The Trans-Pacific Partnership Trade Agreement: In-Depth Analysis

Increasing numbers of U.S. companies, from Small and Medium-sized Enterprises (SMEs) to large multinationals, rely on exports and/or imports as an important part of their business. although large companies are often associated with doing business internationally, SMEs actually make up the vast majority of U.S. firms engaged in international trade.  SMEs with fewer than 500 employees accounted for almost 98% of U.S. companies that exported goods in 2013.  Of the SME exporters, 92% did business from a single U.S. location, with only 18% of SME exports transported to an affiliate of the SME overseas.  Furthermore, 94% of the U.S. companies that both exported and imported goods in 2013 were SMEs.

The U.S., along with Australia, Brunei Darussalam, Canada, Chili, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam concluded negotiations on the Trans-Pacific Partnership (TPP) Trade Agreement on October 5, 2015, and consistent with the Bipartisan Congressional Trade Priorities and Accountability Act of 2015 (“Trade Priorities Act”) the President entered into the TPP agreement on February 4, 2016.  The specifics and process outlined in the Trade Priorities Act is beyond the scope of this article, but it is worth noting that the TPP promises to create the single largest export market for goods and services for U.S. companies.  The TPP countries include some of the fastest growing economies in the world, and currently account for about 40% of total Gross Domestic Product (GDP) worldwide.  In 2015 the U.S. exported $680 billion to TPP countries, and imported $842 billion from the TPP countries.

TPP Trade Agreement

Under the TPP Trade Agreement, almost all areas of commercial relations between the twelve countries are included in the Agreement. There are thirty sections in the Agreement. The sections in the TPP Trade Agreement generally include:

1)  Initial Provisions and General Definitions:

The TPP Trade Agreement can coexist with other Trade Agreements between TPP Members.

2) Trade in Goods:

The TPP Agreement creates preferential treatment between the Members and will increase trade in this market of 800 million people, as well as support high quality jobs in all twelve Member countries through TPP Members agreeing to reduce or eliminate tariffs and non-tariff barriers on industrial goods. On agricultural products, the Members will eliminate or reduce tariffs and other restrictive policies, which will increase agricultural trade in the region, and enhance food security. The Members agree to promote policy reforms, eliminate agricultural export subsidies, work together in the World Trade Organization (WTO) to develop disciplines on export state trading enterprises, export credits, and limiting timeframes allowed for restrictions on food exports in order to provide greater food security in the region. The Members have agreed to increased transparency and cooperation related to agriculture biotechnology.

The Members will publish all tariffs and other information related to trade in goods to ensure that SMEs and large companies can take advantage of the TPP Agreement. The Members agree not to use performance requirements on production in order to obtain the Agreement benefits. The Members also agree not to impose WTO-inconsistent import and export restrictions and duties, including on remanufactured goods, which will promote recycling of parts into new products.

3) Textiles and Apparel:

The TPP Members agree to eliminate tariffs on textiles and apparel. Most tariffs will be eliminated immediately. However, on some sensitive products, the tariffs will be eliminated over a longer timeframe as agreed to by the TPP Members.

There are now specific rules of origin that require use of yarns and fabrics from the TPP region, which will promote regional supply chains and investment in this sector. There will be a “short supply list” mechanism in place that allows the use of certain yarns and fabrics not widely available in the TPP region. Furthermore, there are commitments on customs cooperation and enforcement between the Members to prevent duty evasion, smuggling and fraud; as well as a textile-specific safeguard to respond to serious damage or threat of serious damage to domestic industry in the event there is a sudden surge in imports.

4) Rules of Origin:

The twelve TPP Members have agreed on a single set of rules of origin that define whether a particular good is “originating” and therefore eligible to receive a TPP preferential tariff. The Agreement provides for “accumulation,” so that inputs from one TPP Member are treated the same as materials from another TPP Member. The Members have agreed to and have set rules that ensure businesses can easily operate across the TPP region, by creating a common TPP-wide system of showing and verifying that goods made in the TPP meet the rules of origin. The competent authorities in the TPP have been provided the procedures to verify claims appropriately.

