July

2011

The Trans-Pacific Partnership:

Implications of US preferences for intellectual property and regulatory coherence

Abigail Hunter
The Trans-Pacific Partnership (TPP) is heralded as a 21st century high standard agreement taking on cross cutting issues of trade by going beyond traditional barriers to trade. The TPP is ddesigned to be dynamic and inclusive, having the capacity to constantly evolve and add new nations as trade partners. Due to the highly advanced nature of chapters under negotiation and the inclusivity of the partnership, members along with their external trade partners will feel the effects of the final TPP provisions. In intellectual property and regulatory coherence negotiations the United States has been particularly aggressive, exhibiting strategic geoeconomic interest in instituting its preferences into the chapters. The prerogatives the US is pushing carry major implications for the international trade system and global society.

[ I n t e r n a t i o n a l U n i v e r s i t y i n G e n e v a - T r a d e C a p s t o n e J u l y 2 0 1 1 ]

Index Introduction Dynamic Nature

p 2 p 4 p 4 p 7 p 8 p 8 p 9 p 9 p 10 p 11 p 11 p 13 p 15 p 16

Framework of the agreement Major issues on the table Copyrights

US proposal of intellectual property Patentability Enforcement

Geographical indicators

Implications of the IP proposal Regulatory coherence Conclusion Bibliography

US preferences in regulatory coherence p 13

Abbreviations TPP TBT RTA IP RC P4 APEC FTA FTAAP GSP GDP GATT GATS NTB ASEAN AFTA TRIPS WIPO WCT ACTA WBUT WIPO GMO R&D GI USTR FDI ISDS SPS

Trans-Pacific Partnership Technical Barriers to Trade Regional Trade Agreement Intellectual Property Regulatory Coherence Pacific Four Asia Pacific Economic Cooperation Free Trade Agreement Free Trade Area of Asia Pacific General System of Preferences Gross Domestic Product General Agreement on Tariffs and Trade General Agreement on Trade in Services Non-tariff barriers Association of Southeast Asian Nations ASEAN-FTA Trade Related Intellectual Property Rights Agreement World Intellectual Property Organization WIPO Copyright Treaty Anti-Counterfeiting Trade Agreement World Blind Union Treaty World Intellectual Property Organization Genetically Modified Organisms Research & Development Geographical Indicators Office of the US Trade Representative Foreign Direct Investment Investor State Dispute Settlement Sanitary and Phytosanitary

