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Abigail HunterThe Trans-Pacific Partnership (TPP) is heralded as a 21st century high standardagreement taking on cross cutting issues of trade by going beyond traditional barriers totrade. The TPP is ddesigned to be dynamic and inclusive, having the capacity to constantlyevolve and add new nations as trade partners. Due to the highly advanced nature ofchapters under negotiation and the inclusivity of the partnership, members along withtheir external trade partners will feel the effects of the final TPP provisions. In intellectual property and regulatory coherence negotiations the United States has been particularlyaggressive, exhibiting strategic geoeconomic interest in instituting its preferences into the

chapters. The prerogatives the US is pushing carry major implications for the internationaltrade system and global society.

2011July

The Trans-Pacific Partnership:

[ 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 ]

Implications of US preferences for intellectual property and regulatory coherence


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Index p 2

Introduction p 4

Dynamic Nature p 4

Framework of the agreement p 7Major issues on the table p 8

US proposal of intellectual property p 8

Copyrights p 9

Patentability p 9

Geographical indicators p 10

Enforcement p 11

Implications of the IP proposal p 11

Regulatory coherence p 13

US preferences in regulatory coherence p 13

Conclusion p 15

Bibliography p 16


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AbbreviationsTPP Trans-Pacific PartnershipTBT Technical Barriers to TradeRTA Regional Trade AgreementIP Intellectual Property

RC Regulatory CoherenceP4 Pacific FourAPEC Asia Pacific Economic CooperationFTA Free Trade AgreementFTAAP Free Trade Area of Asia PacificGSP General System of PreferencesGDP Gross Domestic ProductGATT General Agreement on Tariffs and TradeGATS General Agreement on Trade in ServicesNTB Non-tariff barriersASEAN Association of Southeast Asian Nations

AFTA ASEAN-FTATRIPS Trade Related Intellectual Property Rights AgreementWIPO World Intellectual Property OrganizationWCT WIPO Copyright TreatyACTA Anti-Counterfeiting Trade AgreementWBUT World Blind Union TreatyWIPO World Intellectual Property OrganizationGMO Genetically Modified OrganismsR&D Research & DevelopmentGI Geographical IndicatorsUSTR Office of the US Trade RepresentativeFDI Foreign Direct InvestmentISDS Investor State Dispute SettlementSPS Sanitary and Phytosanitary


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IntroductionThe Trans-Pacific Partnership Agreement (TPP) is an ever-growing regional tradeagreement designed to constantly expand membership and serve as a platform forregional economic integration around the Pacific. It takes on both explicit and

implicit barriers to trade and with it negotiators are attempting to establish a newmodel 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 sectorssuch as services, intellectual property, goods market access, investment andgovernment procurement. Advancements in these sectors are expected to gobeyond like-sectors of current accords but the true groundbreaking measures arebeing taken cross cutting issues. These issues of small and medium size enterprisepromotion, 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 beenincluded in a regional trade agreement (RTA). 1

While the nine TPP partners flaunt negotiations as high quality and 21 st Century,the road to reaching an accord on such matters is fraught with challenges. Thenations have to determine how they can string together a trade scheme amidst the25 plus bilateral and regional agreements already standing between members. Theyalso have to find common ground on highly sensitive societal issues that cause civilsociety actors to call sovereignty into question and risk domestic political backlash.

Although negotiations are approaching their eighth round come September 2011and draft texts are on the table, none of the drafts have been released for publicreview.

An examination of the TPP based upon the current knowledge of the intellectualproperty (IP) and regulatory coherence (RC) chapters reveals the US has a strategicgeo-economic interest in instituting its prerogatives into the TPP. Because of thesize and inclusive nature of the TPP, the standards it sets will carry majorimplications for the world trading system and global society.

