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Top negotiators from 12 countries including the U.S. are in Atlanta this week, hammering out what could be the final details of the Trans-Pacific Partnership behind closed doors. If achieved, the result would be the biggest trade deal in history, which organizers say would be a major win for the global economy.
But after the dust settles, each locale will be left figuring out what the agreement means in its own context. So far, the only glimpses of the text have come through leaked documents — much to the chagrin of labor and opposition groups — and public statements have been limited as negotiators have sought to keep their cards close to the chest.
Each country has its sensitive issues: Canada wants better protections for its auto parts makers; New Zealand seeks greater access for its dairy products and the U.S. wants a longer period of protection for testing data on biologic drugs.
Drill down, and Georgia will also be affected, given its key industries’ exposure to Asia and Latin America, as well as the presence of Fortune 500 companies with substantial business in these regions.
Coca-Cola Co. welcomes the lowering of barriers between the 200-plus countries where it operates, the company told Global Atlanta.
“As a global business that wants to see the communities we serve thrive, we support free and fair trade between nations. The Trans-Pacific Partnership is a comprehensive agreement that will open markets and set high-standard trade rules and regulations to guide the global economy for years to come. We wish the negotiators well as they work to secure a final agreement,” said spokesman Kent Landers in a statement.
Coke also said that TPP could help its efforts to foster more sustainable supply chains, bolstering its efforts to hold suppliers to higher standards for workers’ rights, environmental protection and farm management.
United Parcel Service Inc. sees the pact as benefiting its bottom line as well, as intra-Asia supply chains grow more integrated. It’s not just about trade barriers for UPS; it’s about smoothing out customs processes and reducing the cost of trade, which should grow volumes.
“With a 25-year history operating in the region, more than 15,000 employees and over 500 facilities, The Asia-Pacific is an important part of the world for us and it’s one that’s going to be increasingly important,” Leslie Griffin, senior vice president for international public policy at UPS, told Global Atlanta.
Delta Air Lines Inc., which didn’t respond to requests for comment, is deepening its presence in both Asia and Latin America, and air transport is metro Atlanta’s biggest services export.
On the export side, nearly 40 percent of the state’s goods and services sales are destined for countries in the TPP, which includes Canada and Mexico. While the U.S. has trade agreements with many of the other countries in the pact — Singapore, Australia, Peru, and Chile in particular — it also opens the door to Malaysia, Vietnam, Brunei, New Zealand, and the deal’s crown jewel: the highly regulated Japanese market. That country alone was worth $2.8 billion in goods and services exports from Georgia in 2011, and better access to the country’s market for U.S. agricultural goods is seen as one of the major prospective U.S. victories in the deal.
The effect on products made or grown in Georgia could be immediate. Malaysia has an up to 50 percent tariff on golf carts — two of the largest manufacturers of the electric vehicles are based in Augusta, Ga. Malaysian and Vietnam, a country of 90 million, currently have substantial tariffs on poultry, another staple Georgia export.
More than 500 companies from these countries — mostly Japanese and Canadian — have invested in the state, creating 461,600 jobs as of 2011, according to an analysis by The Business Roundtable.
Some churn in jobs, especially at the lower end of the technology spectrum, is likely to occur if TPP is enacted, though it’s unclear how much because the details of the deal are still secret, says Usha Nair-Reichert, an associate professor in the Georgia Tech Ivan Allen College of Liberal Arts’ School of Economics who studies the global economy.
“We’re talking about something where we don’t even know what it really is,” she said.
While important to ensure the deal is a good one for U.S. workers, Dr. Nair-Reichert said it’s also key not to look past the strategic and geopolitical importance of a deal that goes beyond the mere reduction of tariffs and the labor and environmental issues normally covered in free trade agreements.
The TPP is being sold by negotiating parties as a “high-standards” pact that covers issues like investments, intellectual property rights, e-commerce, trade in financial services and telecommunications, as well as regulatory coherence, reforms of state-owned enterprises and trade facilitation. Those could result in clearer rules that might allow smaller U.S. firms to compete in countries that were previously too murky to wade into, she said.
“With supply chains becoming global, some of the traditional rules of the game are getting rewritten, and we want to be part of rewriting those rules,” she said. “I see this as ‘trade-plus,’ and there’s a lot of potential value in the ‘plus’ part of it.”
Some critics worry that the deal will displace jobs and empower foreign corporations to undercut U.S. legislative authority. One provision known as investor-state dispute resolution, now common in trade deals, allows companies within TPP countries to sue governments for monetary damages over laws they perceive as impacting their bottom lines. The cases would be decided by independent arbitrators that aren’t accountable to the courts in the respective countries.
But Dr. Nair-Reichert turns that argument on its head, saying the likely effect would be less about foreign firms challenging U.S. laws and more about reassuring U.S. firms that they won’t be tied up in the less-than-transparent courts of some developing nations. The Office of the U.S. Trade Representative, for its part, says it has heard the concerns of opposition groups and is building in measures to protect U.S. sovereignty.
Still, there is an element of uncertainty to this and many parts of the deal, including how rules of origin on products like textiles will affect certain industries. These rules govern the proportion of a product that has to be made within a TPP country to qualify for reduced tariffs under the pact. A widely known example is Vietnam’s textile industry, which sources much of its cotton from China — a country not currently in the TPP. Many wonder where that new supply will come from under a potential deal.
The U.S. and other parties have said that they want to wrap up the deal in Atlanta. Trade ministers are to visit Wednesday to build up on the progress made by their negotiators. It could be now or never, as Canada has an October election that could delay the process if stalled too much longer, and the U.S. faces an election year in 2016.
That was a main reason legislators voted to give President Barack Obama Trade Promotion Authority earlier this year, which allows his administration to negotiate the deal without congressional edits, then put it to Congress for an up or down vote. If the pact is ironed out here this week, that could happen late this year or early next.