The United States is participating in negotiations of the Trans-Pacific Partnership (TPP) Agreement with 11 other Asia-Pacific countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam) – a trade agreement that will open markets, set high-standard trade rules, and address 21st-century issues in the global economy. By doing so, TPP will promote jobs and growth in the United States and across the Asia-Pacific region.
The Obama Administration is pursuing TPP to unlock opportunities for American manufacturers, workers, service providers, farmers, and ranchers – to support job creation and wage growth. We are working hard to ensure that TPP will be a comprehensive deal, providing new and meaningful market access for goods and services; strong and enforceable labor standards and environmental commitments; groundbreaking new rules designed to ensure fair competition between state-owned enterprises (SOEs) and private companies; commitments that will improve the transparency and consistency of the regulatory environment to make it easier for small- and medium-sized businesses to operate across the region; a robust intellectual property (IP) rights framework to promote innovation, while supporting access to innovative and generic medicines and an open Internet; and obligations that will promote a thriving digital economy, including new rules to ensure the free flow of data.
This document describes the Administration’s goals and objectives for TPP, and presents the main elements of each chapter from the United States’ perspective. Negotiations toward a TPP Agreement are ongoing, and many of the elements detailed below are not settled. These are our objectives; there is still work to be done to achieve them. This document lays out the Administration’s vision, which the Office of the U.S. Trade Representative is advancing, of harnessing trade as a tool for economic growth and supporting jobs, and building opportunity for Americans in the context of an agreement that will benefit all TPP countries.
We are committed to providing the public information on what we are working to achieve through trade negotiations, and we will continue to share this information through the press, social media, and at www.ustr.gov as we move forward in the TPP negotiations.
TRADE IN GOODS
The United States ships more than $1.9 billion in goods to TPP countries every day. In today’s highly competitive global marketplace, even small increases in a product’s cost due to tariffs or non-tariff barriers can mean the difference between success and failure for a business. That is why the United States is working to negotiate in TPP comprehensive and preferential access across an expansive duty-free trading region for the industrial goods, food and agriculture products, and textiles, which will allow our exporters to develop and expand their participation in the value chains of the fastest-growing economies in the world.
The United States exported more than $622.5 billion of manufactured products to TPP countries in 2013. With the elimination of TPP countries’ tariffs on manufactured products, including innovative and high technology products, such as industrial and electrical machinery, precision and scientific instruments, and chemicals and plastics, U.S. products will compete on a more level playing field with goods from TPP countries’ other free trade agreement (FTA) partners – including China, India, and the EU. As just one example, certain U.S. auto parts currently face a 27-percent tariff entering Vietnam. Other countries that have an FTA with Vietnam, such as China, Thailand, and Indonesia, export their auto parts to Vietnam duty free. By eliminating duties U.S. auto parts companies face, TPP would help boost their competitiveness in the Vietnamese market.
Twenty percent of U.S. farm income comes from agricultural exports and those exports support rural communities. In fact, U.S. food and agricultural exports to the world reached an all-time high in 2013 of over $148 billion. Of that total, we exported more than $58 billion to TPP countries – a figure that would increase as a result of tariff elimination under TPP. As just one example: U.S. poultry currently faces a 40-percent tariff in Malaysia. U.S. poultry would become more affordable in Malaysia under a TPP agreement that reduces these duties to zero.
Specifically, in the TPP we are seeking:
- Elimination of tariffs and commercially-meaningful market access for U.S. products exported to TPP countries; and
- Provisions that address longstanding non-tariff barriers, including import licensing requirements and other restrictions.
TEXTILES
U.S. textile and apparel manufacturers sold more than $10 billion worth of products to TPP countries in 2013, an increase of 5.4 percent from the previous year. Many U.S. yarns, fabrics, and apparel currently face tariffs as high as 20 percent upon entering some TPP countries. Our goal in the TPP negotiations is to remove tariff and non-tariff barriers to textile and apparel exports to enhance the competitiveness of our producers in the Asia-Pacific region.
