Judging from the time frames of past trade deals, agreements like the Trans-Pacific Partnership (TPP) involving 12 nations are bound to be a lengthy process.
Negotiations over the agreement were completed in November, 2015 and the TPP member countries will formally sign the agreement on February 4th, 2016 in New Zealand. However, signing does not equal ratification.
The agreement still must be ratified by the governments of the 12 countries. For the TPP to come in to force, a minimum of six countries representing 85 per cent of the total GDP of the bloc must ratify the agreement. The United States and Japan form about 80 per cent of the TPP member GDP. Which means that the TPP is not likely to go forward without these two members – hence, the most important ratification processes to watch are those of the U.S. and Japan.
While the agreement has to be ratified by the government in each country, with a smooth-sailing process and no interruptions the agreement could be in force by 2017.
Here is what the process of ratification is in each country, estimated timelines and likelihood of ratification.
– Shafak Sajid is a policy analyst
Although Japan has faced some TPP opposition, more specifically from farmers and the agricultural sector, Prime Minister Abe has shown decisive leadership when it comes to the TPP. It is part of his broader agenda to grow the Japanese economy. Thus, it is likely that the agreement will be ratified as the current party has a majority in both upper and lower houses of Parliament. The question is about timing – the Abe administration has called for an extra Diet (legislative) session to discuss details. However, pushing it too far in 2016 could be problematic as Japan has an upper house election scheduled in the summer.
Timeline for approval:
>Agreement reached with TPP country negotiators (30 days)
>Signing the agreement, Congress is informed (90 days)
>Implementing bill is introduced in the House and Senate
>The House and Senate have between 60 to 90 days from when the bill is introduced to when they must vote.
Every member around the TPP table is watching the U.S. closely as they come closer to their election. In the U.S. the TPP has become somewhat of a political football as the candidates from both parties try to win the hearts and minds of voters. Given, the ability of Congress to move deadline on its own and the elections scheduled for Nov 2016, it is likely that the voting will take place after the election.
Canada has voted in a new federal government since the TPP was reached. While the government cannot change the text of the TPP, it has announced announced that it wants to take a more inclusive approach and conduct public consultations. The process will likely play out in the middle of 2016. Plus, Canada will likely wait to see if the U.S. will ratify the agreement before deciding.
>Negotiation: New Zealand officials participate in international negotiations resulting in the text of an agreement being finalised.
>National Interest Analysis: the lead government agency prepares a Cabinet paper and a National Interest Analysis (NIA), which sets out the advantages and disadvantages for New Zealand of becoming a party to the agreement or deciding to withdraw.
>Signing: Cabinet approves the final text of the agreement – giving authority to sign the agreement – and also approves the NIA. At this stage, the treaty is agreed but not yet legally binding.
>Presentation: The Ministry of Foreign Affairs and Trade presents the treaty and its corresponding NIA to the House of Representatives.
>Consideration: a select committee considers the treaty and the NIA. The committee has 15 sitting days in which to report back to the House. If it has recommendations to Government, a Government response to these must be tabled within 90 days of the report.
>Implementing Legislation: This is presented to Parliament once the select committee was reported on the entire agreement. Experts foresee at least two pieces of legislation – an amendment to the Tariff Act and to the Copyright Act. The treaty cannot enter into force in New Zealand until this legislation is passed.
>Ratification: formal documents are exchanged with the other countries or organisations involved, to bring the treaty into force for New Zealand. These documents confirm domestic procedures have been completed and that the treaty is now in force.
Source: Ministry of Foreign Affairs and Trade
It is up to the Government when to initiate the ratification process – they have said they are not going to rush. The earliest could be immediately after signing the agreement on February 4, 2016. If so, the remaining steps are expected to take up most of 2016.
There is a high chance of the agreement being ratified – as the Government’s coalition has a majority in Parliament. The Labour Opposition party, though has been critical of the TPP, has a history of supporting free trade agreements.
The Parliament approved the motion to ratify the agreement at the end of January 2016 with a 127-84 vote. The ratification process is expected to involve 26 amendments to 17 laws.
Technically, the ratification did not require Parliament’s approval but the government was interested to have it debated and voted in Parliament. Now that this is done, further negotiations are likely to take place before formal ratification by the Cabinet. With the added vote of approval from parliament the PM is now in a position to more easily approve the agreement.
