Confused About the TPP? Here's a Simple Explainer

May 24th 2015

Alex Mierjeski

The Trans Pacific Partnership, or, TPP is a trade agreement between the U.S. and other nations that has become one of President Obama's signature domestic policy initiatives as he ends his term in office.

So what is the TPP, exactly?

For all its divisiveness, the TPP deal, which has caused political splintering in Washington, pitting the administration against its own party, while allying it with both Republicans and libertarians, can be hard to grasp.

You've probably seen the TPP in the news lately––after all, it's been negotiated for close to ten years. Yet, it remains a complex, multi-faceted set of proposals that center around revamped trade relationships between 12 countries, but have broad, far-reaching implications into everything from copyright law and environmental regulation to job safety and financial regulations. Needless to say, it's less of a simple trade deal and more of a geopolitical economic re-structuring.

The 12 countries that have negotiated so far include: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

So what's actually in the deal?

The catch to all of this is that the actual text of the TPP remains secret, so we don't actually know what's in it yet. Lawmakers feel that negotiating in public would be too difficult, so the text is only available to members of Congress and a special advisory committee. That's partially why the TPP is difficult to understand.

President Obama has also pointed out that before any deal is finalized, the full text must be posted online for 60 days. "Then it would go to Congress - and you know they're not going to do anything fast. So there will be months of review," he said recently.

Transparency is certainly a concern, but there are a few things we know the deal would probably do.

An outright trade deal.

A main component of the TPP sets new rules for trade and business partnerships between the U.S. and 11 other nations in the Pacific Rim, attempting to establish a free-trade zone in the region. Importantly, those nations––the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam––make up one-third of global trade and collectively produce an annual gross domestic product of close to $28 trillion, which makes up almost half of the global GDP. Both those economies and the world's, then, would theoretically expand with freer trade.

What do people like about TPP?

The deal's selling point here is that by lowering remaining trade restrictions––tariffs and quotas––and setting universal ground rules between countries, it would open up trade opportunities for all nations involved, "address vital 21st-century issues within the global economy," and incentivize other countries, namely China, to join. Many tariffs in the region are already low, but the TPP could mean big changes for producers of specific exports like Japanese trucks, U.S. meat, and potentially, Australian sugar.

Supporters say freer trade will be a boon for the global economy by creating more demand and more jobs. They also argue that the deal would level the playing field of international trade for both big and small businesses and raise working standards in places like Vietnam and other countries used by large U.S. corporations for outsourcing work.

Why does President Obama support this so much?

President Obama has been persistent in his support of approving the TPP, and it is frequently described as one of his final, signature policy initiatives. There are, of course, myriad reasons he supports it, but in short, it is a "put up or shut up" moment for the country and his administration, as Vox put it. For one thing, Obama promised to renegotiate an existing trade deal, the North American Free Trade Agreement (NAFTA -- a trade agreement between the United States, Canada, and Mexico), when he ran for office, and in some ways, the TPP accomplishes this so far unfulfilled promise.

The other policy thrust the TPP accomplishes single-handedly is Obama's much-discussed "pivot to Asia," shorthand for formally addressing the dominance of eastern Asian countries like China as the major global players that they are and naming a trend of "re-balancing" U.S. international interests, as the Atlantic notes. Pushing the TPP through in a timely manner also secures the U.S. a central position in a major, international trade deal, forcing other countries to comply with our standards.

Why does China matter so much in this deal?

One of the reasons Obama is itching to speed the deal through is that the congressional process of amendments and review could test the patience of other participating countries and open up the door for a competing deal with China, a country observers say is jockeying with the US to be the most important power in Asia. "We've got to think of China very seriously as a competitor, a competitor that essentially does not want us in Asia over the long term because our presence in Asia becomes an obstacle to China's realization of its own ambitions," Ashley Tellis of the Carnegie Endowment for International Peace, told NPR.

What do people not like about TPP?

Opponents claim that it will encourage businesses to outsource or export jobs to low-wage countries, further contributing to economic inequality both at home and abroad. 2016 presidential candidate Sen. Bernie Sanders (I-Vt.) pointed out that in the last landmark trade deal, NAFTA, the U.S. lost almost 700,000 jobs, most of which were in manufacturing.