5) Customs Administration and Trade Facilitation:

The TPP Members have agreed on rules to enhance the facilitation of trade, improve transparency in customs procedures, and ensure integrity in customs administration. The rules are designed to help TPP businesses by encouraging smooth processing in customs and border procedures, and promote regional supply chains. The Members have agreed to transparent rules, including publishing their customs laws and regulations, as well as providing for release of goods without unnecessary delay on bond or “payment under protest” where a decision has not yet been made on the amount of duties or fees owed.

The Members agree to advance rulings on customs valuation and other matters that will help businesses with predictability. The Members also agree to disciplines on customs penalties that will help ensure the penalties are administered in an impartial and transparent manner. In addition, the TPP Members agreed to provide expedited customs procedures for express shipments. As a way to prevent and counter smuggling, the Members have agreed to provide information, upon request, to help each other enforce their respective customs laws.

6) Sanitary and Phytosanitary (SPS) Measures:

The TPP Members have advanced their shared interest in ensuring transparent, non-discriminatory rules based on science. The Members reaffirmed their right to protect human, animal or plant life or health in their countries. The Members will allow public comment on proposed SPS measures to inform their decision-making, and to ensure businesses understand the rules they will need to follow. The Members agree that import programmes are based on the risk associated with importations, and that import checks are carried out without undue delay.

The TPP Members agree emergency measures necessary for the protection of human, animal, or plant life may be taken, provided the Member taking them notifies all other Members. The Member adopting an emergency measure will review the scientific basis of that measure within six months and make available the results of these reviews to any Member upon request.

Furthermore, TPP Members commit to improve information exchange related to equivalency or regionalization requests and to promote systems-based audits to assess the effectiveness of regulatory controls of an exporting Member.  In an effort to rapidly resolve SPS, they have agreed to establish a mechanism for talks between governments.

7) Technical Barriers to Trade (TBT):

The TPP Trade Agreement requires Members to comply with transparent nondiscriminatory rules for developing technical regulations, standards, and conformity assessment procedures while preserving the ability of the Members to fulfill legitimate objectives. The Members agreed to cooperate in order to ensure technical regulations and standards do not create unnecessary barriers to trade.

As a method of reducing costs, TPP Members agree to rules that will facilitate the acceptance of the results of conformity assessment procedures from the conformity assessment bodies in other TPP Members, making it easier for companies to access TPP markets. The Members further agreed to ensure a reasonable interval between publication of technical regulations and conformity assessment procedures, and their entry into force, so that businesses have sufficient time to meet the new requirements.

The TPP includes annexes related to regulation across the region. These sectors are cosmetic, medical devices, pharmaceuticals, information and communications technology products, wine and distilled spirits, proprietary formulas for prepackaged foods and food additives, and organic agricultural products.

8) Trade Remedies:

The TPP Members agree to promote transparency and due process in trade remedy proceedings through recognition of best practices. This policy does not affect the rights of TPP Members granted under the WTO.

The Members agree to allow another Member to apply a transitional safeguard measure during a certain period of time if import increases, as a result of tariff cuts implemented under the TPP Agreement, cause serious injury to a domestic party. The measures may be maintained for up to two years (one year with one-year-long extension), but the safeguard measure must be progressively liberalized if it will last longer than one year. In order to impose a safeguard, the Member must follow notification and consultation requirements with the other Members.

The Members will provide mutually-agreed compensation in the event a Member needs to apply a transitional safeguard measure. The Members are prohibited from imposing more than one of the safeguards allowed under the Agreement to the same product at the same time. Members may not impose a transitional safeguard measure on any product imported under a TPP tariff rate quota, and may exclude TPP products from a WTO safeguard measure if such imports are not a cause of, or threaten, serious injury.

9) Investment:

The TPP Agreement sets out rules requiring nondiscriminatory investment policies and protections that assure basic rule of law protections, while protecting the ability of Members’ governments to achieve legitimate public policy objectives. The TPP Agreement provides the basic investment protections found in other investment-related Agreements, including national treatment; most-favored-nation treatment; “minimum standard of treatment” for investments in accordance with customary international law principles;  prohibition of expropriation that is not for public purpose, without due process, or without compensation;  prohibition on “performance requirements” such as local content or technology localization requirements; free transfer of funds related to an investment (subject to exceptions in the TPP Trade Agreement to ensure that governments retain the flexibility to manage volatile capital flows, including through non-discriminatory temporary safeguard measures restricting investment-related transfers in the context of a balance of payments crisis or the threat thereof, and certain other economic crises or to protect the integrity and stability of the financial system); and freedom to appoint senior management positions of any nationality.

