitary & Phytosanitary (SPS) Standards Builds on WTO SPSA to balance animal/plant health protection & TF; new commitments on transparency, regionalization, cooperation & equivalence
Chapter Highlights Technical Barriers to Trade (TBT) Sets compliance periods, conformity assessment procedures, international standards, institutional mechanisms and transparency Intellectual Property Reinforces WTO TRIPS Agreement with specific provisions on trademarks, geographical indications, Internet domain names, copyright & related rights, patents, cable signals, encrypted programs; and regulated products, genetic resources and traditional knowledge
Chapter Highlights Investment Investor & investment legal protection e.g., non-discrimination, minimum standard of treatment, expropriation, etc.; expeditious, fair, and transparent ISDS Financial Services Investment in FIs, cross-border trade in financial services; transparency, non-discrimination, investment protection; protects right of financial regulators to ensure integrity & stability of financial markets, including in financial crises.
Why still No Deal? Open Issues after Maui (2015): Access to the Japanese agricultural & industrial markets Rules of origin for auto parts (of particular concern to Mexico) Workers rights, especially in Vietnam Environmental protections Labor standards Patent protection and access to generic medicines in developing countries
TPP: Why still No Deal? More Open Issues after Maui (2015): Copyright protections for entertainment content, including on the Internet Investment and dispute settlement procedures, particularly the use of investor arbitration rights to block local government actions Food safety measures, and making sure that arbitrary and scientifically indefensible barriers are not allowed to block imports (controls on GMOs, for example) Restrictions on state-owned enterprises (SOEs) Tobacco controls and rules on cigarette packaging
Philippines & TPP Signed the 2011 Phil-US Trade Facilitation Protocol Expressed interest to join negotiations Efforts to ease foreign ownership restrictions March 2014 technical consultations in US Consultations with 5 other TPP members DTI: Roadmap to TPP focused on - Stakeholder engagement in trade policy making - Trade policy research - Capacity-building - Enhanced inter-agency cooperation
Implications of Philippine Membership in TPP Clarete (UP School of Economics) Study (2014): Increase exports by up to 42% Raise GDP by up to 59% Cororaton (Virginia Tech) Study (2014) : Non-membership will divert substantial trade away from PH to TPP members Vulnerable industries: Textile & wearing apparel, petroleum products, construction, services, equipment manufactures Membership will increase exports by $300 million in 2015, rising to $3 billion by 2024
Questions to Address Given the above, what do you think are the key shortcomings that PH must address to be able to join TPP? What in your view are the most important actions PH must take to be TPP-ready? How would your industry/company be benefited by PH accession to TPP? How might your industry/company be impacted by PH exclusion from TPP?