Dynamic NatureThe Trans-Pacific Partnership (TPP) has been heralded as a 21 st Century tradeagreement, set to lower both explicit and implicit barriers to trade. The agreementwas originally signed by Brunei, Chile, Singapore, and New Zealand in 2005 and wasknow as the Pacific Four (P4). The initial P4 group advocated for the tradeagreement as a high standard agreement that could serve as a model within theAsia-Pacific region and attract other countries in the region to join. 2 It was an

1 Barfield, Claude. The Trans-Pacific Partnership: A Model for Twenty-First-Century Trade Agreements?, American EnterpriseInstitute 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 Economicand 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 aneconomic 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 securityinterest. 3 In 2009, Barack Obama made the TPP the forefront of his administrationstrade policy and began discussions with the P4 to develop the agreement into alarger accord. 4

As part of the US trade strategy, the US began pushing the TPP by calling off allconsultations for bilateral free trade agreements (FTA) with Asian nations. This hada domino effect of Asian nations joining the TPP. 5 Now the TPP consists of ninenations surrounding the Pacific Rim New Zealand, Australia, Malaysia, Singapore,Viet Nam, Brunei, Chile, Peru and the US and are still looking to gain morepartners. 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 aFree Trade Area of Asia Pacific (FTAAP). 6

By interweaving its mechanisms and standards into the Asian trading system, the UShopes to counter the rising influence of China. 7 The trade of goods within TPPmembers is minimal compared to trade with the rest of the Pacific Rim and theopenness of trade ratios for members are already extremely high in worldrankings. 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 maintainleadership and power in the region. 9

The seventh round of negotiations, hosted the 15-24 June in Ho Chi Minh City, VietNam, was suppose to announce the inclusion of Japan into the TPP. Because of theearthquake and resulting tsunami that struck Japan in March, along with the nuclearreactors and reconstruction issues Japan continues to face, the Japanese refrainedfrom joining this round. 10 Although Japan listed recovery efforts as its primaryreason 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 talkswith Mongolia. 11

Despite the Japanese opting out of the seventh round of negotiations, they arecontinuing efforts in regards to talks for the TPP while synonymously pursuing talksfor a tripartite FTA with South Korea and China. 12 It is appropriate for Japan to

3 Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011.4 Ibid.5 Hamanaka, Shintaro. Institutional Parameters of a Region-Wide Economic Agreement in Asia: Examination of Trans-PacificPartnership 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 tomove forward toward the goal of Asia-Pacific regional integration, wrote ShinjiFukukawa, former vice minister of Japans Ministry of Economy, Trade, andIndustry, in a public statement.

In early July 2011, the US formally asked the Philippines to consider joining the TPPduring a development conference in Manila. The Philippines announced later thesame week that a Philippine delegation would be sent to Washington DC to examinethe current TPP texts in September. 13 They have since begun bilateral talks withTPP nations on an individual basis. 14

If the Philippines decide to enter into the partnership they must make changes toseveral legal issues dealing with investment and be willing to sacrifice their rightsunder the US Generalized System of Preferences (GSP) a program that allowsgoods from developing nations to enter at lower or zero tariff to US markets. TheGSP 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 askedThailand to consider joining the partnership as well. 16

TPP nations have set out with the intention of constructing an inclusive frameworkto the agreement making it open to new membership and compatible with otherstanding 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 willconstantly broaden through membership. The proposed automatic accessionprovisions would allow membership to extend automatically to other countries thatconform to TPP rules without requiring a laborious application and accessionperiod. 18 If an accord on such a provision were reached, this type of embeddedinclusivity would make the TPP a dynamic partnership, able to incorporate newmembers throughout the region.

The TPP would not simply affect member nations, however. Because of Asiaseconomies 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 belooking be directly linked to Asia through trade. 19 If the TPP were to pass and cometo realisation in the transcribed manner, its provisions would have the potential toinfluence trade the world over. The dynamic nature of the TPP is precisely why theUS has become involved; TPP engagement is a strategic geo-economic powermanoeuvre to instil the US rules based trade system into Asia in hopes ofmaintaining influence against rising China. Ultimately, the TPP could carry major

13 US-PHL: Trade deal entry offered, BusinessWeek , 10 July 2011.14 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 AsianDevelopment Bank. 2011


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implications for member nations, potential members, and the world trading systemas a whole.

Framework of the agreementAlthough debate continues over what constitutes a high standard agreement, the

basic concept is that, to perform as a high standard agreement the TPP must gobeyond the provisions of current enacted agreements. The TPP must first fulfilobligations of the General Agreement on Tariffs and Trade (GATT) Article XXIV andthe General Agreement on Trade in Services (GATS) Article V that require an RTA tocover substantially all traded goods and services. The TPP must then go beyond thestandards of current multilateral agreements and bilateral/regional accords tofurther liberalize markets and provide better quality opportunities for economicintegration between member states. 20

Because traditional barriers to trade between the nine nations is almost nil tarifflevels 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 todeal with barriers such as labelling requirements, standardization, inquiry points,and transparency. 21 All of these issues are central to the TPP agenda and membersare attempting to create provisions in the agreement that exceed those under themultilateral TBT Agreement.