Specifically, in the TPP we are seeking:
- Elimination of tariffs on textile and apparel exports to TPP countries;
- A “yarn forward” rule of origin, which requires that textile and apparel products be made using U.S. or other TPP country yarns and fabrics to qualify for the benefits of the agreement, so as to ensure that non-qualifying textiles and apparel from non-TPP countries do not enjoy the benefits reserved for TPP countries;
- A carefully crafted “short supply” list, which would allow fabrics, yarns, and fibers that are not commercially available in the United States or other TPP countries to be sourced from non-TPP countries and used in the production of apparel in the TPP region without losing duty preference;
- Strict enforcement provisions and customs cooperation commitments that will provide for verification of claims of origin or preferential treatment, and denial of preferential treatment or entry for suspect goods if claims cannot be verified; and
- A textile specific safeguard mechanism that will allow the United States and other TPP countries to re-impose tariffs on certain goods if a surge in imports causes or threatens to cause serious damage to domestic producers.
SERVICES
Services industries account for four out of five U.S. jobs and also represent a significant and growing share of jobs in other TPP countries. Securing liberalized and fair access to foreign services markets will help U.S. service suppliers, both small and large, seeking to do business in TPP markets, thereby, supporting jobs at home.
Specifically, in the TPP we are seeking:
- Liberalizing access for services companies so they receive better or equal treatment to service suppliers from TPP countries’ other FTA partners and face a more level playing field in TPP markets;
- Provisions that would enable service suppliers to supply services without establishing an office in every TPP country;
- New or enhanced obligations in specific sectors important to promoting trade (e.g., enhanced disciplines for express delivery services will promote regional supply chains and aid small businesses, which often are highly dependent on express delivery services for integration into supply chains and distribution networks); and
- Commitments to liberalize foreign financial services and insurance markets while protecting a government’s broad flexibility to regulate, including in the financial sector, and to take the actions necessary to ensure the stability and integrity of a financial system.
INVESTMENT
With trade following investment, we are working to ensure that U.S. investors abroad are provided the same kind of opportunities in other markets that we provide in the United States to foreign investors doing business within our borders. That is why we are seeking to include in TPP many of the investment obligations that have historically proven to support jobs and economic growth, as well as new provisions to take on emerging investment issues.
Specifically, in the TPP we are seeking:
- Liberalized access for investment in TPP markets, non-discrimination and the reduction or elimination of other barriers to the establishment and operation of investments in TPP countries, including prohibitions against unlawful expropriation and specified performance requirements;
- Provisions that will address measures that require TPP investors to favor another country’s domestic technology in order to benefit SOEs, national champions, or other competitors in that country; and
- Procedures for arbitration that will provide basic rule of law protections for U.S. investors operating in foreign markets similar to those the U.S. already provides to foreign investors operating in the U.S. These procedures would provide strong protections to ensure that all TPP governments can appropriately regulate in the public interest, including on health, safety, and environmental protection. This includes an array of safeguards designed to raise the standards around investor-state dispute settlement, such as by discouraging and dismissing frivolous suits, allowing governments to direct the outcome of arbitral tribunals in certain areas, making proceedings more open and transparent, and providing for the participation of civil society organizations and other non-parties.
LABOR
Ensuring respect for worker rights is a core value. That is why in TPP the United States is seeking to build on the strong labor provisions in the most recent U.S. trade agreements by seeking enforceable rules that protect the rights of freedom of association and collective bargaining; discourage trade in goods produced by forced labor, including forced child labor; and establish mechanisms to monitor and address labor concerns.
Specifically, in the TPP we are seeking:
- Requirements to adhere to fundamental labor rights as recognized by the International Labor Organization, as well as acceptable conditions of work, subject to the same dispute settlement mechanism as other obligations in TPP;
- Rules that will ensure that TPP countries do not waive or derogate from labor laws in a manner that affects trade or investment, including in free trade zones, and that they take initiatives to discourage trade in goods produced by forced labor;
- Formation of a consultative mechanism to develop specific steps to address labor concerns when they arise; and
- Establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP country is not meeting its labor commitments, and requirements that governments consider and respond to those concerns.
ENVIRONMENT
Environmental stewardship is a core value and advancing environmental protection and conservation efforts across the Asia-Pacific region is a key priority for the United States in TPP. In addition to core environment obligations, we are seeking trailblazing, first-ever conservation proposals to address some of the region’s most urgent environmental challenges.