 Introduction The Trans-Pacific Partnership Agreement (TPP) is an ever-growing regional trade agreement designed to constantly expand membership and serve as a platform for regional economic integration around the Pacific. It takes on both explicit and implicit barriers to trade and with it negotiators are attempting to establish a new model for trade agreements that deal primarily in technical barriers to trade (TBT). The nine partner nations in the TPP New Zealand, Australia, Malaysia, Singapore, Viet Nam, Brunei, Chile, Peru and the United States are negotiating texts on sectors such as services, intellectual property, goods market access, investment and government procurement. Advancements in these sectors are expected to go beyond like-sectors of current accords but the true groundbreaking measures are being taken cross cutting issues. These issues of small and medium size enterprise promotion, transparency, competitiveness, labour, development, environment, supply chain management and regulatory coherence cross over sectors of trade to ease underlying barriers of multilateral commerce and have never before been included in a regional trade agreement (RTA).1 While the nine TPP partners flaunt negotiations as high quality and 21st Century, the road to reaching an accord on such matters is fraught with challenges. The nations have to determine how they can string together a trade scheme amidst the 25 plus bilateral and regional agreements already standing between members. They also have to find common ground on highly sensitive societal issues that cause civil society actors to call sovereignty into question and risk domestic political backlash. Although negotiations are approaching their eighth round come September 2011 and draft texts are on the table, none of the drafts have been released for public review. An examination of the TPP based upon the current knowledge of the intellectual property (IP) and regulatory coherence (RC) chapters reveals the US has a strategic geo-economic interest in instituting its prerogatives into the TPP. Because of the size and inclusive nature of the TPP, the standards it sets will carry major implications for the world trading system and global society. Dynamic Nature The Trans-Pacific Partnership (TPP) has been heralded as a 21st Century trade agreement, set to lower both explicit and implicit barriers to trade. The agreement was originally signed by Brunei, Chile, Singapore, and New Zealand in 2005 and was know as the Pacific Four (P4). The initial P4 group advocated for the trade agreement as a high standard agreement that could serve as a model within the Asia-Pacific region and attract other countries in the region to join.2 It was an
Barfield, Claude. The Trans-Pacific Partnership: A Model for Twenty-First-Century Trade Agreements?, American Enterprise Institute for Public Policy Research, International Economic Outlook No 2. June 2011. 2 Gao, H. The Trans-Pacific Strategic Economic Partnership Agreement: High Standard or Missed Opportunity? UN Economic and Social Commission for Asia and the Pacific.
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offshoot of a 1998 proposition by the US to the Asia Pacific Economic Cooperation (APEC) to begin discussions for an RTA. As Western economies began to digress in recent years, Asia has become an economic powerhouse, seen as having the potential to lead the world out from the recession. For that reason, the US began to see Asia as a vital trade and security interest.3 In 2009, Barack Obama made the TPP the forefront of his administrations trade policy and began discussions with the P4 to develop the agreement into a larger accord.4 As part of the US trade strategy, the US began pushing the TPP by calling off all consultations for bilateral free trade agreements (FTA) with Asian nations. This had a domino effect of Asian nations joining the TPP.5 Now the TPP consists of nine nations surrounding the Pacific Rim New Zealand, Australia, Malaysia, Singapore, Viet Nam, Brunei, Chile, Peru and the US and are still looking to gain more partners. Eventually, TPP members aspire to include all eleven nations of the Asia- Pacific Economic Cooperation (APEC) group and use the TPP as a building block to a Free Trade Area of Asia Pacific (FTAAP).6 By interweaving its mechanisms and standards into the Asian trading system, the US hopes to counter the rising influence of China.7 The trade of goods within TPP members is minimal compared to trade with the rest of the Pacific Rim and the openness of trade ratios for members are already extremely high in world rankings.8 Thus, the US is not looking to better trade with existing TPP members, but instead is seeing the dynamic nature of the TPP as a mechanism to maintain leadership and power in the region.9 The seventh round of negotiations, hosted the 15-24 June in Ho Chi Minh City, Viet Nam, was suppose to announce the inclusion of Japan into the TPP. Because of the earthquake and resulting tsunami that struck Japan in March, along with the nuclear reactors and reconstruction issues Japan continues to face, the Japanese refrained from joining this round.10 Although Japan listed recovery efforts as its primary reason for delaying TPP membership thus far this year, it has, at the same time, signing new trade agreements with Europe, Peru, and India while launching talks with Mongolia.11 Despite the Japanese opting out of the seventh round of negotiations, they are continuing efforts in regards to talks for the TPP while synonymously pursuing talks for a tripartite FTA with South Korea and China.12 It is appropriate for Japan to
Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011. Ibid. 5 Hamanaka, Shintaro. Institutional Parameters of a Region-Wide Economic Agreement in Asia: Examination of Trans-Pacific Partnership and ASEAN+ FTA Approaches, The Asian Development Bank, Paper No 67. November 2010. 6 Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011. 7 Ibid. 8 Global Trade Enabling Report 2010, World Economic Forum. May 2010. 9 Penghong, Cai. The US, TPP and Challenges Ahead, China US Focus. 14 February 2011. 10 Kyodo. Chile: Its OK if Japan takes its time on TPP, The Japan Times. 25 June 2011. 11 ASEAN Free Trade Area Meeting, The UB Post, 26 July 2011. 12 Fukuawa, Shinji. Push FTA of South Korea, Japan, China toward TPP, The Japan Times, 26 July 2011.
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promote negotiations for the TPP and the tripartite FTA step by step in parallel to move forward toward the goal of Asia-Pacific regional integration, wrote Shinji Fukukawa, former vice minister of Japans Ministry of Economy, Trade, and Industry, in a public statement. In early July 2011, the US formally asked the Philippines to consider joining the TPP during a development conference in Manila. The Philippines announced later the same week that a Philippine delegation would be sent to Washington DC to examine the current TPP texts in September.13 They have since begun bilateral talks with TPP nations on an individual basis.14 If the Philippines decide to enter into the partnership they must make changes to several legal issues dealing with investment and be willing to sacrifice their rights under the US Generalized System of Preferences (GSP) a program that allows goods from developing nations to enter at lower or zero tariff to US markets. The GSP scheme officially lapsed in December 2010 after failing to garner substantial votes in the US Congress to extend it.15 Canada is said to be examining accession to negotiations while the US has asked Thailand to consider joining the partnership as well.16 TPP nations have set out with the intention of constructing an inclusive framework to the agreement making it open to new membership and compatible with other standing initiatives in the region.17 If inclusivity is wholly incorporated in the TPP, the range of influence of TPP rules on trade, investment, and regulation will constantly broaden through membership. The proposed automatic accession provisions would allow membership to extend automatically to other countries that conform to TPP rules without requiring a laborious application and accession period.18 If an accord on such a provision were reached, this type of embedded inclusivity would make the TPP a dynamic partnership, able to incorporate new members throughout the region. The TPP would not simply affect member nations, however. Because of Asias economies are expected to comprise over half of world Gross Domestic Product (GDP) and trade and investment by 2050, more and more of the world will be looking be directly linked to Asia through trade.19 If the TPP were to pass and come to realisation in the transcribed manner, its provisions would have the potential to influence trade the world over. The dynamic nature of the TPP is precisely why the US has become involved; TPP engagement is a strategic geo-economic power manoeuvre to instil the US rules based trade system into Asia in hopes of maintaining influence against rising China. Ultimately, the TPP could carry major
US-PHL: Trade deal entry offered, BusinessWeek, 10 July 2011. RP sets bilateral talks with TPP members, The Manila Bulletin Publishing Corporation. 6 April 2011. 15 Ibid. 16 US pitches Pacific pact to Thailand, Bangkok Post, 11 April 2011. 17 Armstrong, Shiro. TPP needs less haste, more caution, East Asia Forum, 17 April 2011. 18 Ibid. 19 The Asian Development Bank. Asia 2050: Realising the Asian Century, The Asian Development Bank. 2011
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implications for member nations, potential members, and the world trading system as a whole. Framework of the agreement Although debate continues over what constitutes a high standard agreement, the basic concept is that, to perform as a high standard agreement the TPP must go beyond the provisions of current enacted agreements. The TPP must first fulfil obligations of the General Agreement on Tariffs and Trade (GATT) Article XXIV and the General Agreement on Trade in Services (GATS) Article V that require an RTA to cover substantially all traded goods and services. The TPP must then go beyond the standards of current multilateral agreements and bilateral/regional accords to further liberalize markets and provide better quality opportunities for economic integration between member states.20 Because traditional barriers to trade between the nine nations is almost nil tariff levels mostly range between 0 to 5 percent the TPP will have to deal more within TBT and non-tariff barriers (NTBs). The TBT Agreement under GATT attempts to deal with barriers such as labelling requirements, standardization, inquiry points, and transparency.21 All of these issues are central to the TPP agenda and members are attempting to create provisions in the agreement that exceed those under the multilateral TBT Agreement. In all, twenty-five different chapters are on the negotiating table and range from rules of origin to investment, agriculture to Mode 4 services. Economic integration is the ultimate goal of negotiations on all the chapters in order to improve the ease of doing business among the Pacific partners. Within the TPP, negotiations are taking a hybrid approach of dealing with the multiple-ruling issues associated with the twenty-five FTAs already existing between member nations.22 The TPP it is also being designed to run alongside agreements like the Singapore-New Zealand FTA and the ASEAN FTA (AFTA) so that firms are ensured no less than best current treatment.23 In doing so members are avoiding getting bogged down in modalities discussions because it allows them to negotiate both bilaterally and regionally, giving them freedom to extend specific offers to specific partners. Australia and New Zealand question the appropriateness of this approach, as it does nothing to relieve the spaghetti bowl effect that FTAs have on tariff schedules within the region.24 However, the focus of the TPP is not on improved market access, instead it is on reducing transaction costs to doing trade between the nations. Since