In all, twenty-five different chapters are on the negotiating table and range fromrules of origin to investment, agriculture to Mode 4 services. Economic integration isthe ultimate goal of negotiations on all the chapters in order to improve the ease ofdoing business among the Pacific partners.

Within the TPP, negotiations are taking a hybrid approach of dealing with themultiple-ruling issues associated with the twenty-five FTAs already existingbetween member nations. 22 The TPP it is also being designed to run alongsideagreements like the Singapore-New Zealand FTA and the ASEAN FTA (AFTA) so thatfirms are ensured no less than best current treatment. 23 In doing so members areavoiding getting bogged down in modalities discussions because it allows them tonegotiate both bilaterally and regionally, giving them freedom to extend specificoffers to specific partners.

Australia and New Zealand question the appropriateness of this approach, as it doesnothing to relieve the spaghetti bowl effect that FTAs have on tariff scheduleswithin 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

20 Gao, H. The Trans-Pacific Strategic Economic Partnership Agreement: High Standard or Missed Opportunity? UN Economicand 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.922 Hamanaka, Shintaro. Institutional Parameters of a Region-Wide Economic Agreement in Asia: Examination of Trans-PacificPartnership 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, UNDivision of International Trade and Integration . March 2011.


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the TPP is working to create common regulatory and legal frameworks instead ofdealing with tariff schedules, the TPP scheme actually consolidates the various FTAsunder 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, theAustralian Department of Foreign Affairs and Trade announced that draft texts arenow on the table in each negotiating group. 26 While the agreement will not besigned in November 2011 as originally hoped, New Zealand and other nations, haveclaimed that at the November 2011 APEC meeting in Honolulu, Hawaii a frameworkagreement will be politically endorsed. 27

While all chapters under negotiation will impact the world economy at large if theTPP is implemented, the Intellectual Property (IP) chapter and RegulatoryCoherence (RC) chapter carry major implications for global trade. Although neitherdraft text has been released, leaked documents and proposals made by third parties

show that the US is engaging a highly aggressive and strategic geo-economicapproach to push its prerogatives within these chapters specifically. If the US is ableto see its preferences passed in final texts, US systems would be integrated intoAsia-Pacific growth and the US would be able to maintain its importance as a tradepartner as Asian economic power rises. 28

US proposal for intellectual property rightsWith the IP chapter of the TPP, member nations are going behind-the-border byimproving IP rights and strengthening enforcement measures. The US has emergedas an intense advocate for stricter regulation of IP rights, advocating for provisionsthat emulate its own laws. In February 2011, the confidential US draft proposal forIP was leaked. It outlines terms for governing patents, copyrights, trademarks,geographic indicators, and regulatory test data for pharmaceuticals and agriculturalproducts that go well beyond the terms of the Trade Related Intellectual PropertyRights (TRIPS) Agreement of GATT and other existing treaties. Tougherenforcement measures are also included in the proposal.

The proposed text is a source of contention among member states because it wouldforce various nations to rewrite existing laws and carries major implications forpublic health and global access to medicines. 29 Within the proposal copyrights,patentability and pre-grant opposition systems, geographical indicators, andenforcement mechanisms are the most divisive and highly influential tointernational trade and global society.

25 Fergusson, Ian & Vaugn, Bruce. The Trans-Pacific Partnership Agreement, Congressional Research Service, 10 January 2011.26 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 Vol15 No 10 , 23 March 2011.


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CopyrightsThe US proposal hosts expansions of current copyrights standards beyond those setforth by TRIPS, the World Intellectual Property Organization (WIPO) CopyrightTreaty (WCT), the Anti-Counterfeiting Trade Agreement (ACTA), and the BernConvention.

It proposes an extension to the life of copyright terms from the current 50 years to70 years for individuals while for corporate works to be legally enforceable for 95 to120 years. Also, it plans to remove the copyright fair dealing exception for transientcopying, which currently allows for individuals to sidestep infringement charges ifthe reproduction of a work is incidental, part of a technological process, and has noindependent 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, andmovies. 32 Several members of the TPP, such as New Zealand and Singapore, permitparallel importations and would have to change their laws to abide by the newstandards. Importation rights are also a part of ongoing negotiations for the WorldBlind 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 WBUTunder negotiation. If the US IP chapter were to pass before WBUT reachedconsensus, it could jeopardise provisions of WBUT and possibly make negotiatorsgo back to the drawing board.

