However, as Shuaihua Wallace Cheng, MD for China at International Centre for Trade and Sustainable Development and a Yale World Fellow for 2015, points out there is a need for the US government to look at inking a deal that help the overall development of its partner countries.
TPP’s strengths and implementation of SDGs
With more than 18,000 tariff lines reduced to zero, according to a fact sheet provided by the Office of US Trade Representative, 12 countries will merge into a more integrated market. This will significantly lower transaction costs for firms to trade among the TPP members, boosting economic growth and creating jobs.
The TPP pact, Cheng states, has one chapter dedicated to labour rights to prevent the race to bottom. Its members make an explicit statement supporting international core labour standards, from the freedom to form unions and bargain collectively to prohibitions against child labour and forced labour, and protection against employment discrimination. Although these standards are only minimum requirements to all signatory countries under the International Labour Organisation, this is the first time they will be incorporated in a large regional trade agreement with ‘teeth’, namely, possible trade sanctions against producers who violate core standards, Cheng points out.
Cheng argues this agreement will make some positive contributions to other sustainable development goals, by emphasizing good governance, anti-corruption measures and codes of conduct with high standards. TPP also has a chapter on development and capacity building. These are in line with the SDG 16 addressing justice and good governance and SDG 17 on effective partnership.
TPP’s negative impact on poor countries
However, Cheng says that the TPP agreement will negatively impact poor countries and people in vulnerable situations, while the SDGs obligate all countries to carry out an effective partnership to “work in a spirit of global solidarity, in particular solidarity with the poorest and with people in vulnerable situations.”
Citizens of a poor country outside the negotiations, he points out, will have no say at all on how TPP will affect their interests. For example, US subsidies to cotton farmers have been the largest concern for cotton farmers in poor countries. According to a research by Oxfam, US cotton farmers receive three times more in subsidies than the entire USAID budget for Africa’s 500 million people. Trade-distorting cotton subsidies have pushed down the global price of cotton, costing Benin, Burkina Faso, Chad and Mali more than US $100 million a year.
Even for Vietnam, the poorest developing country within the TPP, export potentials in labour-intensive sectors such as textile and clothing will be compromised by a restrictive “yarn forward” rule of origin insisted on by the US – if Vietnamese clothing exporters would like to enjoy the TPP market’s zero tariff, all components, from yarn to fabric to final item, must be produced by one of the members to the agreement. Note that the US is the most competitive producer of yarn, thread and fabric among the TPP countries.
Cheng says the US cherry-picked practices in the Doha Development Round negotiations of the World Trade Organization. The US negotiators have preliminarily secured the trade facilitation agreement, the expansion of information technology agreement and possible liberalization of environmental goods under the WTO frameworks, for which their business groups lobbied. However, the US leaves behind critical issues for developing countries, such as trade-distorting domestic farm subsidies, anti-dumping rules and tariff escalation of some products, he says.
In conclusion Cheng says in a new context of pursuing the Sustainable Development Goals over the next 15 years, the world needs leadership. As a nation promoting universal values of freedom, democracy and equality, the United States is in a good position to lead, he says, adding, the US political leaders should not merely follow US business interests, but stand for these higher values.
In this TPP agreement, the US has made positive steps in promoting trade for growth, strengthening environmental and labour protections in international commerce, and advancing anti-corruption principles, however, the country fails to support sustainable development by refusing to discontinue subsidies harmful to poorest countries outside the TPP, by insisting on the yarn-forward rule of origin and pushing unbalanced intellectual property protections that will likely cost lives, he avers.
If President Barack Obama would like to be remembered as a great global leader rather than a follower of business interests, he may need a bigger legacy than TPP, Cheng asserts, adding, there is a chance at the upcoming December WTO Ministerial Meeting in Nairobi, where the President should ask his trade officials to work more constructively with trading partners and deliver a more development-friendly package than the TPP.
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