Gao, H. The Trans-Pacific Strategic Economic Partnership Agreement: High Standard or Missed Opportunity? UN Economic and Social Commission for Asia and the Pacific. 21 Decisions and recommendations adopted by the WTO Committee on Technical Barriers to Trade since 1 January 1995, WTO, G/TBT/Rev.9 22 Hamanaka, Shintaro. Institutional Parameters of a Region-Wide Economic Agreement in Asia: Examination of Trans-Pacific Partnership and ASEAN+ FTA Approaches, The Asian Development Bank, Paper No 67. November 2010. 23 Ibid. 24 Herreros, Sebastin. The Trans-Pacific Strategic Economic Partnership Agreement: a Latin American perspective, UN Division of International Trade and Integration. March 2011.
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the TPP is working to create common regulatory and legal frameworks instead of dealing with tariff schedules, the TPP scheme actually consolidates the various FTAs under its umbrella by allowing them to exist at different rates.25 Major issues on the table At the conclusion of the seventh round of talks in Ho Chi Minh City, Viet Nam, the Australian Department of Foreign Affairs and Trade announced that draft texts are now on the table in each negotiating group.26 While the agreement will not be signed in November 2011 as originally hoped, New Zealand and other nations, have claimed that at the November 2011 APEC meeting in Honolulu, Hawaii a framework agreement will be politically endorsed.27 While all chapters under negotiation will impact the world economy at large if the TPP is implemented, the Intellectual Property (IP) chapter and Regulatory Coherence (RC) chapter carry major implications for global trade. Although neither draft text has been released, leaked documents and proposals made by third parties show that the US is engaging a highly aggressive and strategic geo-economic approach to push its prerogatives within these chapters specifically. If the US is able to see its preferences passed in final texts, US systems would be integrated into Asia-Pacific growth and the US would be able to maintain its importance as a trade partner as Asian economic power rises.28 US proposal for intellectual property rights With the IP chapter of the TPP, member nations are going behind-the-border by improving IP rights and strengthening enforcement measures. The US has emerged as an intense advocate for stricter regulation of IP rights, advocating for provisions that emulate its own laws. In February 2011, the confidential US draft proposal for IP was leaked. It outlines terms for governing patents, copyrights, trademarks, geographic indicators, and regulatory test data for pharmaceuticals and agricultural products that go well beyond the terms of the Trade Related Intellectual Property Rights (TRIPS) Agreement of GATT and other existing treaties. Tougher enforcement measures are also included in the proposal. The proposed text is a source of contention among member states because it would force various nations to rewrite existing laws and carries major implications for public health and global access to medicines.29 Within the proposal copyrights, patentability and pre-grant opposition systems, geographical indicators, and enforcement mechanisms are the most divisive and highly influential to international trade and global society.
Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011. Seventh round of Trans-Pacific Partnership Agreement Negotiations, Press Release, Australian Department of Foreign Affairs and Trade. 27 Espiner, Guyon. Q+A: Time Groser interview transcript, TVNZ. 3 July 2011. 28 Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011. 29 IP Provisions in Trans-Pacific Partnership Negotiations Raise Public Health Concerns, ICTSD Bridges Trade News Digest Vol 15 No 10, 23 March 2011.
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Copyrights The US proposal hosts expansions of current copyrights standards beyond those set forth by TRIPS, the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT), the Anti-Counterfeiting Trade Agreement (ACTA), and the Bern Convention. It proposes an extension to the life of copyright terms from the current 50 years to 70 years for individuals while for corporate works to be legally enforceable for 95 to 120 years. Also, it plans to remove the copyright fair dealing exception for transient copying, which currently allows for individuals to sidestep infringement charges if the reproduction of a work is incidental, part of a technological process, and has no independent economic significance.30 Transient copying is highly prevalent online, where many individuals reproduce images and icons without attributing its content; the US proposal would include repercussions for such reproduction.31 The proposal also provides a clause to prohibit parallel importations. It would allow copyrights owners to decide whether to permit imports of their books, music, and movies.32 Several members of the TPP, such as New Zealand and Singapore, permit parallel importations and would have to change their laws to abide by the new standards. Importation rights are also a part of ongoing negotiations for the World Blind Union Treaty (WBUT) at the World Intellectual Property Organization (WIPO) and the standards the US is pushing for are in conflict with aspects of the WBUT under negotiation. If the US IP chapter were to pass before WBUT reached consensus, it could jeopardise