Barfield: Latin American Advisor

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Question: The next round of negotiations for the Trans-Pacific Partnership is scheduled to begin May 15 in Lima. At the same time, the list of participating countries is growing as Japan is close to becoming the latest nation to join the talks. What will be the main difficulties participants must iron out during the next rounds of negotiations? How important is the TPP to the economies of the Latin American countries that are involved? How difficult will it be for countries that are part of the negotiations to update their laws in order to protect investments and intellectual property? What issues, if any, might derail the negotiations at this stage?

Answer: Since 2010, there have been 16 negotiating sessions for the TPP. Talks this year represent the beginning of the 'endgame' for creating this crucial trans-Pacific economic architecture. Should the upcoming bargaining reach a stalemate during the fall, it is likely that the whole project will begin to unravel in 2014, a victim of the 'Doha syndrome' that combines substantive intransigence with political cowardice. This need not happen. The larger tradeoffs have been clear for some time; in return for the 21st century liberalization advances pushed by the United States—tackling inside-the-border barriers in services, investment, state-owned enterprises, competition policy, health and safety regulations and government procurement— developing TPP members will demand concessions in old-fashioned 20th century protection in the areas of textiles, shoes, cotton, clothing, as well as less restrictive rules of origin. At this point, the trade negotiators have completed much of the technical work on 29 chapters tthe TPP. Now it falls to the political leaders in the 11 (12 with Japan) TPP nations to fashion the political and substantive compromises that will take the talks over the finish line. The Latin American TPP members (Mexico, Peru and Chile) will see demonstrable enhanced economic growth over the middle terms (2025) if the negotiations are successful: about 1 percent above the baseline for Mexico and Chile, and 1.5 percent for Peru. Of equal if not greater significance—and little noticed in all the analysis of the TPP—is that a successful TPP in effect will update NAFTA into the 21st century, all without the searing and mindless 1990s U.S. debate over the 'giant sucking sound' of job destruction.

- Claude Barfield, resident scholar at the American Enterprise Institute