Ryan Greenaway-McGrevy & Amber Carran-Fletcher wrap up their TPPA series with a look at the unenforceable chapters of the agreement

This is the 22nd and last in a series of articles Interest.co.nz commissioned reviewing the key chapters and issues for New Zealand in the Trans-Pacific Partnership Agreement (TPPA). Links to all the articles in the series are below.

By Ryan Greenaway-McGrevy*

We end our series on the TPP by covering the unenforceable chapters of the agreement. These chapters are explicitly exempt from the agreement’s state-state dispute settlement mechanism, and thus it ultimately remains the prerogative of the signatories to follow the commitments contained within these parts of the text. 

These chapters include: Competition Policy (chapter 16); Cooperation and Capacity Building (chapter 21); Competitiveness and Business Facilitation (chapter 22); and Regulatory Coherence (chapter 25) - all of which we will cover below. Other chapters which do not have recourse to the dispute settlement process include Small and Medium-size Enterprises (chapter 24), which we covered earlier here, and Development (chapter 23), which we covered here.  

Competition policy 

Chapter sixteen requires all countries to adopt or maintain competition laws to prevent anticompetitive business conduct, and requires each party to maintain an authority responsible for enforcing its competition policy. These laws are also expected to comply with the 1999 APEC Principles to Enhance Competition and Regulatory Reform. 

Anticompetitive laws typically promote competition by restricting the ability of firms to merge, and by prohibiting cartels and other forms of collusion between separate firms. In New Zealand such regulations are included in the Commerce Act of 1986 and its associated amendments. Many countries also explicitly outlaw monopolies. 

Additional clauses outline protocols for addressing breaches of competition policy within each party’s legal and regulatory framework. Article 16.2 (Procedural Fairness in Competition Law Enforcement) outlines the requirements for a fair hearing (16.2.1) and written procedures for investigations (16.2.2). It also requires that parties maintain rules for procedure and evidence in investigations (16.2.3), and that any imposed sanctions are contestable (16.2.4). 

The chapter also calls for the right of private individuals to challenge enterprises that may have violated competition policy. Article 16.3 (Private Rights of Action) emphasises the importance of individuals to be able to seek redress against companies that have violated a parties competition policy, and states that parties should have laws allowing private rights of action. 

For situations in which private rights of action are not permitted, the clause states that individuals should be given the opportunity to request that the relevant competition authority initiate an investigation of the alleged anticompetitive conduct. 

Article 16.4 (Cooperation) recognises that the effective implementation of competition law requires cooperation between signatories to the agreement and suggests that competition authorities may consider entering into specific agreements with their counterparts in other TPPA member countries. 

The chapter also gives a nod to consumer welfare through Article 16.6 (Consumer Protection), which requires parties to maintain either civil or criminal consumer protection laws. Meanwhile, article 16.7 (Transparency) requires parties to make their competition policies as transparent as possible. 

Cooperation and capacity building 

This chapter highlights the importance of bi-lateral and multi-lateral cooperation to ensure effective implementation of the agreement. Article 21.2 (Areas of Cooperation and Capacity Building) suggests that capacity building could include, but is not limited to, areas such as: agricultural, industrial and services sectors; promotion of education, culture and gender equality; and disaster risk management. 

Article 21.4 establishes a committee on cooperation and capacity building to facilitate these activities. The committee will also work with international donor organisations, private sector entities, and non-governmental organisations to assist with developing and implementing these activities.

Competitiveness and business facilitation 

Chapter twenty-two establishes a committee to encourage business creation and economic integration within the TPP bloc. 

New Zealand is well-known for having a business-friendly regulatory framework that encourages business creation - we can register and start a business on the same day. Would-be entrepreneurs in countries such as Vietnam are not so fortunate, and could do with some help in this area. 

Article 22.2 establishes a committee for competitiveness and business facilitation. The purpose of the committee will be to promote information sharing in order to facilitate: fast and efficient establishment of businesses; investment in TPPA countries; and further integration and development within the trading bloc. 

Article 22.3 outlines the goals of the Committee with respect to regional supply chains. The Committee will look at ways the trade agreement can be used to strengthen supply chains and reduce the cost of doing business within the bloc. It will also encourage SMEs to participate in regional supply chains. The Committee is required to conduct a review of how well the agreement has facilitated supply chain improvements four years after implementation. 

Regulatory coherence 

Chapter twenty-five sets some parameters for how each party can implement the mandatory elements of the agreement through its domestic laws and regulations. 

Article 25.3 requires parties to publish a list of the regulatory measures it considers to be related to the implementation of these mandatory elements. Article 25.4 (Coordination and Review Processes or mechanisms) promotes mechanisms to ensure interagency cooperation at the domestic level in order to make systemic regulatory improvements and prevent the creation of inconsistent requirements across agencies. 

The chapter also set boundaries on how these regulatory measures can be altered going forward. Article 25.5 (Implementation of Core Good Regulatory Practices) encourages agencies to undertake regulatory impact assessments when developing new regulations and to review regulations on ensure they are achieving the party’s policy objectives. New regulatory measures should be clearly written (25.5.4) and made available to the public, preferably online (25.5.5). 

Is this all just talk? 

Cynics might say that the commitments contained within these chapters are nothing more than token gestures that give politicians some pleasant sound bites to repeat to the media. And they might have a point. Without the threat of suspended trade benefits, compliance ultimately remains up to each government within the trade bloc. 

But the creation of the committees in relation to each chapter at least provides a forum for the trading partners to talk about their disagreements, and to work together in areas where they do agree.


*Ryan Greenaway-McGrevy is a senior lecturer in economics at the University of Auckland. Prior to that he was a research economist in the Office of the Chief Statistician at the Bureau of Economic Analysis (BEA) in Washington DC.

*Amber Carran-Fletcher contributed to this series.

The series:

Investor-state dispute settlement

Labour standards

Settling disputes

Intellectual property

SOEs and designated monopolies

Environment

Government Procurement

Sanitary and phytosanitary measures

National treatment and market access for goods

How the TPPA could boost competition in the building materials sector

What TPPA's investment chapter says, including on housing investment

What the TPPA says about remedies for unfair trade

What the TPPA means for SMEs

We can have globalisation and more equitably share the gains

What the TPPA says about financial services

Greasing the wheels for creative & vibrant service sector firms

What the TPPA says about online retailing

What the TPPA would do for transparency & combating corruption

TPPA rules of origin, they're complicated

What the TPPA does for customs administration & trade facilitation

The TPPA on textiles

*And here's a video interview with Greenaway-McGrevy where he discusses the series.

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