provisions of WBUT and possibly make negotiators go back to the drawing board. Ultimately, the US is the worlds largest exporter of copyright content and all other nations are net importers.33 Expanding copyright laws would be extremely beneficial for all US industry yet through international agreements, such as ACTA the US has not been able to achieve the protections it warrants necessary for its domestic industries. The provisions the US proposes for the TPP are precisely the ones that it was unable to pass through at a multilateral basis in ACTA.34 Patentability The US proposal outlines a broadening of patentability criteria. The document reads, Each Party shall make patents available for any invention, whether a product or process, in all fields of technology, provided that the invention is new, involves an inventive step, and is capable of industrial application. While the proposal maintains the public order and morality exemptions to patentability as set forth by TRIPS, the range of patentable technologies is enlarged and will open the floor to new technologies whose use is currently under debate in
Copyright Act 1994 No 143, Public Act, New Zealand Legislation. Shera, Rick. US wants to take an axe to New Zealand IP law, L@w.geek.nz at Lowndes Jordan. 16 March 2011. 32 Ibid. 33 Dawes, Mattew. Trans-Pacific Partnership Agreement: Carrying the water for America, East Asia Forum. 17 April 2011. 34 Dawes, Mattew. Trans-Pacific Partnership Agreement: Carrying the water for America, East Asia Forum. 17 April 2011.
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many nations.35 Some of these technologies include patents for genetically modified organisms (GMOs) along with genes and genetic diagnostics. This would cause conflicts between members such as the US - with high GMO research and development (R&D) - and a country like Peru - where the Congress just passed a ten-year moratorium on the cultivation, import, and R&D on GMOs.36 Furthermore, the US proposal eliminates pre-grant patent opposition systems, which are currently practiced in some form or another by six of the nine TPP nations. Under a pre-grant patent opposition system, once a patent application is published, third parties are able to dispute its validity.37 It permits a quasi-judicial process to occur between the applicant, third party opponent and patent authority in which oral arguments, research, documents and other evidence can be presented against a patent while it is still in its application phase. Opposition from third parties can arise over patent applications that lack novelty or innovation and therefore are undeserving of a wholly new patent. In this manner it can effectively eliminate the potential for companies to gain monopolist advantage over products such as pharmaceuticals by extending their patents through minor tweaks and blocking production of cheaper generic versions of drugs. In a leaked negotiating document in July 2011, the US again projected their distaste for a pre-grant opposition system to be permitted within the IP text.38 If pre-grant opposition were to be left out of the IP chapter, it would have major implications for TPP members and their trading partners who produce generic drugs. India, for example, holds the some of most rigorous patentability criteria in the world. The use of pre-grant opposition in India has allowed for generic HIV-AIDS medications to be produced and distributed to Africa. If pre-grant patent opposition systems are eliminated under the TPP and the TPP continues to expand in size throughout Asia, it would increasing isolate Indias system.39 Geographical indicators The articles on geographical indicators (GI) permit the use or registration of signs or indications that reference a geographical area even though it is not the exact place or origin of the goods or services.40 In this way, the GI section of the TPP seems to undermine the basic concept of GIs because it allows a product to be labelled as a GI without actually originating in the geographical region. This makes the GIs more closely resemble trademarks.41 The proposed section goes on to provide that any GI recognized by another member country given it is not misleading in use or name and does not encroach upon the generic identification of
Saez, Catherine. US IP Enforcement Ambitions in Trans-Pacific Trade Agreement Stir Reactions, Intellectual Property Watch. 16 March 2011. 36 Esperan la respuesta del presidente sobre ingreso de los OVM, La Republica. 11 June 2011. 37 Leaked Paper Shows US Fights Pre-Grant Patent Opposition in TPP, Inside US Trade, 30 June 2011. 38 Saez, Catherine. Trans-Pacific Partnership Agreement: Did US move to threaten public health?, Intellectual Property Watch. 12 July 2011. 39 Ibid. 40 Koo, Jimmy H. Trans-Pacific Partnership Intellectual Property Rights Chapter February Draft Section by Section Analysis, American University Washington College of Law, PIJIP. 2011. 41 De Zwart, Melissa. The Trans-Pacific Partnership Agreement IP Chapter, The Fortnightly Review of IP & Media Law.