Specifically, in the TPP we are seeking:
- Strong and enforceable environment obligations, subject to the same dispute settlement mechanism as other obligations in TPP;
- Commitments to effectively enforce domestic environmental laws, including laws that implement multilateral environmental agreements, and commitments not to waive or derogate from the protections afforded in environmental laws for the purpose of encouraging trade or investment;
- New provisions that will address wildlife trafficking, illegal logging, and illegal fishing practices; and
- Establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP member is not meeting its environment commitments, and requirements that governments consider and respond to those concerns.
E-COMMERCE AND TELECOMMUNICATIONS
In the past five years, the number of Internet users worldwide has ballooned from 2 to 3 billion and will continue to grow. The increase in Internet use creates significant economic potential, particularly for small businesses. The Obama Administration is working through TPP to unlock the promise of e-commerce, keep the Internet free and open, promote competitive access for telecommunications suppliers, and set digital trade rules-of-the-road.
Specifically, in the TPP we are seeking:
- Commitments not to impose customs duties on digital products (e.g., software, music, video, e-books);
- Non-discriminatory treatment of digital products transmitted electronically and guarantees that these products will not face government-sanctioned discrimination based on the nationality or territory in which the product is produced;
- Requirements that support a single, global Internet, including ensuring cross-border data flows, consistent with governments’ legitimate interest in regulating for purposes of privacy protection;
- Rules against localization requirements that force businesses to place computer infrastructure in each market in which they seek to operate, rather than allowing them to offer services from network centers that make business sense;
- Commitments to provide reasonable network access for telecommunications suppliers through interconnection and access to physical facilities; and
- Provisions promoting choice of technology and competitive alternatives to address the high cost of international mobile roaming.
COMPETITION POLICY AND STATE-OWNED ENTERPRISES
U.S. goals on competition policy and SOEs are grounded in long-standing principles of fair competition, consumer protection, and transparency. The United States is seeking rules to prohibit anticompetitive business conduct, as well as fraudulent and deceptive commercial activities that harm consumers. We are also pursuing pioneering rules to ensure that private sector businesses and workers are able to compete on fair terms with SOEs, especially when such SOEs receive significant government backing to engage in commercial activity.
Specifically, in the TPP we are seeking:
- Basic rules for procedural fairness on competition law enforcement;
- Commitments ensuring SOEs act in accordance with commercial considerations and compete fairly, without undue advantages from the governments that own them, while allowing governments to provide support to SOEs that provide public services domestically; and
- Rules that will provide transparency with respect to the nature of government control over and support for SOEs.
SMALL AND MEDIUM-SIZED ENTERPRISES
Small- and medium-sized enterprises (SMEs) are the backbone of the U.S. economy and are key contributors to economic growth in other TPP economies as well. The United States’ 28 million SMEs account for nearly two-thirds of net new private sector jobs in recent decades. SMEs that export tend to grow even faster, create more jobs, and pay higher wages than similar businesses that do not trade internationally. We are seeking through this agreement to provide SMEs the tools they need to compete across TPP markets. TPP will benefit SMEs by eliminating tariff and non-tariff barriers, streamlining customs procedures, strengthening intellectual property protection, promoting e-commerce, and developing more efficient and transparent regulatory regimes. In addition, TPP will include a first-ever chapter focusing on issues that create particular challenges for SMEs.
Specifically, in the TPP we are seeking:
- Commitments to provide access to information on utilizing FTAs – a problem that SMEs have identified as a disproportionate challenge for them; and
- Establishment of a regular review of how TPP is working for SMEs.
INTELLECTUAL PROPERTY RIGHTS
As the world’s most innovative economy, strong and effective protection and enforcement of IP rights is critical to U.S. economic growth and American jobs. Nearly 40 million American jobs are directly or indirectly attributable to “IP-intensive” industries. These jobs pay higher wages to their workers, and these industries drive approximately 60 percent of U.S. merchandise exports and a large share of services exports. In TPP, we are working to advance strong, state-of-the-art, and balanced rules that will protect and promote U.S. exports of IP-intensive products and services throughout the Asia-Pacific region for the benefit of producers and consumers of those goods and services in all TPP countries. The provisions that the United States is seeking – guided by the careful balance achieved in existing U.S. law – will promote an open, innovative, and technologically-advanced Asia-Pacific region, accelerating invention and creation of new products and industries across TPP countries, while at the same time ensuring outcomes that enable all TPP countries to draw on the full benefits of scientific, technological, and medical innovation, and take part in development and enjoyment of new media, and the arts.
