Why Obama's legacy trade agreement matters for development

U.S. President Barack Obama attends the Trans-Pacific Partnership meeting back in 2012 during the ASEAN Summit at the Peace Palace in Phnom Penh in Cambodia. The blockbuster Trans-Pacific Partnership was recently finalized by its 12 member countries. Photo by: Pete Souza / The White House

The blockbuster Trans-Pacific Partnership that was finalized early Monday is many things to its various interested parties.

Asian economies will rely on preferential access to large markets across the Pacific to be an engine of new jobs and economic growth that has recently stalled. For U.S. President Barack Obama the accord will likely take effect during his final year in office and burnish his credentials for successfully “pivoting” U.S. foreign policy towards the Asia-Pacific region. Candidates vying for Obama’s job, meanwhile, will surely offer varying opinions on the deal to score political points.

For stakeholders in the development industry, fresh off their own pivotal week in New York, the long-sought Trans-Pacific Partnership will have substantive impact on several of the sustainable development goals that government, civil society and business leaders recently agreed to achieve in the next 15 years.

While negotiations between the 12 countries have wrapped up, the text of the agreement itself will likely not be made public for another few weeks — or perhaps months. Importantly, that final text will ultimately contain the key details of how TPP countries will implement and enforce the accord. What is available so far is the 30-chapter summary of the agreement.

The TPP agreement summary contains an entire chapter specifically on development and it is believed to be a first time that such a multinational trade deal includes a specific focus on the topic. It mentions three areas “to be considered for collaborative work” once TPP enters force — broad-based economic growth, women’s empowerment and education, science and technology. But it remains unclear exactly how a specific development focus will be woven into the contours of the agreement. And the language around it appears vague, for example, calling for the establishment of a TPP Development Committee that will “meet regularly to promote voluntary cooperative work in these areas and new opportunities as they arise.”

Beyond the broader level of economic growth, specific measures within the TPP will impact sustainable development targets, particularly those related to environmental preservation and public health.

According to development analysts, that summary appears to go beyond previous trade agreements in its support and requirements for environmental preservation. It commits all TPP member counties, for example, to combat wildlife trafficking, illegal logging and fishing and to crack down on ship pollution of seaborne vessels. The agreement summary also outlines commitments for reducing fishing subsidies.

“In an effort to protect their shared oceans, TPP parties agree to sustainable fisheries management, to promote conservation of important marine species, including sharks, to combat illegal fishing, and to prohibit some of the most harmful fisheries subsidies that negatively affect overfished fish stocks, and that support illegal, unreported or unregulated fishing,” the summary reads.

The language of the TPP summary agreement has split the major voices of the environmental base. A statement by the World Wildlife Fund looked favorably on the pact saying that “no major trade agreement before this one has gone so far to address growing pressures on natural resources like overexploited fish, wildlife and forests.”

But other pro-environmental groups such as the Sierra Club struck a less positive tone, particularly in the absence of the final text. "The Trans-Pacific Partnership would empower big polluters to challenge climate and environmental safeguards in private trade courts and would expand trade in dangerous fossil fuels that would increase fracking and imperil our climate,” Sierra Club Executive Director Michael Brune said. “The TPP’s environment chapter might look nice on the surface but will be hollow on the inside, and history gives us no reason to believe that TPP rules on conservation challenges such as the illegal timber or wildlife trade will ever be enforced."

The agreement also raises an environmental issue that may be relevant to the broader climate debate underway. With the TPP in place, the U.S. would have a wider base of free trade member countries where it could export natural gas without a lengthy government approval process through an existing hydrocarbon export policy.

The debate on biological drugs

Sustainable Development Goal 3 — ensure healthy lives and promote well-being for all at all ages — is also a subject of debate based on select TPP provisions. A key sticking point of the marathon negotiations was the issue of intellectual property and data protection for biological drugs, and not everyone was pleased with the outcome.

The U.S. had lobbied for a minimum of 12 years in which biological drugs would be granted exclusive market access in TPP countries. This would restrict the research for patented medicines from becoming public and bar generic producers from manufacturing cheaper, similar drugs over that period.

The final agreement limits that exclusivity period to five years and is closer in line with the timetable that middle-income countries were advocating. It means, however, that some TPP countries who currently don’t have any restrictions on data access will have to wait a minimum five years before cheaper drugs can reach the market.

“That was a big increase from what the U.S. was pushing,” Julie Johnson from the Center for Global Development told Devex.

“The big losers in the TPP are patients and treatment providers in developing countries,” read a statement from international NGO Doctors Without Borders. “Although the text has improved over the initial demands, the TPP will still go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies.”

Without a doubt the TPP is profound and transformative, linking together 12 Pacific Rim economies — including two of the world’s three largest — that together account for more than 40 percent of the global gross domestic product. Like any trade deal, jobs and economic growth are built-in expectations that will come out of free trade access. The White House estimates that 18,000 tariffs will be eliminated from American exports alone. In turn, tariff-free access will stimulate export industries in 11 other countries — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

There are many shades of gray to be read within the agreement so far, and perhaps even more will emerge when the final text is released in the coming weeks. But it’s clear that there is no one reading of the benefits of the accord, no clear winners or losers that are often discussed in trade deals. Development stakeholders will keep a close eye on the economic, environmental and public health implications of this new mega-trade deal as more specifics details emerge.

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About the author

  • Naki mendoza 400x400

    Naki B. Mendoza

    Naki is a former reporter, he covered the intersection of business and international development. Prior to Devex he was a Latin America reporter for Energy Intelligence covering corporate investments and political risks in the region’s energy sector. His previous assignments abroad have posted him throughout Europe, South America, and Australia.