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the product - qualifies to become a registered trademark of the region.42 While the section specifically prohibits the registration of generic goods, it fails to define what generic is. Wine and spirits is the traditional sector in which GI is most implemented a prime example of GI is champagne. Two tiers of higher protections for wine and spirits are built into the TRIPS and the US proposal looks to extend the tiered system to all eligible products.43 The TPP articles build in exceptions for wine and spirits that are consistent with the stipulations of TRIPS.44 It limits prohibits the ability of wine or spirits to register or reference a GI if it is not the exact place of origin. For such GI provisions to be adopted, TPP nations would have to reform domestic laws and suspend their commitments under other international accords. Australia and New Zealand have allocated protections for their domestic wine industries and have signed international treaties to enforce GI protections that would have to be reformed. Because GIs would be significantly weakened in preference of trademarks, these protections would be at-risk and in need of reform. GI provisions of standing agreements, such as the Australian-European Community Agreement on Trade in Wine 2008, would also be weakened.45 The proposed GI articles would smear the line between trademarks and GIs. Under the TPP GI chapter more products could be registered as a GI or trademark, even ones that do not originate in the geographical area. Furthermore, as the term generic fails to be defined, interpretation of where the product must be considered generic could make for major disputes. The proposal also creates the need for domestic law reformation and external agreements to be renegotiated if standing protections for GIs desire to be honoured. Reforming GIs to serve more like trademarks is in the absolute interest of the US. This is because the US legal system already provides protections for GIs through a trademark system that recognizes GIs also as collective or certification marks.46 In previous negotiations such as US-Chile FTA, TRIPS and more, the US has failed in their push for strengthened trademark legislation at the cost of GIs.47 The proposed GI articles reflect a furthering of the US trademark system over that of traditional international GI protections. Enforcement The US proposal introduces remarkably harsher enforcement measures of IP rights. For the first time in international standards, the proposed IP chapter mandates statutory damages to be charged for copyright, trademark, and patent infringement.
US Leaked proposal Shera, Rick. US wants to take an axe to New Zealand IP law, L@w.geek.nz at Lowndes Jordan. 16 March 2011. 44 Koo, Jimmy H. Trans-Pacific Partnership Intellectual Property Rights Chapter February Draft Section by Section Analysis, American University Washington College of Law, PIJIP. 2011. 45 De Zwart, Melissa. The Trans-Pacific Partnership Agreement IP Chapter, The Fortnightly Review of IP & Media Law. Is it considered generic in the country of sale or generic in the country of origin? 46 Geographical Indication Protection in the United States, US Patent and Trademark Office. 47 Roffe, Pedro & Genovesi, Mariano. Implementacin y Administracin e Propiedad Intelectual en los Acuerdos de Libre Comercio con los Estados Unidos, Banco Interamericano de Desarrollo. October 2011.
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It permits rewards for damages to amount to three times the size of actual losses and allows for the inclusion of legal fees for the lawsuit to be covered by the guilty party as well.48 The enforcement measures also criminalise small scale and personal infringement, provide legal backing for seizure of suspected counterfeits at customs offices, and criminalize running a camcorder at the cinema with no provision for accidental recording.49 Penalties for such crimes would include sentences of imprisonment as well as monetary finds sufficiently high to provide a deterrent to future infringements.50 The legal enforcement provisions of the US proposal would weigh heavily on the transfer of technology between nations of the TPP. The lengthy and strict scheme outlined by the US places emphasis on protecting IP rights rather than fostering better implementation of IP rights and encourages rights holders to engage governments in long and costly legal battles against small scale infringements. Implications of the IP proposal Overall, the US IP proposal to the TPP showcases all of the desires that the US has for multilateral accords such as TRIPS, ACTA, and the Bern Convention but were unable to succeed in getting at the multilateral level. The US aggressive approach to negotiating the IP chapter, showcases desire to inject conditions onto the trade system of the Pacific by instituting them in the smaller, yet expansive TPP, where the US has greater negotiating power. In a statement, US Chamber of Commerce President Thomas Donohue, said, the US must seize another tremendous opportunity to boost our competitiveness in the region and that is to successfully negotiate the TPP.51 The IP chapter of the TPP will affect TPP members and nations outside the negotiations as well. A report constructed by the Australian Productivity Commission, presented evidence showing the extending IP protection and enforcement in trade agreements does not benefit countries that are net IP importers.52 All members of the TPP are net importers besides the US, and the Commission found that when net importers extend IP rights under a bilateral or regional agreement, they in fact impost a net cost to their economy. The Commission encouraged Australia to not carry the water for the US by extending IP rights in the TPP. Furthermore, the IP framework could carry larger implications for world trade as more nations find the need to contort to the IP regulations to trade within the Pacific Rim region. Although TPP nations are by no means economic leaders in the
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Shera, Rick. US wants to take an axe to New Zealand IP law, L@w.geek.nz at Lowndes Jordan. 16 March 2011. Dawes, Mattew. Trans-Pacific Partnership Agreement: Carrying the water for America, East Asia Forum. 17 April 2011. 50 US Leaked Proposal 51 Donohue, Thomas J. Priorities for US-Korea Relations and the G-20: The Business Perspective, Speech, US Chamber of Commerce. 10 November 2010. 52 Australia Productivity Commission. Bilateral and regional trade agreements: Research Report, Commonwealth of Australia.13 December 2010.