Specifically, in the TPP we are seeking:
- Strong protections for patents, trademarks, copyrights, and trade secrets, including safeguards against cyber theft of trade secrets;
- Commitments that obligate countries to seek to achieve balance in their copyright systems by means of, among other approaches, limitations or exceptions that allow for the use of copyrighted works for purposes such as criticism, comment, news reporting, teaching, scholarship, and research;
- Pharmaceutical IP provisions that promote innovation and the development of new, lifesaving medicines, create opportunities for robust generic drug competition, and ensure affordable access to medicines, taking into account levels of development among the TPP countries and their existing laws and international commitments;
- New rules that promote transparency and due process with respect to trademarks and geographical indications;
- Strong and fair enforcement rules to protect against trademark counterfeiting and copyright piracy, including rules allowing increased penalties in cases where counterfeit or pirated goods threaten consumer health or safety; and
- Internet service provider “safe harbor” provisions, as well as strong and balanced provisions regarding technological protection measures to foster new business models and legitimate commerce in the digital environment.
TECHNICAL BARRIERS TO TRADE AND SANITARY AND PHYTOSANITARY MEASURES
Non-tariff trade barriers, such as duplicative testing and unscientific regulations imposed on food and agricultural goods, are among the biggest challenges facing exporters across the Asia-Pacific region. An effective regulatory program should protect the public interest – for example in health, safety, and environmental protection – and do so in a manner that is no more trade restrictive than necessary to achieve the policy goal. The United States is therefore seeking in TPP to strengthen rules intended to eliminate unwarranted technical barriers to trade (TBT) and build upon WTO commitments in this area, and to ensure that sanitary and phytosanitary measures (SPS) are developed and implemented in a transparent, science-based manner.
Specifically, in the TPP we are seeking:
- Commitments to enhance transparency, reduce unnecessary testing and certification costs, and promote greater openness in standards development;
- Commitments aimed at adopting common approaches to regulatory matters related to trade in products in key sectors such as wine and distilled spirits, medical devices, cosmetics, pharmaceuticals, information and communication technology, and food formulas
- New and enforceable rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable, and non-discriminatory manner, while at the same time preserving the ability of U.S. and other TPP regulatory agencies to do what they deem necessary to protect food safety, and plant and animal health; an
- Establishment of an on-going mechanism for improved dialogue and cooperation on addressing SPS and TBT issues.
TRANSPARENCY, ANTICORRUPTION AND REGULATORY COHERENCE
Through TPP, we are seeking to make trade across the TPP region more seamless, including by improving the coherence of TPP regulatory systems, enhancing transparency in policy-making processes, and combatting corruption. These “good government” reforms also play an important role in ensuring fairness for American firms and workers
Specifically, in the TPP we are seeking:
- Commitments to promote greater transparency, participation, and accountability in the development of regulations and other government decisions, including by promptly publishing laws, regulations, administrative rulings of general application, and other procedures that affect trade and investment, and providing opportunities for stakeholder comment on measures before they are adopted and finalized;
- For the first time in a U.S. trade agreement, a chapter on regulatory coherence, including commitments on good regulatory practices; and
- Commitments discouraging corruption and establishing codes of conduct to promote high ethical standards among public officials.
CUSTOMS, TRADE FACILITATION AND RULES OF ORIGIN
Cutting the red-tape of trade, including by reducing costs and increasing customs efficiencies, will make it cheaper, easier, and faster for businesses to get their products to market. In TPP, we are looking to facilitate trade across the TPP region; support the deep integration of U.S. logistics, manufacturing, and other industries in regional supply chains; and reduce costs for U.S. business by removing onerous and opaque customs barriers.
