The final stages of the Trans Pacific Partnership (TPP) negotiations were well-publicised in Australia, albeit hazy with regard to the implications of the agreement. Negotiations between Australia, the US, Japan and nine other Asia-Pacific countries over the mammoth deal have been ongoing for seven years. From an international law point-of-view, the fact that an agreement has been reached is in itself laudable.
DFAT has said that outcomes from the conclusion of the TPP include new market opportunities for exporters and investors, increased transparency of regulators frameworks, greater certainty for businesses, improved access for regional supply chains, and a reduction in bureaucratic processes. However, reactions to the deal so far have been mixed, and key economic commentators have concluded that the advantages and the disadvantages of the TPP are largely unremarkable (see for example, opinions by Ross Gittins, Joseph Stiglitz and Adam S. Hersh). Major changes to existing legislation as a result of the TPP are unlikely. There are, however, legal implications to be aware of.
Investor-state dispute settlement arrangements
One of the most contentious issues appears to be the investor-state dispute settlement (ISDS) mechanisms in the TPP. Australia initially maintained that it would not accept any arbitration mechanisms for investor-state dispute settlements. However, the final text of the TPP reveals that Australia has conceded to the ISDS provisions, which allow for the establishment of an arbitration tribunal specifically to adjudicate on claims arising from the operation of the TPP. As a result, foreign investors will be able to bring claims against a participating TPP country.
ISDS mechanisms can enable foreign investors to attack legislation enacted for the protection of the public interest. The best example of such a such a scenario is the Phillip Morris litigation. One of the avenues Phillip Morris used to challenge Australian plain-packaging legislation was the ISDS mechanism in the 1993 Australian bilateral investment treaty with Hong Kong. Recently, the Permanent Court of Arbitration dismissed the case, agreeing with Australia’s position that it did not have jurisdiction to hear the case.
Notably, the TPP disallows tobacco companies to challenge public health legislation. So Phillip Morris, for example, will not be able to seek relief under the TPP. Nevertheless, such free trade agreements can stand in opposition to public interest legislation. Article 9.15 of the the TPP’s Investment Chapter provides that a signatory party is not prevented from legislating in the public interest. However, there is a clause allowing non-discriminatory public welfare legislation to be challenged ‘in rare circumstances’, at appendix 9-B, clause 3(b). Effectively, this can give rise to challenges against legislation that protects legitimate public welfare objectives.
The Intellectual Property Chapter of the TPP was crucial to the conclusion of the negotiations, especially for the Australian delegation.
The TPP and pharmaceuticals
One of the central issues was the length of the data exclusivity period, especially for biologics. Biologics are a type of medicine made of protein-producing cells found in living organisms, and are used to treat a number of illnesses, including diabetes and cancer. Generic versions of biologics, known as biosimilars, can be manufactured in Australia after a minimum of five years since the release of the biologic. This is known as the data exclusivity period.
The US pushed for a twelve-year minimum data exclusivity period during the negotiations. However, according to the final text of the TPP, the agreed data exclusivity period is five years. Since this is the same level of protection that is afforded to biologics under Australian legislation, there is no real impact here.
The TPP and copyright
Once again, it is unlikely that there will be any major change to domestic copyright laws. DFAT has confirmed that provisions under domestic legislation relating to copyright terms, patents and Internet Service Provider liability are all consistent with the TPP’s standards. Notably, there will likely be no introduction of new civil or criminal penalties for individuals who download movies illegally.
The biggest legal implication here for the Asia-Pacific region involves the TPP’s provisions on counterfeit and pirated goods. The TPP requires signatory countries to legislate against the use of counterfeit and pirated goods. This includes expanding the range of offences for counterfeit or pirated labels and packaging, broaden powers to allow the forfeiture of counterfeit or private goods, and ensuring that adequate damages are available for copyright and trademark infringement. Within the Asia-Pacific region, this may have large implications, given that the large majority of counterfeit goods originate from the Asia-Pacific region (mostly from China, but also from Malaysia, a TPP signatory). These countries will now be required to legislate according to the TPP’s provisions. This is a welcome development for Australia.
Finance Expats in the Asia-Pacific Region
Under the TPP, the Australian financial sector has more opportunity to integrate with those in the Asia-Pacific region. Australian bank and asset managers have been seeking expanded growth in Asia, with a focus on financial services exports. This includes lowering restrictions for Australian professionals to work in Australian financial companies overseas. Some countries within the Asia-Pacific region limit the number of foreign persons that can hold senior managerial positions in a financial institution in their country. The TPP places a cap on these restrictions, and also provides for special visa arrangements that will allow such professionals more certainty during their stay overseas. This is outlined by DFAT, announcing that Australian financial institutions will be ‘guaranteed’ the option to transfer specialists and managerial staff to their overseas branches for extended periods. Conversely, such provisions will also lead to an increase in financial services (and expats) from Asia-Pacific countries.
Where does the TPP leave us?
Overall, the TPP is a good deal for Australia, and promotes Australian involvement in the Asia-Pacific. Legally, the biggest uncertainty is what the ISDS provisions will entail. While an exception has justifiably been made for tobacco companies, the clause allowing public welfare legislation to be challenged is perturbing. For example, under a similar ISDS mechanism, a US investor was able to sue Costa Rica on the basis that its environmental legislation impeded their business interests, thus contravening a free trade agreement. As has been pointed out, ‘tobacco control measures are not the only policies worth protecting’. Litigation against public welfare legislation is detrimental to the public interest, can encroach on national sovereignty in a negative way, and could ultimately lead to the public expenditure of millions in legal fees.
A further (albeit political) consideration for Australia is its relationship with the US. Australia has an important role to play in the imminent economic dominance of the Asian countries. A criticism often brought against the TPP is that it preserves US interests in the Asia-Pacific region in the face of growing Chinese influence. Tellingly, the negotiations (released on Wikileaks)showed a reluctance on Australia’s part to step away from its alignment with US interests and establish itself as an important regional player in its own right. For example, Australia’s position in the negotiations lined up with the US 64 times. This was higher than its alignment with the next highest, Peru (54 times) and Singapore (51 times). Additionally, Australia ranked second last in terms of the support drawn by its proposals. The dominance of Asia-Pacific region should lead to a convergence in regional interests, but Australia appears to be taking a step away from this direction.
The TPP is an important step towards economic integration within the Asia-Pacific region. This is not without legal implications, and while many aspects of the deal are welcome and needed, a better outcome could be achieved in others.
Anna John is a final year Law/Arts student at the University of Queensland. She works as a research assistant at the T. C. Beirne School of Law. Anna was recently also a guest researcher and research assistant at the Max Planck Institute of Comparative Public and International Law in Heidelberg, Germany.