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world - their collective world market share is very slim, less than 8 percent - TPP nations still play a major role in global value chains. Therefore, if products must abide by TPP regulations throughout the duration of their trade cycle, the weight of TPP rules would be much greater than evident with market share. This would carry consequences for product of generic medicines, GMO cultivation, technology transfer, and much more. Regulatory Coherence RC is a forefront cross-cutting issue of the TPP. It is a horizontal issue, involving establishment of systematic mechanisms to improve data collection, transparency, and even enforcement in domestic regulatory systems.53 Its main thrust, according to New Zealand APEC Ambassador, Kurt Tong, is about maintaining transparent regulatory systems that are based on scientific knowledge and are consistently applied.54 Essentially RC calls for nations to make regulatory systems in their countries operate in a more steady, equal and seamless manner so as to remove types of regulatory barriers that have mounted up behind tariffs and now stand as the greatest obstacles to free trade. RC has never before been included in a trade agreement but is making strong advancements within TPP negotiations. The Office of the US Trade Representative (USTR) proclaimed that the RC had particularly productive discussions at the recent round of talks in Ho Chi Minh.55 A draft text for RC is expected for November, like all other chapters, yet no information has been released regarding what may be included in the chapter. Because there is no RC chapter within other trade agreements either, it is difficult to project what may be the focus of RC provisions in the TPP. Thus speculation remains as to whether RC means the harmonization of substantive regulations or instead signifies mutual recognition of regulations in the enforcement of a countrys regulations as to producers, traders, and investors of another country.56 Furthermore, there is debate in regards to the best way to incorporate RC into the TPP text. Negotiators are currently considering the options of including RC as a distinct chapter, making RC inclusive within each chapter, or making RC an addendum to the text referring to the RC provisions within each chapter. US preferences in regulatory coherence The simple addition of a RC chapter is indicative of US desires and is preferential for the US. Because RC will be looking to establish regulatory bodies within each nation that deal specifically with issues relating to regulating requirements along with monitoring and advising trade partners, it will benefit all trade partners. However, the US is the only countries within the TPP that already has a specific national
Notes on USTR TPP Briefing, Program on Information Justice and Intellectual Property, Washington College of Law. 29 September 2010. 54 Young, Audrey. It takes nine to tango in Pacific free trade plan, New Zealand Herald. 8 July 2011. 55 Steady Progress at the Seventh Trans-Pacific Partnership Round, Press Release, Office of the US Trade Representative. June 2011. 56 Posner, Theodore & Wolff, DJ. Making Regulatory Coherence Coherent, Law360. 25 April 2011.
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independent regulatory body - the US Office of Information and Regulatory Affairs.57 Thus, the US would be obligating partners to create agencies in coordination with them, implementing the US system of regulatory oversight on a region basis. While also being the only nation spared the costs of opening a new national agency. With greater clarity over legal regulations, companies and investors with high calibre legal representation will have the ability to take inconsistencies up within the Investor State Dispute Settlement (ISDS) framework that is currently on the table at TPP negotiations. This would allow for foreign companies to take countries to court over legislation that does not comply with the terms the investor agreed to upon entering the market. The US is the second largest source of foreign investment in the world only the EU has higher outflows of foreign direct investment (FDI) US companies and investors will therefore also benefit the greatest from greater transparency in regulations surrounding services and investment.58 Australia is currently attempting to eliminate the option of having ISDS within international agreements because they say it hampers their ability to regulate sectors like tobacco.59 Phillip Morris currently is threatening Australia through Australia-Hong Kong investment treaty because of recent Australian legislation passed eliminating labelling on cigarette packages. Australia is now fighting aspects of RC that deal with ISDS in order to preserve the right of Australian governments to make laws in important public policy areas, according to the governments Trade Policy Statement.60 Sectoral annexes on RC are rumoured to have been added to the TBT and Sanitary and Phytosanitary (SPS) measures chapters.61 Attaching RC to SPS is viewed in the US as a mechanism for slashing barriers based on food safety and animal and plant health. Our goal is simple, USTR Ambassador Ron Kirk told the House Ways and Means Committee in March 2011, we want to work together to address their legitimate food safety concerns and expand markets for safe and wholesome food from the US.62 Incorporated in the US SPS approach would be proposals on harmonizing regulations on sectors such as biotechnology and pathogen reduction treatments in meat processing.63 Currently the US has more liberal policies on biotechnology, cultivation of GMOs, and hormone treatments for meat than any other nation in the partnership. Therefore, including initiatives to liberalise these sectors would be to the greatest benefit of the US because it would open up new markets for US products. The US has also appears to have interest in attaching RC annexes to