But trade in the 21st century no longer only incorporates the transfer of goods, and any large trade deal naturally reflects that. The TPP has many "riders" catering to interest groups like big pharmaceutical companies and Hollywood, and it's those hidden stipulations that has many up in arms about what TPP would do in addition to regulating the transfer of goods. Sen. Elizabeth Warren (D-Mass.), who has been an outspoken critic of the deal, worries that TPP could be used to eventually undercut the rules of her investor-protection Dodd-Frank law.

She has also spoken out against a provision that lets companies take individual governments to court if their laws interfere with trade agreements. These so-called "investor-state settlement disputes" (ISDS) consist of companies suing nations in international court. ISDS are in place to make sure companies are being treated fairly in a foreign country that has agreed to certain trade standards. The downside, critics say, is that they can be used to undermine a nation's laws by giving a corporation power over a sovereign government. John Oliver recently covered the bad effects of an existing ISDS regarding tobacco companies:

Why do people keep bringing up movies and TV shows as well as online freedom? Why is everyone talking about Hollywood influencing this deal?

Concern over TPP's intellectual property (IP) chapter, drafts of which have been leaked, has led to discussions of implications for Hollywood and online freedom. IP includes copyright law, which is the protection under which entertainment companies monetize movies, TV shows, or music. Because Hollywood is powerful in the U.S., we're known for having pretty tough rules around copyright -- individuals can go to jail for pirating movies and internet content platforms like YouTube can be held liable for their users uploading stolen content. Some people say that these tough standards impede internet freedom and that the TPP will make it worse by exporting those standards to a huge chunk of the global economy. The TPP will also make it even more difficult to change existing U.S. copyright law, which internet freedom advocates argue is in dire need of updating to reflect 21st century technology. Most of U.S. copyright law dates back to 1976.

What about Big Phama?

Like copyright law, some public health organizations have warned that exporting certain U.S. patent laws would expand Big Pharma's patent rights. A patent gives the patent holder a monopoly on their invention. That is, if you invent a miracle drug, you're the only one who can produce and sell that drug while you have a patent. Eventually, the patent expires, and everyone can make your drug. Take, for example, cough medicine, which is sold by many brands.

The upside to patents is that they incentivize people to invent new medicine. The downside is that they limit the ability of other people or companies to produce generic forms of certain drugs, keeping costs high for life-saving AIDS medication, for example, and out of reach for the people who can't afford the brand name. According to OpenDemocracy, one of these patent extensions would stretch patents beyond their original 20-year lifespan and also allow companies to re-patent drugs for "new uses" via slight chemical alterations, extending their monopoly over those drugs. Generic drugs are often 30-38 percent less expensive for consumers. Another clause would bar generic drug manufacturers from citing clinical trial research data used by the brand-name's patent holder––something described as data exclusivity. It would force generic manufacturers to go through expensive, lengthy tests to re-prove existing data.

This is a good example of the argument that the TPP isn't a trade deal for the common citizen, but a giveaway for corporate interests.

Other concerns?

Environmental groups like the Sierra Club have also voiced their concerns over the implications that the TPP would have for many environmental issues, including threats to forests and wildlife, as well as fracking and natural gas extraction.

What's "fast-track" legislation?

Fast-track legislation, also known as "trade promotion authority," speeds the bill through Congress, only allowing lawmakers to either accept or reject the proposal, not introduce amendments. It also gives the Obama administration negotiating freedom.

What's next?

On Friday, lawmakers in the Senate passed fast-track legislation, which observers hailed as a major victory for Obama. But because a provision amendment on human trafficking authored by Sen. Ted Cruz (R-Texas) never got a vote, skeptical Tea Party Republicans in the House will prove even more difficult to win over, the Huffington Post points out. Though fast-track is just an up-or-down vote, the procedure allows lawmakers to suggest proposals relating to the TPP for the fast-track bill, which some Senators did. Sen. Debbie Stabenow (D-Mich.) and Rob Portman (R-Ohio) proposed legislation that would crack down on currency manipulation, but it failed in a 48-51 vote. The White House has warned that amendments could jeopardize the deal on the whole, and Cruz's legislation, which would effectively force the country of Malaysia out of the trade deal for failing to meet requirements, could do just that. The fast-track bill will now continue on to the House, where lawmakers have warned that it will face an uphill battle.