Specifically, in the TPP we are seeking:
- Commitments that will ensure the quick release of goods through customs, expedited procedures for express shipments, advance rulings, and transparent and predictable customs regulations;
- Strong customs cooperation commitments in order to ensure that TPP countries work together to prevent smuggling, illegal transshipment, and duty evasion, and to guarantee compliance with trade laws and regulations; and
- Strong and common rules of origin to ensure that the benefits of TPP go to the United States and other TPP countries, and also that TPP promotes the development of supply chains in the region that include companies based in the United States.
GOVERNMENT PROCUREMENT
Increasing access to government procurement markets in TPP countries, which represent an estimated 5-10 percent of a country’s economy, will unlock significant opportunities for U.S. and other TPP businesses and workers.
Specifically, in the TPP we are seeking:
- Creation of fair, transparent, predictable, and non-discriminatory rules to govern government procurement in TPP countries; and
- Commitments to liberalize TPP countries’ government procurement markets, with comparable levels of coverage by all TPP countries, taking into account the particular sensitivities of specific countries.
DEVELOPMENT AND TRADE CAPACITY-BUILDING
The United States views development as a way to further strengthen the region and lay the groundwork for future economic opportunities by improving access to economic opportunity for women and low income individuals; incentivizing private-public partnerships in development activities; and designing sustainable models for economic growth. In addition, the United States sees trade capacity-building as critical to assist TPP developing countries in implementing the agreement and ensuring they can benefit from it. In TPP, we plan to include a chapter on cooperation and capacity building and, for the first time in any U.S. trade agreement, a chapter dedicated specifically to development.
Specifically, in the TPP we are seeking:
- Agreement on cooperative development activities TPP countries could conduct to promote broad-based economic growth and sustainable development, including public-private partnerships, science and technology cooperation, and other joint development activities; and
- Mechanisms for collaboration and facilitation of capacity-building activities by both TPP government and non-government representatives, as well as the private sector, in order to help TPP workers and businesses, including SMEs and micro- enterprises participate in global trade and take advantage of the agreement.
DISPUTE SETTLEMENT
When the United States negotiates a trade agreement, we expect our trading partners to abide by the rules and obligations to which they agree. Under the TPP, countries will first seek to address an issue cooperatively. If they are unable to do so, the Parties have recourse to an independent tribunal to determine whether a Party has failed to meet its obligations, and ultimately to allow suspension of benefits if a Party fails to come into compliance. Through the TPP dispute settlement mechanism, we are seeking to give the American public the confidence that the United States has the means to enforce the strong, high-standard obligations we are negotiating in this agreement.
Specifically, in the TPP we are seeking:
- Establishment of a fair and transparent dispute settlement mechanism that applies across the agreement; and
- Procedures to allow us to settle disputes on matters arising under TPP in a timely and effective manner.
U.S.-JAPAN BILATERAL NEGOTIATIONS ON MOTOR VEHICLE TRADE AND NON-TARIFF MEASURES
With the participation of Japan, TPP countries account for nearly 40 percent of global GDP and about one-third of all world trade. Japan is currently the fourth-largest goods trading partners of the United States. The United States exported $65 billion in goods and an estimated $48 billion in services to Japan in 2013.
Nevertheless, U.S. exporters have faced a broad range of formidable non-tariff measures in Japan’s automotive and other markets. As a result, prior to Japan joining the TPP negotiations, the United States reached a series of agreements with Japan to address a range of issues in conjunction with Japan’s participation in TPP. This includes an agreement that U.S. tariffs on motor vehicles will be phased out in accordance with the longest staging period in the TPP negotiations and will be back-loaded to the maximum extent.
The United States and Japan also agreed to address non-tariff measures through parallel negotiations to TPP, which were launched in August 2013.
Specifically, in these negotiations with Japan we are seeking:
- Enforceable commitments related to the automotive sector that will address a broad range of non-tariff measures – including those related to regulatory transparency, standards, certification, financial incentives, and distribution;
- Establishment of an accelerated dispute settlement procedure that would apply to the automotive sector that includes a mechanism to “snap back” tariffs as a remedy, as well as a special motor vehicle safeguard; and
- Meaningful outcomes that address cross-cutting and sectoral non-tariff measures, including in the areas of insurance, transparency, investment, IP rights, standards, government procurement, competition policy, express delivery, and SPS.