Ultimately, the US is the worlds largest exporter of copyright content and all othernations are net importers. 33 Expanding copyright laws would be extremelybeneficial for all US industry yet through international agreements, such as ACTAthe US has not been able to achieve the protections it warrants necessary for itsdomestic industries. The provisions the US proposes for the TPP are precisely theones 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 orprocess, in all fields of technology, provided that the invention is new, involves aninventive step, and is capable of industrial application.

While the proposal maintains the public order and morality exemptions topatentability as set forth by TRIPS, the range of patentable technologies is enlargedand will open the floor to new technologies whose use is currently under debate in

30 Copyright Act 1994 No 143, Public Act , New Zealand Legislation.31 Shera, Rick. US wants to take an axe to New Zealand IP law, [email protected] 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 modifiedorganisms (GMOs) along with genes and genetic diagnostics. This would causeconflicts between members such as the US - with high GMO research anddevelopment (R&D) - and a country like Peru - where the Congress just passed aten-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 TPPnations. Under a pre-grant patent opposition system, once a patent application ispublished, third parties are able to dispute its validity. 37 It permits a quasi-judicialprocess to occur between the applicant, third party opponent and patent authorityin which oral arguments, research, documents and other evidence can be presentedagainst a patent while it is still in its application phase.

Opposition from third parties can arise over patent applications that lack novelty orinnovation and therefore are undeserving of a wholly new patent. In this manner it

can effectively eliminate the potential for companies to gain monopolist advantageover products such as pharmaceuticals by extending their patents through minortweaks and blocking production of cheaper generic versions of drugs.

In a leaked negotiating document in July 2011, the US again projected their distastefor a pre-grant opposition system to be permitted within the IP text. 38 If pre-grantopposition were to be left out of the IP chapter, it would have major implications forTPP members and their trading partners who produce generic drugs. India, forexample, holds the some of most rigorous patentability criteria in the world. The useof pre-grant opposition in India has allowed for generic HIV-AIDS medications to beproduced and distributed to Africa. If pre-grant patent opposition systems areeliminated under the TPP and the TPP continues to expand in size throughout Asia,it would increasing isolate Indias system. 39

Geographical indicatorsThe articles on geographical indicators (GI) permit the use or registration of signsor indications that reference a geographical area even though it is not the exactplace or origin of the goods or services. 40 In this way, the GI section of the TPPseems to undermine the basic concept of GIs because it allows a product to belabelled as a GI without actually originating in the geographical region. This makesthe GIs more closely resemble trademarks. 41 The proposed section goes on toprovide that any GI recognized by another member country given it is notmisleading in use or name and does not encroach upon the generic identification of

35 Saez, Catherine. US IP Enforcement Ambitions in Trans-Pacific Trade Agreement Stir Reactions, Intellectual PropertyWatch . 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 SectionAnalysis, 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 thesection specifically prohibits the registration of generic goods, it fails to definewhat 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 arebuilt into the TRIPS and the US proposal looks to extend the tiered system to alleligible products. 43 The TPP articles build in exceptions for wine and spirits that areconsistent with the stipulations of TRIPS. 44 It limits prohibits the ability of wine orspirits 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 domesticlaws and suspend their commitments under other international accords. Australiaand New Zealand have allocated protections for their domestic wine industries andhave signed international treaties to enforce GI protections that would have to bereformed. Because GIs would be significantly weakened in preference of

trademarks, these protections would be at-risk and in need of reform. GI provisionsof standing agreements, such as the Australian-European Community Agreement onTrade in Wine 2008, would also be weakened. 45

The proposed GI articles would smear the line between trademarks and GIs. Underthe TPP GI chapter more products could be registered as a GI or trademark, evenones that do not originate in the geographical area. Furthermore, as the termgeneric fails to be defined, interpretation of where the product must be consideredgeneric could make for major disputes. The proposal also creates the need fordomestic law reformation and external agreements to be renegotiated if standingprotections 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 atrademark system that recognizes GIs also as collective or certification marks. 46 Inprevious negotiations such as US-Chile FTA, TRIPS and more, the US has failed intheir push for strengthened trademark legislation at the cost of GIs. 47 The proposedGI articles reflect a furthering of the US trademark system over that of traditionalinternational 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 mandatesstatutory damages to be charged for copyright, trademark, and patent infringement.

