Blouin: Beat: Despite rocky start, L. America on board with the TPP

"Despite rocky start, Latin America on board with the TPP"
W. Alejandro Sanchez
Blouin Beat: Business
August 11, 2015
Originally published: http://blogs.blouinnews.com/blouinbeatbusiness/2015/08/11/despite-rocky-start-l-america-on-board-with-the-tpp/

There has been much discussion about the recent round of negotiations over the Trans-Pacific Partnership (TPP), which took place in Hawaii at the end of July. This is not surprising, as the attempt to create an ambitious free trade area that would bring together 12 nations of the Asia-Pacific and Western Hemisphere has yet to reach a final agreement. Despite the current setback, the White House can rest assured that the TPP’s three Latin American members – Chile, Peru, and Mexico – remain firmly interested in this initiative.

For Washington, this bloc is geo-strategically important because it will further increase U.S. influence in the Asia Pacific at a time of tensions with Beijing. Moreover, President Barack Obama has around a year and a half left in office, and his objective is to cement his legacy regarding foreign policy issues, in the vein of recent successes like historical agreements with Cuba and Iran. Hence, a successful TPP agreement would be the proverbial cherry on the cake for the Obama presidency’s foreign policy.

Nevertheless, it remains to be seen whether the TPP will be signed before the end of 2015. After failing to reach a final agreement, U.S. Trade Representative Michael Froman and the representatives from the other TPP states released a neutrally worded statement in which they stated, “We have made significant progress and will continue to work on resolving a limited number of remaining issues.”

Clearly every country has its own set of national interests, and while the TPP’s three Latin American members are generally in support of the partnership, it is worth stating their interests and concerns. For example, the Andean nation of Peru is particularly interested in biodiversity. For all its economic growth over the past decade and a half, Peru remains a developing nation and a pillar of its growth is its natural resources. Hence, it is critically important for Lima tocombat biopiracy in order to retain ownership of plants, vegetables, fruits, and other products that are indigenous to Peru. Apart from securing control over its biodiversity, Peru hopes that TPP nations will open their markets to foreign goods (to this end, Lima had a strong presence in the recent FODEX Japan 2015 fair). Case in point, Peru would like to see Japan relax restrictions over agricultural imports so that Peruvian products like quinoa and asparagus can more easily enter the Asian nation’s market. As for concerns regarding the TPP, the Peruvian media has focused in recent months on how the agreement could increase the costs ofpharmaceutical drugs, since the agreement would potentially limit competition.

As for Chile, Foreign Affairs Minister Heraldo Muñoz, who travelled to Hawaii for the TPP meeting, has declared that his country has concerns regarding “intellectual property, financial issues, and how the agreement itself will be implemented.” Nevertheless, sectors of the Chilean population believe that the TPP will be detrimental to the country. For example, Sara Larrain, the director of the Chilean think tank Chile Sustentable, has argued that the TPP would force Chile, and other countries, to change their domestic legislation regarding property rights and natural resources. She went on to attest that the TPP would signify the loss of Chilean national sovereignty.

In regards to Mexico, a recent commentary in the National Interest by economist Samuel Rines of Chilton Capital Management argues that the TPP would help Mexico City as it would A) give Mexican products new markets and B) “potentially provide the administration of Peña Nieto with the necessary cover to enact politically difficult changes to labor markets and state-owned enterprises.” Nevertheless, Mexican entrepreneurs are concerned about intellectual property rights and whether some TPP nations (i.g. Vietnam) will flood the Mexican market with cheaper products, like textiles, shoes, and meat products, among others. The Mexican dairy industry is particularly concerned that the TPP will bring imports from dairy nations like New Zealand and Australia, which would severely hurt Mexican dairy producers.

Regarding the round of negotiations in Hawaii, Chilean Minister Muñoz summarized the current situation well, “We are on the final stretch, but we have not reached a final agreement that is fair and that is obviously beneficial for our country.” For the Latin American members of the TPP, issues like dairy, pharmaceuticals, biodiversity, and intellectual property are major concerns; however, all three governments seem to believe that the TPP will ultimately be beneficial to their respective nations.

There is no such thing as a treaty in which every signatory is a winner (particularly one like the TPP, which has 12 member states), meaning there will undoubtedly be “losers” when it is signed. Hopefully, Latin American industries and the general population will benefit more than suffer when the TPP becomes a reality.