TPP criticism is widespread in the country so the ratification process is expected to be relatively long. The administration of President Michelle Bachelet has moved forward with the TPP negotiation process, however, opposition is strong in the legislature.
Even though Chile is the only country to have free trade agreements with every TPP member the agreement may still face opposition with the ratification process.
The agreement is set to benefit the export sector and contribute to turning Peru into a “hub” for the Asia-Pacific area. According to the Trade Minister, Peru expects to have the agreement ratified this year and would like to have it implemented by June 2017.
Peruvian President, Ollanta Humala’s government hopes to submit the TPP for ratification to Peru’s 130-member legislature when it returns to work in March 2016 after a two-month recess. The Humala government would like the agreement ratified by July 28, when his five-year term end. Humala is constitutionally banned from running for a consecutive term. Peru will hold presidential elections in April.
Mexico is in a similar boat like Canada when it comes to signing the TPP. While Mexico already has FTAs with numerous TPP countries – U.S., Canada, Japan, Chile, and Peru – it is important for Mexico to be part of the TPP to protect its market share in the U.S.
Once the agreement is signed in New Zealand on Feb. 4, 2016 the Senate will decide which committees will analyze the agreement. The text will be translated into Spanish and the executive branch of the government will submit it to the Senate in the first half of 2016. The Senate will debate the agreement but since hasn’t been much opposition it is expected that it will be approved. Regular Congress sessions run up to April 2016 and from September to December 2016. Experts estimate that the agreement will be approved in the latter half of 2016.
Under the Law on Treaties, the President has the right to ratify a treaty himself, or to submit the treaty to the National Assembly for ratification. Given the importance of the TPP and the broad media coverage of the negotiations process, it is likely that the President will submit the TPP to the National Assembly for ratification. Ratification by the National Assembly is a three step process:
>The TPP first needs to be verified by the Foreign Affairs Committee of the National Assembly (the “Committee”). The Committee will conduct a meeting to verify the TPP within 15 days from the date it receives the TPP documents. After its meeting, the Committee will submit a report on the verification of the TPP to the National Assembly.
>The National Assembly will ratify the TPP by a resolution at its next working session.
>The President will then issue an order promulgating the ratifying resolution of the National Assembly.
>The Ministry of Foreign Affairs will notify the depository of the ratification of the TPP within 15 days from the date the President issues the promulgating order. A plan for implementing the TPP in domestic legislation will then be prepared and submitted to the Prime Minister for approval.
Source: Mayer Brown
Vietnamese media has reported that the National Assembly may ratify the TPP during its working session at the end of this year.
>The Trade Minister presents the text to the Cabinet, which is made up of the Prime Minister and other Cabinet Ministers. The decision to sign the text is made by Cabinet, not the whole Parliament.
>After signing, the text is tabled in Parliament for 20 sitting days and goes to the Joint Standing Committee on Treaties for review before the legislation to implement the agreement is presented to parliament.
>At this point the text becomes public. There is an opportunity for public submissions to the review. The Committee cannot change the text of the agreement after it is signed and can only make recommendations.
>Because it is a Joint Standing Committee of both the House of Representatives and the Senate, the government of the day, which has a majority in the House of Representatives, will have a majority on the committee, and the committee is likely to recommend that the agreement be finalised through the Parliament passing the implementing legislation, even if there are critical submissions.
>The final ratification of the agreement will take place after the implementing legislation has been passed by both the House of Representatives and the Senate.
Source: Australia Fair Trade and Investment Network
Australia’s ratification process is expected to go smoothly and the agreement is expected to be legislated without any major changes. This is because none of the major political parties (the governing Liberal- National coalition or the ALP) have objections to the TPP. Within Australia there is a widely held consensus that international trade is vital for the country’s long-term prosperity. Historically, both of the major political parties have had a shared commitment to free trade and multilateral trade liberalization (since the 1980’s). Hence, it is not common to see questions raised in the Senate about Australia’s international trade policy.
Brunei probably has the fastest ratification process – if the Sultan approves the TPP ratified fairly quickly.
The ratification process in Singapore can be less formal than some of the other TPP countries. The Parliament has to approve any legal or regulatory changes that are necessary to comply with the TPP. These changes will be drawn up by the various ministries and run past the Attorney General’s chambers. Since they have handled all the legal vetting and negotiations for Singapore they are bound to be well versed in what gaps exist.
The TPP ratification has the potential to be wrapped up in a few days. However, Parliament only sits a few days a year and that could be a source of delay.