Japanese Economy Minister Akira Amari (left) and US Trade Representative Michael Froman participate in a press conference in Lahaina, Maui, Hawaii, during the most recent round of negotiations, July 2015 (Reuters photo).
Trans-Pacific Partnership (TPP) countries are moving toward consensus on a Japanese proposal stipulating that the agreement will enter into force once at least six countries representing 85 percent of the region’s economic activity have ratified the deal, according to informed sources.
The Japanese proposal would require the six countries — which would have to include the United States and Japan to surpass the 85 percent threshold — to ratify the deal within two years after the conclusion of the negotiations, sources said. Once that threshold is reached, the agreement would enter into force only for those countries.
But the Japanese proposal also lays out a procedure by which the agreement would enter into force for the additional TPP countries that are not part of the first tranche, sources said. Specifically, it states that the TPP “Free Trade Commission” — consisting of the parties that have already ratified the deal — would determine when the agreement would enter into force for the additional countries.
Sources said it is unclear whether the Free Trade Commission would have to affirmatively certify whether a country seeking to ratify the deal has sufficiently implemented its obligations before allowing the agreement to enter into force for that country.
If there is some sort of certification process carried out by the Free Trade Commission, then this would create an incentive for TPP countries to be part of the first tranche of parties to ratify the deal, as they would not be subject to this type of scrutiny, sources said.
The procedures for entry into force set out by the Japanese proposal would be separate from the U.S.’s own unilateral “certification” requirement, sources said.
This requirement, which has been included in the U.S. implementing legislation for past trade agreements rather than the agreements themselves, states that the U.S. president is only authorized to allow a trade deal to enter into force for a given country once he determines that the country has taken measures necessary to comply with the provisions of the deal that take effect immediately.
In the bilateral context, this effectively gives the U.S. leverage to ensure that the other country implements its FTA obligations in a way that is acceptable to the U.S., as it can hold up the agreement from entering into force until it deems the other country’s implementation steps to be adequate. But it is unclear exactly how this process will work in the context of a plurilateral agreement like TPP.
Critics of the U.S. certification process argue it requires U.S. FTA partners to cede sovereignty. They argue that countries typically fight for ambiguous and broad language in FTAs that would allow them a certain level of flexibility in implementing the provisions of a deal and that the U.S. certification process robs them of the ability to interpret those obligations as they see fit. In the context of the TPP negotiations, some countries such as Chile have been particularly worried about the U.S. certification process.
The mechanism for bringing the TPP into force was discussed during the Maui round last month by the negotiating group on legal issues, according to an informed source. In U.S. free trade agreements, the provisions on entry into force typically appear in the “Final Provisions” chapter.