TPP Members adopted a “negative-list” basis, which means their markets are fully open to foreign investors, except when they have taken an exception in one of two country-specific annexes: (1) current measures on which a Member accepts an obligation not to make its measures more restrictive in the future and to bind any future liberalization, and (2) measures and policies on which a Member retains full discretion in the future.

The Members agree to neutral and transparent international arbitration of investment disputes, with strong provisions to prevent abusive and frivolous claims and ensure the right of governments to regulate in the public interest. The procedural measures include: transparent arbitral proceedings; amicus curiae submissions; non-disputing Member submissions; expedited review of frivolous claims and possible award of attorneys’ fees; a review procedure for an interim award; binding joint interpretations by TPP Members; time limits on bringing a claim; and rules to prevent a claimant pursuing the same claim in parallel proceedings.

10) Cross-Border Trade in Services:

The TPP Trade Agreement includes: core obligations found in the WTO and other Trade Agreements; most-favored nation treatment; market access (which requires that no TPP Member may impose quantitative restrictions on the supply of services or require a specific type of legal entity or joint venture); and local presence, which means that no Member may require a supplier from another country to establish an office or affiliate, or to be resident, in its territory in order to supply a service. TPP Members accept these obligations on a “negative-list basis,” meaning their markets are fully open to services suppliers from TPP Members, except where they have taken an exception in one of two country-specific annexes attached to the TPP Trade Agreement: (1) current measures on which a Member accepts an obligation not to make its measures more restrictive in the future, and to bind any future liberalization, and (2) sectors and policies on which a country restrains full discretion in the future.

TPP Members will administer measures of general application in a reasonable, objective, and impartial manner, and accept requirements for transparency in the development of new services regulations. These benefits can be denied to shell companies and to a service supplier from a non-Member with which a TPP Member prohibits certain transactions. The Members will permit free transfer of funds related to cross-border supply of service. Furthermore, the Members agree to a professional services annex encouraging cooperative work on licensing recognition and other regulatory issues, and an annex on express delivery services.

11) Financial Services:

The TPP Members agree to cross-border and investment market access opportunities, while ensuring the Members will retain the ability to regulate financial markets and institutions, and to take emergency measures in the event of a crisis. The Members agree to other core obligations found in other Trade Agreements, such as: national treatment; most-favored nation treatment; market access; and a minimum standard of treatment. The Members agree to the sale of certain financial services across borders to a TPP Member from a supplier in another TPP country rather than requiring suppliers to establish operations in the other country to sell their services; however, this is subject to registration or authorization of cross-border financial services suppliers of another TPP Member in order to help ensure appropriate oversight.

A supplier of a TPP Member may provide a new financial service in another TPP market if domestic companies in that market are allowed to do so. Members have country-specific exceptions to some of these rules in two types of annexes: (1) current measures on which a Member accepts an obligation not to make its measures more restrictive in the future and to bind any future liberalization; and (2) measures and policies on which a country retains full discretion in the future.

The TPP Trade Agreement sets out rules that formally recognize the importance of regulatory procedures to expedite the offering of insurance services by licensed suppliers, and procedures to achieve this outcome. The Agreement includes specific commitments on portfolio management, electronic payment card services, and transfer of information for data processing.

The TPP Agreement provides for resolution of disputes relating to certain provisions through neutral and transparent investment arbitration. The Agreement includes specific provisions on investment disputes related to the minimum standard of treatment; as well as provisions requiring arbitrators to have financial services expertise, and a special State-to-State mechanism to facilitate the application of the prudential exception and other exceptions in the context of investment disputes. The TPP Agreement includes exceptions to preserve broad discretion for TPP financial regulators to take measures to promote financial stability and the integrity of their financial system, including a prudential exception and exception of non-discriminatory measures in pursuit of monetary or certain other policies.