42 US Leaked proposal43 Shera, Rick. US wants to take an axe to New Zealand IP law, [email protected] at Lowndes Jordan . 16 March 2011.44 Koo, Jimmy H. Trans-Pacific Partnership Intellectual Property Rights Chapter February Draft Section by SectionAnalysis, 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 LibreComercio 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 lossesand allows for the inclusion of legal fees for the lawsuit to be covered by the guiltyparty as well. 48

The enforcement measures also criminalise small scale and personal infringement,

provide legal backing for seizure of suspected counterfeits at customs offices, andcriminalize running a camcorder at the cinema with no provision for accidentalrecording. 49 Penalties for such crimes would include sentences of imprisonment aswell as monetary finds sufficiently high to provide a deterrent to futureinfringements. 50

The legal enforcement provisions of the US proposal would weigh heavily on thetransfer of technology between nations of the TPP. The lengthy and strict schemeoutlined by the US places emphasis on protecting IP rights rather than fosteringbetter implementation of IP rights and encourages rights holders to engagegovernments in long and costly legal battles against small scale infringements.

Implications of the IP proposalOverall, the US IP proposal to the TPP showcases all of the desires that the US hasfor multilateral accords such as TRIPS, ACTA, and the Bern Convention but wereunable to succeed in getting at the multilateral level. The US aggressive approach tonegotiating the IP chapter, showcases desire to inject conditions onto the tradesystem of the Pacific by instituting them in the smaller, yet expansive TPP, wherethe US has greater negotiating power. In a statement, US Chamber of CommercePresident Thomas Donohue, said, the US must seize another tremendousopportunity to boost our competitiveness in the region and that is to successfullynegotiate the TPP. 51

The IP chapter of the TPP will affect TPP members and nations outside thenegotiations as well. A report constructed by the Australian ProductivityCommission, presented evidence showing the extending IP protection andenforcement in trade agreements does not benefit countries that are net IPimporters. 52 All members of the TPP are net importers besides the US, and theCommission found that when net importers extend IP rights under a bilateral orregional agreement, they in fact impost a net cost to their economy. The Commissionencouraged Australia to not carry the water for the US by extending IP rights inthe TPP.

Furthermore, the IP framework could carry larger implications for world trade asmore nations find the need to contort to the IP regulations to trade within thePacific Rim region. Although TPP nations are by no means economic leaders in the

48 Shera, Rick. US wants to take an axe to New Zealand IP law, [email protected] at Lowndes Jordan . 16 March 2011.49 Dawes, Mattew. Trans-Pacific Partnership Agreement: Carrying the water for America, East Asia Forum . 17 April 2011.50 US Leaked Proposal51 Donohue, Thomas J. Priorities for US-Korea Relations and the G-20: The Business Perspective, Speech, US Chamber ofCommerce. 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 - TPPnations still play a major role in global value chains. Therefore, if products mustabide by TPP regulations throughout the duration of their trade cycle, the weight ofTPP rules would be much greater than evident with market share. This would carryconsequences for product of generic medicines, GMO cultivation, technology

transfer, and much more.

Regulatory CoherenceRC is a forefront cross-cutting issue of the TPP. It is a horizontal issue, involvingestablishment of systematic mechanisms to improve data collection, transparency,and even enforcement in domestic regulatory systems. 53 Its main thrust, accordingto New Zealand APEC Ambassador, Kurt Tong, is about maintaining transparentregulatory systems that are based on scientific knowledge and are consistentlyapplied. 54 Essentially RC calls for nations to make regulatory systems in theircountries operate in a more steady, equal and seamless manner so as to removetypes 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 strongadvancements within TPP negotiations. The Office of the US Trade Representative(USTR) proclaimed that the RC had particularly productive discussions at therecent 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 beincluded in the chapter. Because there is no RC chapter within other tradeagreements either, it is difficult to project what may be the focus of RC provisions inthe TPP. Thus speculation remains as to whether RC means the harmonization ofsubstantive regulations or instead signifies mutual recognition of regulations in theenforcement of a countrys regulations as to producers, traders, and investors ofanother country. 56

Furthermore, there is debate in regards to the best way to incorporate RC into theTPP text. Negotiators are currently considering the options of including RC as adistinct chapter, making RC inclusive within each chapter, or making RC anaddendum to the text referring to the RC provisions within each chapter.

