By Nathanael Susanto, Business Manager, Singapore, Dezan Shira & Associates
Mar. 13 – The Trans-Pacific Partnership (TPP) framework is fundamentally designed to be identical to the free trade agreement model, and is also known as a “high standard” agreement aiming at emerging trade issues in the 21st Century. The 16th round of the TPP negotiations were recently held in Singapore, where the following countries participated: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.Japan plans to agree to TPP free trade liberalization as a negotiating partner.
The TPP presents a golden opportunity for all parties involved, as it could be beneficial for many businesses in various sectors throughout the region. The TPP framework seeks to address the enforcement of intellectual property (IP) rights (specifically in regards to piracy), and there is a new commitment from all parties to now take action against IP criminals. In the investment chapter of the TPP framework, there has also been new regulations set regarding trade secrets.
In this regard, the TPP seeks to boost the viability of foreign direct investment. For example, 10 years ago, Singapore recommended investment into sectors such as pharmaceuticals. One of the advantages of the TPP is an assurance for businesses.
From the financial services perspectives, there has been discussion on:
- Tax Obligations. Transfer of funds to a foreign country, protection for investors, expatriation, state process.
- Market Access. In the annexes: Countries reserving the right to discriminate against clients and 100 percent subsidiary owned companies.
- Specific Commitments. Relevant taxes, for example electronic payment services, insurance selling and cross border data flows.
There are also some challenges for the TPP in the financial services sector, such as the e-payment systems in Malaysia, Singapore and Vietnam. The underlying concern is about access to the information, broker dealer information security and the trading market.
In summary, the TPP is a large free trade agreement, and will be very significant for all business sectors in the region. With progress ongoing for the past two and half years, discussions are now including issues regarding market access, cross-border flows, regulatory frameworks and IP piracy.
The TPP will be further discussed in late May 2013.