7 October, 2015
The Trans-Pacific Partnership (TPP) represents a trade bloc second only to the European Union in the size of its total trade value, bringing together key Latin American and Asia-Pacific states within a broad trade liberalisation scheme and reorienting global trade flows across almost every sector. While the final text of the 30-chapter agreement has not yet been disclosed, commentary from the negotiating parties about the scope of the commitments involved indicates that the TPP is of great significance for the consumer products sector across the participating states' 800 million consumers. In particular:
- As a free trade agreement, the TPP is primarily concerned with the elimination of barriers to trade such as tariffs and export controls. Negotiators have confirmed that the TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services, across the full spectrum of trade sectors. The sectors which are believed to have benefited most from the liberalisation of the market access regimes around the Pacific include pharmaceuticals and healthcare; tobacco; food and beverages; technology and manufacturing; textiles, apparel and footwear; the automotive industry; and a broad range of cross-border services including IT and technology services, film and television services, infrastructure, construction and logistics. The prospect of tariff-free trade in these sectors promises considerable opportunities for any business with operations in the region.
- A key part of implementing this liberalisation is harmonising regulation on various trade-related issues, so as to facilitate the development of regional production and supply chains and cross-border integration. The TPP sets out common regulatory standards for customs procedures and policies, including changes in quarantine restrictions on the import of certain goods, the provision of expedited customs procedures for express shipments and transparent rules on customs penalties; agreement on some sanitary and phytosanitary standards (SPS), which impose restrictions on the import of certain animal and plant products, including provision for emergency measures for the protection of human, animal or plant life or health, as well as audits of states' regulatory controls; and rules of origin to determine whether a product originates in the TPP region, for example through certain rules requiring a state to use TPP member-produced yarn and fabric in textiles in order to receive the benefit of duty-free access to other TPP markets in textile products.
- Annexes to the TPP have been agreed which set out specific technical regulations for particular sectors, including cosmetics, medical devices, pharmaceuticals, information and communications technology products, wine and distilled spirits, proprietary formulas for pre-packaged foods and food additives, and organic agricultural products.
- The TPP contains far-reaching commitments in relation to intellectual property regulations, including patents, trademarks, copyrights, industrial designs, geographical indications and trade secrets. These commitments are intended to make it easier to search for, register and protect intellectual property rights in new markets around the region. They are thought to contain far more robust protections than are typically present in the domestic regulations around the region, including stronger measures to enforce intellectual property rights (such as the provision of criminal procedures to address trademark counterfeiting on a commercial scale and the criminalisation of the disclosure of trade secrets). Such provisions will be of particular significance to consumer products businesses that are heavily reliant on the protection of commercially valuable, confidential information, including in the manufacturing, technology and food/beverage production sectors.
- The TPP also includes significant measures designed to harmonise the regulation of a variety of other issues directly related to the consumer products sector, including substantial changes to labour standards, environmental regulation, data protection rules and e-commerce (including specific commitments on electronic payment card services, consumer protection laws relating to fraudulent or deceptive commercial activities online and cooperation on personal information protection policies), investment protection mechanisms and government procurement regimes.
Until the content of the agreement is disclosed, the precise implications of the changes involved cannot be assessed with any certainty. However, it is widely acknowledged that the scope and membership of this agreement make it of great importance to consumer products businesses throughout the world. The TPP is expected to have an enormous impact on global trade flows and set new global benchmarks for regulation.
For further information, please contact:
Donald Robertson, Partner, Herbert Smith Freehills
donald.robertson@hsf.com
