The release of the TPP text has spawned a vast cyber-literature, as law firms and consultants compete to provide the hottest insights on what’s really in the agreement and its many hidden traps. There are many. This note doesn’t try to do that. Rather, it looks at the structure of the agreement to shed some light of how it’s been put together.
The most obvious thing about the TPPA is that it is the broadest and most detailed trade and investment treaty the world has known, much larger in scope and vastly more complex than the World Trade Organization Agreement or any existing regional and bilateral agreement, far beyond the NAFTA and the recently concluded Canada-EU trade agreement (or CETA).
The NAFTA has 22 chapters and covers something like 800 pages of text, including annexes. The CETA has 34 chapters and covers just over 1,600 pages, including annexes. TPPA contains 30 chapters and, by one count, covers over 2,700 pages of text and about the same number of pages of annexes, about 5,500 pages in all. Quite a difference.
Quite apart from its wide scope and extremely broad coverage, the TPPA is full of side-deals, exemptions, exclusions, individual undertakings and vast array of party-specific annexes.
Separate undertakings and commitments by parties to trade agreements is not in itself unusual or unexpected, like those in the WTO Agreement, where each WTO member sets out its separately bound tariff rates on imports and its duty-reduction commitments over time. Or the WTO Government Procurement Agreement, which allows WTO members to list those procuring agencies subject to the obligations in the Agreement. A degree of asymmetry is not usual in trade agreements.
The TPPA takes this much further, however, with hundreds of special or exceptional provisions that qualify or reserve on the legal obligations of this or that that participant or limit the obligations that apply to this or that subject.
Take Canada’s carve-out from the investment dispute chapter of all investment reviews under the Investment Canada Act. Or the duty phase-out on automobiles, where Canada has agreed to eliminate duties on Japanese imports over five years, whereas the US duty phase-out period is twenty-five years. Or the many special provisions and exemptions for individual countries in the market access, investment, services and IP chapters. And on and on.
The TPPA is full of these kinds asymmetrical elements in the form of reservations, caveats and side-deals by individual countries. You could say, with only slight exaggeration, that the TPPA is as much an amalgam of bilateral deals and negotiated exemptions cobbled together under a treaty umbrella, as it is a treaty of general application with only limited or narrow exemptions or exclusions.
Another aspect of the TPPA that is different from previous trade deals are the number of cases where treaty provisions are modified by understandings, affirmations and statements of intention. In the Financial Services chapter, as an example, the right of parties to maintain certain measures for “prudential reasons” is subject to an “understanding” in a footnote as to the meaning of that term.
These expressions can give rise to interpretive difficulties. What is the legal effect of an “understanding” among the parties regarding a particular term or a statement of intention contained in a footnote?
The fact that the TPPA was put together in this way just reflects the enormous challenge in achieving consensus on so many items and issues among such a disparate group of countries. At this juncture, the better view is that these are not a serious obstacle to implementing the agreement.
But the pervasive number of these carve-outs and bilateral deals, combined with understandings and expressed intentions on the meaning of so many treaty terms, will make for unusually difficult challenges and complexities in the TPPA’s implementation, interpretation and application down the road.