12) Temporary Entry for Business Persons:

TPP Members are encouraged to provide information on applications for temporary entry to TPP Member business persons, to ensure the application fees are reasonable, and to make decisions on applications and inform applicants of decisions in a timely manner. The Members will ensure information on requirements for temporary entry are readily available to the public, including by publishing the information promptly and online, if possible, and provide explanatory materials. The Members agree to ongoing cooperation on temporary entry issues such as visa processing. Most of the Members have made commitments on access for each other’s business persons, which are in country-specific annexes.

13) Telecommunications:

TPP Members share an interest in ensuring efficient and reliable access to telecommunications networks in their countries. These networks are critical to companies for providing services. The TPP Agreement’s pro-competitive network access rules cover mobile suppliers. The Members commit to ensure that major telecommunications services suppliers in their territory provide interconnection, leased circuit services, co-location, and access to poles and other facilities under reasonable terms and conditions and in a timely manner. Where licensing is required, the Members agree to transparency in the regulatory processes and that regulations do not generally discriminate against specific technologies.

The Members commit to administer their procedures for the allocation and use of scarce telecommunications resources, (frequencies, numbers, and rights-of-way) in an objective, timely, transparent, and nondiscriminatory manner. The Members recognize the importance of relying on market forces and commercial negotiations in the telecommunications sector. The Members agree to take steps to promote competition in international mobile roaming services and facilitate the use of alternatives to roaming. The Members agree, if a Member chooses to regulate rates for wholesale international mobile roaming services, the Member shall permit operators from TPP countries that do not regulate such rates the opportunity to also benefit from lower rates.

14) Electronic Commerce:

The TPP Members commit to ensuring free flow of the global information and data that drive the internet and the digital economy, subject to legitimate public policy objectives. The Members further agree not to require that TPP Member companies build data centers to store data as a condition for operating in a TPP market, and that source code of software is not required to be transferred or accessed.

The TPP Agreement prohibits the imposition of customs duties on electronic transmissions, and prevents Members from favoring national producers or suppliers of such products through discriminatory practices or outright blocking. The Members agree to adopt and maintain consumer protection laws related to fraudulent and deceptive commercial activities online and to ensure privacy and other consumer protections that can be enforced in TPP markets. The Agreement requires Members to have measures to stop unsolicited commercial electronic messages.

TPP Members are encouraged to promote paperless trading between businesses and the government, such as: electronic customs forms, and electronic authentication and signatures for commercial transactions. The Members agree to cooperate to help SMEs take advantage of electronic commerce and the Members are encouraged to cooperate on policies regarding personal information protection, online consumer protection, and cybersecurity threats and capacity.

A number of the obligations in this section of the Agreement are subject to relevant non-conforming measures by individual TPP Members.

15) Government Procurement:

TPP Members share an interest in accessing each other’s large government procurement markets through transparent, predictable, and non-discriminatory rules. TPP Members commit to core disciplines of national treatment and non-discrimination. Furthermore, the Members agree to publish relevant information in a timely manner, to allow sufficient time for suppliers to obtain the tender documentation and submit a bid, to treat tenders fairly and impartially, and to maintain confidentiality of tenders.

The Members will use fair and objective technical specifications; to award contracts based solely on the evaluation criteria specified in the notices and tender documentation; and to establish due process procedures to question or review complaints about an award. Each TPP Member agrees to a positive list of entities and activities that are covered by the Agreement, which are listed in annexes.

16) Competition Policy:

TPP Members share an interest in ensuring a framework of fair competition in the region through rules that require the Members to maintain legal regimes that prohibit anticompetitive business conduct, as well as fraudulent and deceptive commercial activities that harm consumers. The Members agree to adopt or maintain national competition laws that proscribe anticompetitive business conduct and work to apply these laws to all commercial activities in their territories. In order to ensure that such laws are effectively implemented, the Members agree to establish or maintain authorities responsible for the enforcement of national competition laws; and adopt or maintain laws or regulations that proscribe fraudulent and deceptive commercial activities that cause harm or potential harm to consumers.

