With the release of the full text of the Trans-Pacific Partnership (TPP) agreement last month, companies and business groups are poring over the text to assess the potential impact of the 12-nation pact – one of the most ambitious and potentially transformative trade agreements in decades. On December 2, USCIB partnered with Bloomberg BNA to organize a day-long event at Bloomberg’s headquarters in New York titled “The Trans-Pacific Partnership: Interpreting New Rules for Trade in the 21^st Century.”

Architects of the TPP, business representatives and think tank scholars gathered for panel discussions about whether TPP delivers on its promise to open markets, how the agreement will promote digital trade and innovation, how TPP will create a more level field for investment, and whether the agreement will address non-tariff barriers. Shaun Donnelly, USCIB’s vice president for investment and financial services, spoke on the investment panel.

Other partners in organizing the event included Covington & Burling, the National Foreign Trade Council and the Peterson Institute for International Economics.

Market Access

“TPP is an exportation of American commercial values and U.S. values with respect to labor and the environment,” said Gary Hufbauer, senior fellow at the Peterson Institute for International Economics. The agreement will open many markets for U.S. products that weren’t accessible in the past. TPP is also forward-looking, in that the benefits that accrue to the U.S economy due to trade liberalization will continue indefinitely, and the agreement opens the door to further liberalization and to the possibility of new countries joining in the future.

For many of the other 11 members of the agreement, TPP serves as an impetus for domestic economic reforms and further market openings noted John Veroneau, former deputy U.S. Trade Representative and now a partner at Covington & Burling. Panelists also noted that because that multilateral trade talks at the World Trade Organization are stalled, plurilateral agreements like TPP are the next best option for pushing forward economic liberalization and establishing new global rules for trade.

Although certain industries have some concerns about the agreement, such as limited pharmaceutical patent protection and carving out the financial services sector from the ban on local data storage restrictions, the business community as a whole appears supportive of the agreement. Many business groups including USCIB continue to review it.

Most importantly, panelists said TPP will export American rule-o- law to the Asia-Pacific region, making it easier and less risky for companies to do businesses in countries with vastly differing levels of economic development. Expanded free trade will also benefit low-income consumers, since prices on goods such as clothing and food will fall once TPP takes effect.

“Using TPP to strengthen the rule-of-law in other countries is more important, in the long term, than tariff reductions,” concluded Veroneau.

Digital Trade and Innovation

TPP is the first trade agreement that explicitly recognizes the importance of e-commerce for the global economy. As such, the agreement includes many provisions that will be beneficial to all businesses, such as IP protections, criminal penalties for trade secret theft, forbidding restrictions on cross-border data flows, and preventing localization requirements on data processing and storage centers.

“TPP’s IP chapter speaks to how we see the world,” said USCIB member Ed Brzytwa (Information Technology Industry Council). “All companies rely on cross-border data flows.” The agreement states that all parties must allow cross-border data transmissions.

Panelists also noted that TPP offers a roadmap to developing countries such as Vietnam that want to become digital economies.

In terms of the agreement’s benefits to business in the digital trade space, panelists said that TPP affirms IP principles, protection of trade secrets, and strengthens IP law. TPP is setting the new trade rules that will influence other trade agreements, and the agreement contains all the provisions that businesses like to see: transparency, due process, and predictability. Finally, TPP combats digital protectionism.

“TPP is a club that other countries in Asia can’t afford not to be in,” said USCIB member Dorothy Dwoskin (Microsoft).

USCIB member Gina Vetere (Covington & Burling) emphasized the importance of strong intellectual property provisions in TPP to protect and incentivize American innovation and jobs.

Investment Policy

Investment provisions in trade agreements have become top-of-mind for many companies in recent years, because in order to access foreign markets and succeed in the United States, businesses must invest heavily abroad. As a result, much attention has been focused on investment agreements in general and specific provisions of the TPP agreement such as Investor-State Dispute Settlement (ISDS), which offers private investors a neutral, fair arbitral option for settling investment disputes with foreign governments.

Panelists noted that as a whole, TPP protects U.S. investors. One area of concern brought up by USCIB’s Donnelly is the agreement’s carve-out of the tobacco sector from access to the ISDS arbitration provisions, which establishes the unfortunate precedent of governments politicizing access to key provisions of a trade agreement.

“It’s a slippery-slope problem,” said Donnelly. “Now countries have carte blanche to discriminate against or do whatever they want with certain sectors they deem to be bad.”

Overall though, panelists agreed that the business community is looking forward to the agreement’s approval and entry into force. Business seeks clear, enforceable rules that are stable and predictable, and TPP helps establish a friendly environment for investment among the 12 member countries. And despite some public criticism of ISDS, the TPP negotiators have been responsive to concerns about transparency in the arbitration process, and provisions have been included in the agreement that makes the ISDS process open to public scrutiny.

On investment, TPP is attractive to business because it opens up more sectors to foreign investment, and helps makes those investments less risky. Proof of the agreement’s appeal lies in the fact that several other countries are already eager to try to join, including the Philippines, Taiwan (Province of China) and South Korea.

“TPP is magnetic,” said Scott Miller, senior advisor at the Center for Strategic and International Studies. “Many countries want to join.”

Cutting Red Tape

Although tariffs are problematic, the largest barriers to trade in the 21^st century are non-tariff barriers, or red tape of any stripe. These include technical barriers to trade such as in-country testing requirements for products, localization requirements and burdensome customs procedures.

Ed Gresser, director of policy planning and acting assistant U.S. Trade Representative for trade policy and economics, described TPP as an agreement that is “large, comprehensive, and forward-looking.” As a trade agreement among 12 Pacific-Rim countries, TPP is larger than all other free trade agreements combined. The agreement is comprehensive because it addresses specific concerns of individual industries, and it seeks to streamline the standard-setting process to eliminate technical barriers to trade. And TPP is future-looking because it takes the digital economy into account by preventing restrictions on cross-border data-flows, and because the agreement will be open to new members joining.

TPP addresses many non-tariff barriers, with provisions that harmonize standard-setting, eliminate localization barriers, simplify customs documents, and requires all parties to allow electronic payment across borders.

A key take-away from the event’s panels was that TPP is a critical component of the United States’ pivot to Asia, as the agreement creates new standards for global trade based on American values.

“TPP will export our system of values and laws,” said Donnelly.

The event program and a full list of speakers are available on Bloomberg BNA’s website