US Faces Lack of Enthusiasm on Horizontal Topics in TPP Negotiations, Inside US Trade. 10 March 2011. Global and Regional Trends of FDI Outflows in 2010, UNCTAD, Global Investment Trends Monitor, No 6. 27 April 2011. 59 Gleeson, Deborah & Legge, David. Big Tobacco v Australia: dangers looming in the Trans Pacific Partnership Agreement, The Conversation. 7 July 2011. 60 Ibid. 61 US Faces Lack of Enthusiasm on Horizontal Topics in TPP Negotiations, Inside US Trade. 10 March 2011. 62 Kirk Says US to Propose SPS Coherence in TPP, Fight China Trade Curbs, Inside US Trade. 17 March 2011. 63 Ibid.
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electronics, wines and spirits, textiles, medical devices, and pharmaceuticals, according to Inside US Trade sources.64 Member states deny that RC would interfere with the right of governments to regulate but say that it would instead expand internal regulatory systems so as to better coordinate among TPP partner countries.65 RC is an entirely new and unique provision that the TPP will take on in more detail than any other trade agreement has done thus far. By tackling RC, TPP negotiations are cutting across issues, recognizing that the greatest remaining barriers to trade between these Pacific nations are connected horizontally and cannot be properly dealt with by bottlenecking issues into sectors. As members attempt to take on issues of regulation, they spark debate over rule and sovereignty of national domestic lawmaking. While RC is supposed to be about encouraging sovereignty, nations have allowed basically no transparency over negotiations, thus leaving society in the dark over texts that could fundamentally alter their domestic legislative processes. Conclusion With trade barriers already highly open, goods trade between TPP members minimal, and a system of FTAs already in existence, the substantial gains from an accord would be trivial for the US. It is banking on the ability of the TPP to extend membership to other major economies in Asia Pacific.66 If the TPP is unsuccessful in realising its intended goals, or domestic disputes within US government pick apart the integral pieces of text, a TPP accord would be useless. Yet because of the growing importance of Asia economies, the Obama administration has placed the crux of its trade policy on economically integrating itself with Asia through the TPP. The US is attempting to push provisions within the TPP because it is able to negotiate with smaller powers on chapters that will carry major implications for international trade and global society - particularly the intellectual property and regulatory coherence chapters. Through the TPP, the US believes it will be able to advance its systems in Asia so as to maintain its importance as a trade partner counter to China.67
US Faces Lack of Enthusiasm on Horizontal Topics in TPP Negotiations, Inside US Trade. 10 March 2011. Young, Audrey. It takes nine to tango in Pacific free trade plan, New Zealand Herald. 8 July 2011. 66 James, Sallie. Is the Trans-Pacific Partnership Worth the Fuss?, The Cato Institute, 15 March 2010. 67 Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011.
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