US preferences in regulatory coherenceThe simple addition of a RC chapter is indicative of US desires and is preferential forthe US. Because RC will be looking to establish regulatory bodies within each nationthat deal specifically with issues relating to regulating requirements along withmonitoring 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

53 Notes on USTR TPP Briefing, Program on Information Justice and Intellectual Property, Washington College of Law. 29September 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. June2011.56 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. 57Thus, the US would be obligating partners to create agencies in coordination withthem, implementing the US system of regulatory oversight on a region basis. Whilealso being the only nation spared the costs of opening a new national agency.

With greater clarity over legal regulations, companies and investors with highcalibre legal representation will have the ability to take inconsistencies up withinthe Investor State Dispute Settlement (ISDS) framework that is currently on thetable at TPP negotiations. This would allow for foreign companies to take countriesto court over legislation that does not comply with the terms the investor agreed toupon entering the market. The US is the second largest source of foreign investmentin the world only the EU has higher outflows of foreign direct investment (FDI) US companies and investors will therefore also benefit the greatest from greatertransparency 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 regulatesectors like tobacco. 59 Phillip Morris currently is threatening Australia throughAustralia-Hong Kong investment treaty because of recent Australian legislationpassed eliminating labelling on cigarette packages. Australia is now fighting aspectsof RC that deal with ISDS in order to preserve the right of Australian governmentsto make laws in important public policy areas, according to the governments TradePolicy Statement. 60

Sectoral annexes on RC are rumoured to have been added to the TBT and Sanitaryand Phytosanitary (SPS) measures chapters. 61 Attaching RC to SPS is viewed in theUS as a mechanism for slashing barriers based on food safety and animal and planthealth. Our goal is simple, USTR Ambassador Ron Kirk told the House Ways andMeans Committee in March 2011, we want to work together to address theirlegitimate food safety concerns and expand markets for safe and wholesome foodfrom the US. 62

Incorporated in the US SPS approach would be proposals on harmonizingregulations on sectors such as biotechnology and pathogen reduction treatments inmeat processing. 63 Currently the US has more liberal policies on biotechnology,cultivation of GMOs, and hormone treatments for meat than any other nation in thepartnership. Therefore, including initiatives to liberalise these sectors would be tothe greatest benefit of the US because it would open up new markets for USproducts. The US has also appears to have interest in attaching RC annexes to

57 US Faces Lack of Enthusiasm on Horizontal Topics in TPP Negotiations, Inside US Trade . 10 March 2011.58 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 toregulate 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 detailthan any other trade agreement has done thus far. By tackling RC, TPP negotiationsare cutting across issues, recognizing that the greatest remaining barriers to tradebetween these Pacific nations are connected horizontally and cannot be properlydealt with by bottlenecking issues into sectors. As members attempt to take onissues of regulation, they spark debate over rule and sovereignty of nationaldomestic lawmaking. While RC is supposed to be about encouraging sovereignty,nations have allowed basically no transparency over negotiations, thus leavingsociety in the dark over texts that could fundamentally alter their domestic

legislative processes.

ConclusionWith trade barriers already highly open, goods trade between TPP membersminimal, and a system of FTAs already in existence, the substantial gains from anaccord would be trivial for the US. It is banking on the ability of the TPP to extendmembership to other major economies in Asia Pacific. 66 If the TPP is unsuccessful inrealising its intended goals, or domestic disputes within US government pick apartthe integral pieces of text, a TPP accord would be useless.

Yet because of the growing importance of Asia economies, the Obamaadministration has placed the crux of its trade policy on economically integratingitself with Asia through the TPP. The US is attempting to push provisions within theTPP because it is able to negotiate with smaller powers on chapters that will carrymajor implications for international trade and global society - particularly theintellectual property and regulatory coherence chapters. Through the TPP, the USbelieves it will be able to advance its systems in Asia so as to maintain itsimportance as a trade partner counter to China. 67

64 US Faces Lack of Enthusiasm on Horizontal Topics in TPP Negotiations, Inside US Trade . 10 March 2011.65 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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