In addition, the Members will cooperate, as appropriate, on matters of mutual interest related to competition activities. The Members agree to obligations on due process and procedural fairness, as well as private rights of action for injury caused by a violation of a Member’s national competition law. Additionally, the Members will cooperate in the area of competition policy and competition law enforcement, including through notification, consultation and exchange of information.

This section is not subject to the dispute settlement provisions of the TPP Agreement, but the Members may consult on concerns related to this section.

17) State-Owned Enterprises (SOEs) and Designated Monopolies:

All twelve Members of the TPP Trade Agreement have State-Owned Enterprises (SOEs), which play a role in providing public services and other activities. However, the Members recognize the benefit of an Agreement on a framework of rules on SOEs. This section on SOEs covers large SOEs that are principally engaged in commercial activities. The Members agree to ensure that their SOEs make commercial purchases and sales on the basis of commercial considerations, except when doing so would be inconsistent with public services. Furthermore, the Members will ensure that their SOEs or designated monopolies do not discriminate against the enterprises, goods, and services of other Members.

The TPP Members will provide their courts with jurisdiction over commercial activities of foreign SOEs in their territory, and to ensure the administrative bodies regulating both SOEs and private companies do so in the same impartial manner. The Members will not  cause adverse effects to the interests of other TPP Members in providing non-commercial assistance to an SOE that produces and sells goods in that other Member’s territory. The Members will share a list of their SOEs with the other TPP Members and agree to provide, upon request, additional information about the extent of government ownership or control and the non-commercial assistance they provide to SOEs.

There are exceptions to this section that exist, such as in the case of a national or global economic emergency, as well as country-specific exceptions that are set out in annexes.

18) Intellectual Property:

TPP’s Intellectual Property (IP) section covers patents; trademarks; copyrights; industrial designs; geographical indications; trade secrets; other forms of intellectual property; and enforcement of IP rights, as well as areas in which Members agree to cooperate.  The TPP Trade Agreement makes it easier for businesses to search, register, and protect IP rights in new markets, which is particularly important for small businesses. The Agreement establishes standards for patents, based on the WTO’s Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement and international best practices. On trademarks, the Agreement provides protections of brand names and other signs that businesses and individuals use to distinguish their products in the marketplace.  The Agreement also requires certain transparency and due process safeguards with respect to the protection of new geographical indications, including for geographical indications recognized or protected through international agreements.  These include confirmation of understandings on the relationship between trademarks and geographical indications, as well as safeguards regarding the use of commonly used terms.

Furthermore, the TPP Agreement contains pharmaceutical-related provisions that facilitate both the development of innovative, life-saving medicines and the availability of generic medicines, taking into account the time that various Members may need to meet these standards.  The Agreement includes commitments relating to the protection of undisclosed test and other data submitted to obtain marketing approval of a new pharmaceutical or agricultural chemicals product. The Agreement also reaffirms Members’ commitment to the WTO’s 2001 Declaration on the TRIPS Agreement and Public Health, and in particular confirms that Members are not prevented from taking measures to protect public health, including in the case of epidemics such as HIV/AIDS.

In copyright, the TPP Agreement establishes commitments requiring protection for works; performances; and phonograms such as songs, movies, books, and software. The Agreement also includes effective and balanced provisions on technological protection measures and rights management information.  As a complement to these commitments, the Agreement includes an obligation for Members to continuously seek to achieve balance in copyright systems through among other things, exceptions and limitations for legitimate purposes, including in the digital environment.  Additionally, the Agreement requires Members to establish or maintain a framework of copyright safe harbors for Internet Service Providers (ISPs).  These obligations do not permit Members to make such safe harbors contingent on ISPs monitoring their systems for infringing activity.

Finally, TPP Members agree to provide strong enforcement systems, including: civil procedures; provisional measures; border measures; and criminal procedures and penalties for commercial-scale trademark counterfeiting and copyright or related rights piracy. In particular, TPP Members will provide the legal means to prevent the misappropriation of trade secrets, and establish criminal procedures and penalties for trade secret theft, including by means of cyber-theft, and for cam-cording.


