United States: Is The Trans-Pacific Partnership Still Possible Without The United States?

Last Updated: December 1 2016
Article by Carlos Vejar

Carlos Vejar is Senior Counsel in the Mexico City office.

HIGHLIGHTS:

  • Some people argue that U.S. President-Elect Donald Trump's stated intention to withdraw from the Trans-Pacific Partnership (TPP) would definitely end the TPP, but some analysts raise the possibility of the other 11 countries being able to make it work without the U.S.
  • Without the gross domestic input of the U.S. – one of the 12 original signatory countries – the TPP is unviable, although the 11 other countries could possibly amend the TPP's entry into force clause, which requires "at least 85 per cent of the combined gross domestic product of the original signatories in 2013."
  • Just the idea of amending TPP's cross-referenced and complex text to erase all of the U.S. references and particular interests would likely be more challenging than commencing a new trade deal from scratch.

The Trans-Pacific Partnership (TPP) is an ambitious free trade agreement with 30 chapters covering a wide range of disciplines related to trade, imposing higher standards on existing disciplines and incorporating new ones.1

TPP negotiations among the United States, Vietnam, Peru, Singapore, New Zealand, Mexico, Malaysia, Japan, Canada, Chile, Brunei and Australia concluded on Oct. 5, 2015 and was signed on Feb. 4, 2016. The U.S. entered the talks in January 2008.

On Nov. 21, 2016, U.S. President-Elect Donald Trump announced within his policy plans for his first 100 days in office the following:

"On trade, I am going to issue our notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country. Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores."2

Some people argue that this would definitely end the TPP, but some analysts still raise the possibility of the other 11 countries being able to make it work without the U.S. (The Mexican Senate continued its public consultations on TPP through Nov. 23, without concluding on the future of the TPP.)

Legal Overview

Aside from political discourse, from a legal point of view, TPP in its present form is impossible without the U.S.

The TPP entry into force clause (Article 30.5) requires that at least six of the original signatories, accounting for "at least 85 per cent of the combined gross domestic product of the original signatories in 2013" notify the Depositary (New Zealand) in writing of the completion of their applicable legal procedures. However, without the gross domestic input of the U.S. – one of the 12 original signatory countries – the TPP is unviable.

Assuming that consensus is reached among all or some of the other 11 countries to amend this clause, such process would require additional internal consultations with constituencies that, without the U.S., might not be willing to give its support to accept standards that were included to satisfy U.S. requirements in order to gain access to the U.S. market.

Without the U.S., the balance of the negotiations would be definitely lost in chapters such as Intellectual Property, Labor, Environment, State-Owned Enterprises, etc., that only served or mainly served U.S. interests as stated in its Trade Promotion Authority (TPA).3 It would also make no sense to adopt rules of origin that were crafted particularly with the U.S. market in mind.

Just the idea of amending TPP's cross-referenced and complex text to erase all of the U.S. references and particular interests would likely be more challenging than commencing a new trade deal from scratch.

Additional Takeaways

In conclusion, it is safe to say that TPP is almost certainly dead without the U.S. But it is worth asking if TPP could still serve as the basis for new bilateral treaties or the renegotiation of existing ones, such as the potential North American Free Trade Agreement (NAFTA) renegotiation/modernization?

This question deserves a separate analysis, because even though the Anti-Counterfeiting Trade Agreement (ACTA) was never relaunched4, it could have served as reference for some of the TPP's Intellectual Property Chapter provisions. Similarly, TPP might also serve as references for future negotiations.

In this regard, negotiating with the U.S. would at least require a review of whether the existing TPA will serve the trade objectives of the incoming Trump Administration – those objectives have not been clearly stated yet – to avoid the risks of Congress rejecting new trade deals.

Footnotes

1 See New Zealand's TPP text depository page.

2 See The Guardian, "Trump to withdraw from Trans-Pacific Partnership on first day in office"

3 See Bipartisan Congressional Trade Priorities and Accountability Act of 2015.

4 ACTA was signed but rejected by the European Parliament.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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