HIGHLIGHTS:

• The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP) is scheduled to be signed on March 8, 2018, in Santiago, Chile.
• CPATPP, also known as TPP-11, is the result of the United States' withdrawal from the original Trans-Pacific Partnership Agreement. Because the nine pages of text that came out of the CPATPP negotiations do not seem to include substantive or controversial changes, it is likely that all parties obtain their required internal approvals.
• This Holland & Knight alert provides an overview of the major differences between the CPATPP and TPP, and also takes a look at what's next for the TPP-11 as it moves forward without the United States.

A mere nine pages contain the resulting text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPATPP) negotiations, which concluded on Jan. 23, 2018.¹ The agreement is scheduled to be signed on March 8, 2018, in Santiago, Chile. The best way to understand CPATPP, also known as TPP-11, is considering it as the result of the United States' withdrawal from the original Trans-Pacific Partnership Agreement (TPP).²

After the U.S. departed from the TPP, the other 11 signatories (Australia, Brunei Darussalam, Canada, Chile, Japan, Mexico, Malaysia, New Zealand, Peru, Singapore and Vietnam) came up with a minimalistic approach, avoiding a complex and complete overhaul of the TPP. Instead, a limited number of obligations that originally had aimed to comply with U.S. objectives and Trade Promotion Authority goals were identified and suspended.

What Are the Differences Between CPATPP and TPP?

One major difference is the title of the new agreement. Adding the words "Comprehensive and Progressive" seems more of a political statement rather than a substantive change, and it may well be that the only major additions to the TPP are making express reference to "corporate social responsibility," "indigenous rights," "inclusive trade" and "traditional knowledge" in its preamble language. Those concepts were not included in the original TPP preamble.

Regarding the suspension of the application of certain provisions, CPATPP strikes from the 30 Chapters of the TPP very few but controversial obligations. Below is a cursory look at highlights of the CPATPP:

Services

• Express shipments may remain subject to customs duties
• Monopoly postal services may continue to subsidize express delivery services and will continue to be excluded from non-discriminatory principles – National Treatment, Most Favored Nation and limitations to Market Access
• No obligation to allow for appeal procedures against telecommunications regulatory bodies to reconsider its determinations

Investment Disputes

• Disputes over "investment agreements" or "investment authorizations" will not be subject to the Investor-State Dispute Settlement (ISDS) mechanism (runs against additional protections to investors)
• Financial services will not be subject to investment claims regarding breaches of "Minimum Standard of Treatment" (runs against additional protections to investors)

Government Procurement

• Participation conditions in procurement procedures does not include complying with labor rights of the territory where the good is produced (runs against fair labor competition)
• No mandatory further negotiations to expand Government Procurement access, including sub-central coverage of local entities' procurement procedures (runs against market access equality between central and federal states coverage)

Intellectual Property (IP)

• National treatment does not necessarily apply to any form of payment with regard to uses of copyrights and related rights (runs against certainty and extent of obligations)
• Patents are not necessarily available for inventions claimed as new uses of a known product, new methods of using a known product or new processes of using a known product (runs against certainty and further protection of IP rights)
• Patents are not necessarily available for inventions that are derived from plants
• No obligation to adjust or compensate for patent delays when granting them
• No obligation to compensate patent owners for marketing approval process delays
• No obligation to protect undisclosed test or other data concerning the safety and efficacy of the product for an additional period of time from the date of marketing approval
• No obligation to protect products that are, or contain, a protein produced using biotechnology processes for use in human beings for the prevention, treatment or cure of a disease or condition
• No extended (70-plus years) protection for copyrights
• No civil, administrative or criminal remedies and penalties required against the circumvention of technology and rights management information, used to protect authors', performers' and producers of phonograms' exercise of their rights and copyrights
• No criminal offense or civil claims obligation against devices used to decode satellite signals without authorization of lawful distributor of the signal
• No obligation for internet service providers to take actions (notice and takedown) to protect copyright infringements

Environment

• Parties are not required to adopt deterrent measures against trade of wild fauna and flora that was taken or traded in violation of any party's law, even if the fauna and flora was just transshipping in a party's territory

Transparency and Anti-Corruption

• National healthcare authorities are not required to establish transparent and public decision-making processes on listing pharmaceutical products or medical devices for reimbursement purposes

The full text of the CPATPP can be viewed on the New Zealand Ministry of Foreign Affairs & Trade website.³

What's Next?

It is still possible that some countries could internally reject approval of a treaty that made sense only if the United States was part of it (accepting high-standard international trade obligations was counterbalanced by market access to the U.S. and its value chains), although that is not likely because many of the most controversial obligations were suspended. The mere idea of diversifying trade vis-à-vis a more protectionist stance on the part of the U.S. may be enough to justify the approval and quick entry into force of the CPATPP.

The CPTPP text keeps all of its references to the United States, probably hoping for the U.S. to eventually join again. Unlike the TPP, CPTPP countries have not yet published any side agreements, or "side letters," which modify or alter the compromises stated in the agreement. Many of these are bilateral agreements that further consolidate additional protections or free trade among specific partners.

Also unlike the TPP, the CPTPP has a less restrictive approach with regard to its entry into force. TPP basically required the U.S. to be a part of the agreement to enter into force – or requires a combination of members, including Japan, that achieves the established goal of a minimum gross domestic product (GDP) sum. The TPP-11 will enter into force 60 days after the date on which at least six members or 50 percent of the number of signatories to the CPTPP (50 percent refers to the possibility of other countries joining the CPTPP before its entry into force), whichever is smaller, have completed their legal procedures and notified it to the depositary.

Ministers of all 11 member countries are scheduled to officially sign the CPTPP on March 8 in Santiago, and because the changes contained in the nine pages do not seem substantive or controversial, all parties should quickly obtain their required internal approvals.

CAPTPP Plus U.K. and U.S.?

The idea of adding new members into the TPP-11 makes it more relevant, providing an interesting alternative to further trade relations with groups of countries that have no preferential trade relations among them – potentially even the United States and United Kingdom – and probably making it more significant and attractive than other trade agreements such as the Pacific Alliance (Alianza del Pacífico⁴). However, CAPTPP is also competing with other regional initiatives, such as the China-backed Regional Comprehensive Economic Partnership (RCEP), for which negotiations are expected to intensify in 2018.⁵

Notes

¹ The negotiations took less than a year to conclude.

² See Holland & Knight's alert, "Is the Trans-Pacific Partnership Still Possible Without the United States?", Nov. 29, 2016.

³ More information is available on New Zealand's TPP depositary page.

⁴Alianza del Pacífico includes Chile, Colombia, Mexico and Peru, who are currently negotiating with Australia, Canada, New Zealand and Singapore to become "Associated States."

⁵ RCEP's 16 participating countries account for almost half of the world's population.