19) Labour:

All TPP Members are International Labour Organization (ILO) Members and recognize the importance of promoting internationally recognized labour rights. The Members agree to adopt and maintain in their laws and practices the fundamental labour rights recognized in the ILO 1998 Declaration, namely freedom of association and the right to collective bargaining; elimination of forced labour; abolition of child labour and a prohibition on the worst forms of child labour; and elimination of discrimination in employment. The Members also agree to have laws governing minimum wages, hours of work, and occupational safety and health. These commitments also apply to export processing zones.

The TPP Members agree not to waive or derogate from laws implementing fundamental labour rights in order to attract trade or investment, and not to fail to effectively enforce their labour laws in a sustained and recurring pattern that would affect trade or investment between TPP Members. Furthermore, the Agreement includes commitments to discourage importation of goods that are produced by forced labour or child labour, or that contain inputs produced by forced labour regardless of whether the source country is a TPP Member. Each TPP Member commits to ensure access to fair, equitable, and transparent administrative and judicial proceedings to provide effective remedies for violations of its labour laws. The Members also agree to public participation in implementation of this section, including establishing mechanisms to obtain public input.

19) Environment:

The TPP Members share a strong commitment to protecting and conserving the environment, including working together to address environmental challenges such as: pollution; illegal wildlife trafficking; illegal logging; illegal fishing; and protection of the marine environment. The Members agree to effectively enforce their environmental laws, and not to weaken environmental laws in order to encourage trade or investment. The Members also agree to fulfill their obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and to take measures to combat and cooperate to prevent trade in wild fauna and flora that has been taken illegally.

The TPP Members agree to promote sustainable forest management, and to protect and conserve wild fauna and flora that they have identified as being at risk in their territories; this includes measures to conserve the ecological integrity of specially protected natural areas, such as wetlands.  In an effort to protect their shared oceans, TPP Members agree to sustainable fisheries management; promote conservation of important marine species, including sharks; combat illegal fishing; and prohibit some of the most harmful fisheries subsidies that negatively affect overfished fish stocks, and that support illegal, unreported, or unregulated fishing.  Additionally, the Members agree to enhance transparency related to such subsidy programs, and to make best efforts to refrain from introducing new subsidies that contribute to overfishing or overcapacity.

Additionally, the Members agree to protect the marine environment from ship pollution and to protect the ozone layer from ozone depleting substances. The Members agree to reaffirm their commitment to implement the Multilateral Environmental Agreements (MEAs) they have joined.

The Members commit to provide transparency in environmental decision-making, implementation, and enforcement.  Furthermore, the Members agree to provide opportunities for public input in implementation of the Agreement, including through public submissions and public sessions of the Environment Committee established to oversee implementation. The Members agree environmental issues are subject to the dispute settlement procedure laid out in the Agreement.  The Members further agree to encourage voluntary environmental initiatives.  Finally, the Members commit to cooperate to address matters of joint or common interest, including in the areas of conservation and sustainable use of biodiversity, and transition to low-emissions and resilient economies.

21) Cooperation and Capacity Building:

The TPP Members recognize that lesser-developed Members may face particular challenges in implementing the Agreement, and in taking full advantage of the opportunities it creates. To address these challenges, the Agreement establishes a Committee on Cooperation and Capacity Building to identify and review areas for potential cooperative and capacity building efforts. Members’ activities are on a mutually agreed basis and subject to the availability of resources. The Committee will facilitate exchange of information to help with requests related to cooperation and capacity building.

22) Competitive and Business Facilitation:

In order help the TPP Trade Agreement reach its full potential, the Agreement creates formal mechanisms to review the impact of the TPP on competiveness of the Members through dialogues among governments and between government; business; and civil society with particular focus on deepening regional supply chains, to assess progress, take advantage of new opportunities, and address any challenges that may emerge once the Agreement is in force.

