What will the Trans-Pacific Partnership mean for the technology, media and telecoms industries?

Apologies to readers for the long hiatus between recent blog posts. With hindsight (and English understatement), I may have rather underestimated the time that would be taken up in relocating personally from London to Singapore to set up our office there. It is not without irony that I find the time to write this by being ‘snowed in’ in the European Alps.

It is traditional at this time of year to look back at the events of the year just gone and to look forward to the new new year. For the press in general, there seems to be a broad consensus that 2011 was the year when social media came of age playing a very large part in the changes described as the ‘Arab Spring’ whilst the sad demise of Steve Jobs means that the world has lost a innovator who I suspect that history will compare with Watt, Edison and Ford.

Looking ahead, whilst there are lots of topics that I could consider, the rest of this post will consider the implications of the Trans-Pacific Partnership (or TPP) on the technology, telecoms and media industries. The TPP currently includes America, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam whilst Canada, Japan and Mexico have expressed an interest in joining. At their latest summit in November 2011, the leaders of the current 9 TPP members published the following statement:

“We, the Leaders of Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, United States, and Vietnam, are pleased to announce today the broad outlines of a Trans-Pacific Partnership (TPP) agreement among our nine countries. We are delighted to have achieved this milestone in our common vision to establish a comprehensive, next-generation regional agreement that liberalizes trade and investment and addresses new and traditional trade issues and 21st-century challenges. We are confident that this agreement will be a model for ambition for other free trade agreements in the future, forging close linkages among our economies, enhancing our competitiveness, benefitting our consumers and supporting the creation and retention of jobs, higher living standards, and the reduction of poverty in our countries.

Building on this achievement and on the successful work done so far, we have committed here in Honolulu to dedicate the resources necessary to conclude this landmark agreement as rapidly as possible. At the same time, we recognize that there are sensitive issues that vary for each country yet to be negotiated, and have agreed that together, we must find appropriate ways to address those issues in the context of a comprehensive and balanced package, taking into account the diversity of our levels of development. Therefore, we have instructed our negotiating teams to meet in early December of this year to continue their work and furthermore to schedule additional negotiating rounds for 2012.

We are gratified by the progress that we are now able to announce toward our ultimate goal of forging a pathway that will lead to free trade across the Pacific. We share a strong interest in expanding our current partnership of nine geographically and developmentally diverse countries to others across the region. As we move toward conclusion of an agreement, we have directed our negotiating teams to continue talks with other trans-Pacific partners that have expressed interest in joining the TPP in order to facilitate their future participation.”

In its commentary, the Economist noted that the TPP plus the interested three constitute over 40% of the world’s GDP – more than the EU. However, there remain serious obstacles to Japan’s accession and the TPP discussions notably omit China, India, Indonesia and Brazil. It is also unclear whether regional trade arrangements complement or hinder the work of the WTO as countries prefer to deepen trade within the content of regional agreements in preference to opening markets more generally. Commentators have also commented unfavourably on the implicit export of a US-centric model of intellectual property law, and it appears that there is significant resistance to to TPP in a number of countries including US, Malaysia and Japan.

So, what might come out of the current negotiations? A background paper was published to the negotiations which summarised the agreement in more detail. Some of the sections that caught my eye were:

  • Investment. The investment text will provide substantive legal protections for investors and investments of each TPP country in the other TPP countries, including ongoing negotiations on provisions to ensure non-discrimination, a minimum standard of treatment, rules on expropriation, and prohibitions on specified performance requirements that distort trade and investment. The investment text will include provisions for expeditious, fair, and transparent investor-State dispute settlement subject to appropriate safeguards, with discussions continuing on scope and coverage. The investment text will protect the rights of the TPP countries to regulate in the public interest.
  • Technical Barriers to Trade (TBT). The TBT text will reinforce and build upon existing rights and obligations under the World Trade Organization Agreement on Technical Barriers, which will facilitate trade among the TPP countries and help our regulators protect health, safety, and the environment and achieve other legitimate policy objectives. The text will include commitments on compliance periods, conformity assessment procedures, international standards, institutional mechanisms, and transparency. The TPP countries also are discussing disciplines on conformity assessment procedures, regulatory cooperation, trade facilitation, transparency, and other issues, as well as proposals that have been tabled covering specific sectors.
  • Cross-Border Services. TPP countries have agreed on most of the core elements of the cross-border services text. This consensus provides the basis for securing fair, open, and transparent markets for services trade, including services supplied electronically and by small- and medium-sized enterprises, while preserving the right of governments to regulate in the public interest.
  • E-Commerce. The e-commerce text will enhance the viability of the digital economy by ensuring that impediments to both consumer and businesses embracing this medium of trade are addressed. Negotiators have made encouraging progress, including on provisions addressing customs duties in the digital environment, authentication of electronic transactions, and consumer protection. Additional proposals on information flows and treatment of digital products are under discussion.
  • Intellectual Property. TPP countries have agreed to reinforce and develop existing World Trade OrganizationAgreement on Trade-Related Aspects of Intellectual Property (TRIPS) rights and obligations to ensure an effective and balanced approach to intellectual property rights among the TPP countries. Proposals are under discussion on many forms of intellectual property, including trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge. TPP countries have agreed to reflect in the text a shared commitment to the Doha Declaration on TRIPS and Public Health.
  • Telecommunications. The telecommunications text will promote competitive access for telecommunications providers in TPP markets, which will benefit consumers and help businesses in TPP markets become more competitive. In addition to broad agreement on the need for reasonable network access for suppliers through interconnection and access to physical facilities, TPP countries are close to consensus on a broad range of provisions enhancing the transparency of the regulatory process, and ensuring rights of appeal of decisions. Additional proposals have been put forward on choice of technology and addressing the high cost of international mobile roaming.

Whilst the barriers to implementation of the TPP (noted above) and the details, particularly around the detail of the IP arrangements (e.g. copyright term and software patentability (or not)), mean that negotiating and implementing the TPP is by no means a foregone conclusion the increased ability for companies in the TMT sector to directly invest in markets that are increasingly liberalised to offer cross-border services whilst having adequate protection of their intellectual property will be positive for companies in those sectors.