Some Implications of the Trans-Pacific Partnership (TPP) on Singapore

The Trans-Pacific Partnership (TPP) is a proposed trade agreement between Singapore and several nations across the Pacific Rim.  It is a comprehensive agreement concerning many aspects of economic policy.  The TPP seeks to lower trade barriers such as tariffs, enforce common standards for labour law, avoid double taxation, establish a common intellectual property framework, and organise a common investor-state dispute resolution mechanism.  The TPP is an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) signed by Brunei, Chile, Singapore, and New Zealand in 2006.  From 2008, 8 additional countries joined for a broader agreement: Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam.

The original goal of wrapping up negotiations was in 2012.  However, agriculture, intellectual property, and services and investments were some of the contentions that are still being negotiated.  The latest round of negotiations was schedule to take place in July 2015.  That has been delayed due to events in member countries.  After the Election victory, the PAP are in a stronger position domestically to push ahead with the TPP.  And with no significant Opposition presence in Parliament, they can rush through the reading of the bill as they have always done.  To date, there have already been 19 rounds of negotiations.

The negotiations have been conducted in secrecy and the text of the treaty has not been made public.  This means that by the time domestic opposition can build, the treaty would likely have been ratified in most member countries.  WikiLeaks has published several leaked documents pertaining to the TPP since 2013.  Controversial clauses in drafts leaked to the public do not give us much confidence that it is actually to our best interests.

So what are the main points being negotiation?  There is nothing on the official sites of the Singapore government.  However, on the website of the Office of the United States Trade Representative has a list of chapters there.  Of interest to us are the chapters on competition, cross-border services, customs, e-commerce, financial services, government procurement, intellectual property, investment, labour, legal issues, market access for goods, rules of origin, technical barriers to trade, telecommunications, temporary entry, and trade remedies.  The USTR further that the contents of the TPP seek to promote comprehensive market access, facilitate the development of production and supply chains among TPP members, create regulatory coherence and promote “comprehensive and robust market liberalisation”, amongst other things.

One of the most controversial agreements is the Investor-State Dispute Settlement (ISDS).  Based on the draft agreement from WikiLeaks, the treaty essentially elevates a corporation to equal status with the sovereign state in enforcing sections of the treaty.  This means foreign investors in a company can sue the member state governments for any sort of infringement.  This presents a major problem since governments, even the newly elected governments that were not yet in office at the ratification of the TPP are constrained from enacting domestic laws and regulations that might contravene the treaty.  This puts the interests of companies over the interests of citizens.  This provision is at the expense of our sovereignty.  A more aggressive interpretation means that corporations and foreign interests can force the repeal of laws that contravene the free flow of trade and persons.  To put this in a way Singaporeans can understand, this means that the Singapore government cannot limit, for example, the flow of foreign workers and enact laws to protect Singapore jobseekers.

This treaty allows corporations to challenge domestic legislation of public interest.  On the 26^th March 2015, WikiLeaks released the TPP’s Investment Chapter.  According to the documents released, under this treaty, global corporations have the power to sue governments in international tribunals and obtain taxpayer compensation for loss of expected future profits due to government actions.  That means, if a future government of Singapore were to enact a legislation protecting, say, the interest of Singapore PMETs and require companies to hire a certain percentage of them, a corporation based here can sue the government for loss of profits, and they will win.  The tribunal will decide damages and that money will come from our taxes.  That is not ideal.

Joseph Eugene Stiglitz, the Nobel prize-winning economist said, based on leaked drafts, it “serves the interests of the wealthiest.”  Organised labour groups in the U.S., New Zealand, Australia, and Canada have come out against it.  Economic policy think tanks oppose it, including the Economic Policy Institute and the Center for Economic and Policy Research, arguing that it could result in further job losses and declining wages.  Other renowned economists against it include Avram Noam Chomsky, Paul Robin Krugman, and Robert Bernard Reich.

What does it mean for Singaporeans in a nutshell?  It is a mechanism to depress wages, while manipulating currency through massive movement of bank instruments.  In the long term, in its default state, this will shrink the middle class and create an entrenched lower class over the long term.  It will significantly affect our GINI coefficient, meaning that the gap between the wealthy elite and the rest of us will widen, and eventually become insurmountable.  It is not a recipe for a stable economy.  In summary, in the hope of future profits brought about by increased trade, we have made a calculated bet.  The only people who will benefit greatly from the TPP are major corporation in the banking, pharmaceutical and technology sectors.  Of course, now that the US has declined to sign it, under a Trump presidency, it can be argued that the TPP will be modified.  This does not mean, in future, a government having the same policy philosophy would not attempt a similar deal.