23) Development:

The TPP Members seek to ensure that the TPP Trade Agreement will be a high-standard model for trade and economic integration; and in particular, to ensure that all TPP Members can obtain the complete benefits of the TPP, are fully able to implement their commitments, and emerge as more prosperous societies with stronger markets.  The Agreement includes three specific areas to be considered for collaborative work by each Member: (1) broad-based economic growth which includes: sustainable development, poverty reduction, and promotion of small businesses; (2) women and economic growth including: helping women build capacity and skill, enhancing women’s access to markets, obtaining technology and financing, establishing women’s leadership networks, and identifying best practices in workplace flexibility; and (3) education, science and technology, research, and innovation.  The Agreement establishes a TPP Development Committee, which will meet regularly to promote voluntary cooperative work in these areas and new opportunities as they arise.

24) Small-and-Medium-Sized (SMEs) Enterprises:

The TPP Members have a shared interest in the promotion of SMEs in trade to ensure that SMEs share in the benefits of the TPP Trade Agreement. The Agreement includes: commitments by each TPP Member to create user-friendly websites targeted at SME users in order to provide easily accessible information on the TPP Trade Agreement relevant to SMEs; regulations and procedures concerning IP rights; foreign investment regulations; business registration procedures; employment regulations; and taxation information. Additionally, the Agreement establishes a SMEs Committee that will meet regularly to review how well the TPP Trade Agreement is serving SMEs; consider ways to further enhance its benefits; and oversee cooperation or capacity building activities to support SMEs trough export counseling, assistance, and training programs, information sharing, trade finance, and other activities.

25) Regulatory Coherence:

The TPP Trade Agreement implemented Regulatory Coherence in order to help ensure an open, fair, and predictable regulatory environment for businesses operating in the TPP markets. The Agreement achieves this by encouraging transparency, impartiality, and coordination across each government to achieve a coherent regulatory approach. The Agreement aims to facilitate regulatory coherence in each TPP country by promoting mechanisms for effective interagency consultation and coordination for agencies. The TPP Trade Agreement encourages widely-accepted good regulatory practices, such as: impact assessments of proposed regulatory measures; communication of the grounds for selection of chosen regulatory alternatives; and the nature of the regulation being introduced. The Agreement also includes provisions to help ensure regulations are written clearly and concisely, the public has access to information on new regulatory measures (if possible online), and that existing regulatory measures are periodically reviewed to determine if they remain the most effective means of achieving the desired objective. Furthermore, the TPP Trade Agreement encourages TPP Members to provide an annual public notice of all regulatory measures it expects to take.

26) Transparency and Anti-Corruption:

In an effort to promote the goal shared by all TPP Members of strengthening good governance and addressing the corrosive effects that bribery and corruption can have on their economies, the TPP Trade Agreement establishes transparency and anti-corruption mandates. In compliance with the transparency and anti-corruption mandates, TPP Members need to ensure that their laws, regulations, and administrative rulings of general application with respect to any matter covered by the TPP Trade Agreement are publically available, and, to the extent possible, regulations likely to affect trade or investment between Members are subject to notice and comment.

The Members agree to ensure due process rights for TPP stakeholders in connection with administrative proceedings, including prompt review through impartial judicial or administrative tribunals or procedures. The Members also agree to adopt or maintain laws criminalizing offering to, or solicitation of, undue advantages by a public official, as well as other acts of corruption affecting international trade or investment. Furthermore, the Members commit to effectively enforce their anticorruption laws and regulations. Additionally, the Members agree to endeavor to adopt or maintain codes or standards of conduct for their public officials; as well as, measures to identify and manage conflicts of interest, to increase training of public officials, to take steps to discourage gifts, to facilitate reporting of acts of corruption, and to provide for disciplinary or other measures for public officials engaging in acts of corruption.

27) Administration and Institutional Provisions:

The Agreement creates an institutional framework by which the Members will assess and guide implementation or operation of the TPP Trade Agreement. In particular, the Agreement establishes the Trans-Pacific Partnership Commission, which is composed of Ministers or senior level officials to oversee the implementation or operation of the Agreement and guide its future evolution. The Commission will review the economic relationship and partnership among the Members on a periodic basis to ensure the Agreement remains relevant to the trade and investment challenges confronting the Members. Furthermore, the Agreement requires that each Member designate an overall contact point to facilitate communications between the Members. The Agreement also creates a mechanism through which a Member that has a specific transition period for an obligation must report on its plans for, and progress toward, implementing that obligation. This is designed to ensure greater transparency with respect to the implementation of the Members’ obligations.

28) Dispute Settlement:

TPP Members will make every attempt to resolve disputes through cooperation and consultation, and encourage the use of alternative dispute resolution mechanisms when appropriate. When this is not possible, TPP Members aim to have these disputes resolved through impartial, unbiased panels. The dispute settlement mechanism created in the Agreement applies across the TPP, with few specific exceptions. The citizens of each TPP Member will be able to follow proceedings, since submissions made in disputes will be made available to the public; hearings will be open to the public unless the disputing Members otherwise agree; and the final report presented by panels will also be made available to the public. Panels will consider requests from non-governmental entities located in the territory of any disputing Member to provide written views regarding the dispute to panels during dispute settlement proceedings.

Should consultations fail to resolve an issue, Members may request establishment of a panel, which would be established within sixty days after the date of receipt of a request for consultations or thirty days after the date of receipt of a request related to perishable goods. Panels will be composed of three international trade and subject matter experts, independent of the disputing Members, with procedures available to ensure that a panel can be composed even if a Member fails to appoint a panelist within a set period of time. These panelists will be subject to a code of conduct to ensure the integrity of the dispute settlement mechanism. The panelists will present an initial report to the disputing Members within one-hundred and fifty days after the last panelist is appointed or one-hundred and twenty days in cases of urgency, such as cases related to perishable goods. The initial report will be confidential, to enable Members to offer comments. The final report must be presented no later than thirty days after the presentation of the initial report and must be made public within fifteen days, subject to the protection of any confidential information in the report.

To maximize compliance, the Agreement allows for the use of trade retaliation, if a Member is found not to have complied with its obligations fails to bring itself into compliance with its obligations. Before use of trade retaliation, a Member found in violation can negotiate or arbitrate a reasonable period of time in which to remedy the breach.

29) Exceptions:

The TPP Trade Agreement ensures that flexibility is available to all TPP Members that guarantee full rights to regulate in the public interest, including for a Member’s essential security interest and other public welfare reasons. The Agreement incorporates the general exceptions provided for in Article XX of the General Agreement on Tariffs and Trade of 1994 to the goods trade-related provisions; it specifies that nothing in the TPP shall be construed to prevent the adoption or enforcement by a Member of measures necessary to, among other things, protect public morals, protect human, animal or plant life or health, protect IP, enforce measures relating to products of prison labour, and measures relating to conservation of exhaustible natural resources.

The Agreement includes a self-judging exception, applicable to the entire TPP, which makes clear that a Member may take any measure it considers necessary for the protection of its essential security interests. Furthermore, the Agreement defines the circumstances and conditions under which a Member may impose temporary safeguard measures restricting transfers – such as contributions to capital, transfers of profits and dividends, payments of interest or royalties, and payments under a contract – related to covered investments. The Agreement provides for these exceptions to ensure that governments retain the flexibility to manage volatile capital flows, in the contexts of balance of payments or other economic crises, or threats thereof. Additionally, the Agreement specifies that no Member is obligated to furnish information, under the TPP, if it would be contrary to its law or public interest, or would prejudice the legitimate commercial interests of particular enterprises. A Member may elect to deny the benefits of Investor-State dispute settlement with respect to a claim challenging a tobacco control measure of the Member.

30) Final Provisions:

The TPP Trade Agreement can be amended, with the Agreement of all Members and each Member completes its applicable legal procedures and notifies the Depository in writing. The TPP Agreement is open to accession by Members of the Asia-Pacific Economic Cooperation forum and other States or separate customs territories as agreed by the Members, again after completing applicable legal procedures in each Member country. The Agreement also specific rules regulating when a Member can withdraw from the TPP.


The purpose of the TPP Trade Agreement is to promote and increase trade among the regions and help boost the economies in those countries. If SMEs and large corporations are aware of the Agreement and the benefits it provides, they will be able to take advantage of the Agreement. Taking advantage of the TPP agreement will promote business and market growth for the Members.

– Rebecca Rouse, Law Clerk

– Todd Vollmers, Attorney