Rodrigo Contreras talks about the challenges to finalizing the trade deal and what it could mean for Chile.
The Trans-Pacific Partnership (TPP) is a trade deal currently being negotiated among 12 major economies in the Americas and Asia Pacific regions that aims to reduce tariffs and ease the movement of goods across the Pacific. Although often called a “state of the art” trade deal by its proponents, it is not without controversy, as the negotiations have come under fire for their lack of transparency.
Draft texts leaked to the public show the deal would bring strong protections for foreign investors with little limits on capital flow across borders, as well as extend limits on intellectual property and patents which could drive up the costs of prescription drugs and other goods in Chile. Consumer rights groups have also come out against the partnership, saying it would hurt domestic consumers.
The trade deal originally grew out of the P4 trade agreement between Chile, New Zealand, Singapore and Brunei Darussalam and has grown to include Australia, Peru, Vietnam, Malaysia, Mexico, Canada, Japan as well as the United States, who is leading the negotiations.
Rodrigo Contreras is the former lead negotiator for Chile who spent three and a half years negotiating the agreement, before leaving the position several months ago, for what he described in the interview as personal reasons. He talks with The Santiago Times about the negotiations and gives insight into what’s at stake for Chile.
Chile already has free trade agreements with 62 countries. Can you discuss what you see are the biggest advantages for Chile joining this partnership?
Yes, certainly a lot of theories have demonstrated that free trade is good between countries: it’s better to have free trade than to close your borders to exchange with other countries. But when you negotiate with a set of countries bilaterally, even if you gain market access in the other country to reduce the tariffs-- you’re not enjoying all the possible benefits of producing free trade between all the countries. Because in all the agreements you have rule of origin measures that in some way condition the way you have to produce products in order to receive a reduction of the tariff in the other countries.
So in the case of TPP, when you have 11 bilateral agreements, it’s not the same as a free trade agreement. And the main difference, and the main interest of Chile is to finalize the spaghetti bowl, with its multiplicity of measures and conditions, and to have full accommodation between the countries, in order to buy some materials of one country and export it to other countries.
What do you think about the critics that have said there’s been too much secrecy around the process. As someone who’s been in the negotiations, do you think there’s value to this, and keeping draft texts out of the hands of the the public or do you believe there should be more transparency?
I do have a personal opinion about that. It’s very common—in all the negotiations and in all past negotiations the texts have been secret. So in that way, there’s nothing strange about that. It’s difficult-- the high-pressure, the demand for the texts in this moment. It has never been that way before. It’s very difficult, quite impossible to negotiate through the media and through all the different parties.
But what I am against, is that apart from the secrecy of the text, we must be able to discuss the project. We can share ideas, we can listen to civil society, we can have discussions at the universities. It’s perfectly possible. And I think, when we were negotiating with the EU, for example, that we should have discussions through the media and its important to have feedback from everybody, to listen to everybody. It’s very risky to continue the process with trying to quiet any possible comment. Because at the end of the day, we can face difficulties, especially at the moment of implementation.
Some of the text has been leaked of course, despite the secrecy. Are there parts of the text that haven’t been leaked that should be in discussion, or do you feel the most important parts are in the public?
No, I think the most important parts of the negotiation are being discussed now. Of course the text is very wide, more than 25 chapters, some of them very technical and not part of the common language or interests of the people. But I think the most important things are on the table, yes.
What are the main problems that you see now with the agreement now?
Intellectual property issues, certainly. Foreign investment as well. For me, this problem is something that I think we need to be putting pressure on. If you look at what the central or the common factors in the last economic crisis were--it was the big flow of capitals between the countries. So we have to take that into consideration and not push for a full liberalization of that. Because it has been demonstrated that you need to have some minimum control in order to ensure that an economy remains stable.
The pharmaceutical issue, it’s also something very sensitive for developing countries. We have systems that are not perfect, we have a lot of services lacking in the system of basic necessities. So if you put more expenses on the system, more requirements, if you get to higher costs, really I don’t think that would be helpful for us, or that that could be acceptable for us.
From what I’ve read it seems as if the U.S. is staying very firm on the issues you raise. Do you think these could cause the negotiations to fail or do you see this partnership going through?
To push so strong in any negotiation, in any process is not so good. There are a lot of thoughts that it’s better to have something good but not perfect rather than nothing at all. And I think that here, some parties are reaching towards a perfect agreement, or have the intention to finalize the agreement in a short period of time. It’s very difficult to create a very high level agreement, to finalize it with that level, and not only that, to finalize it in a couple of months. So yes, I think that more flexibility would help to assure the finalization of the process.
What I’m asking also is, do you think that Chile could walk away from these negotiations? Allowing the free-flow of capital and driving up prescription drug costs don’t seem like small issues that could just be included in a “good deal,” rather than a perfect deal.
Well, I’m not sure if the right decision is to walk away or run away, but what we personally think, as a responsible negotiator of a country should do, is to be there, in the negotiations until the last moment, trying to balance, trying to reach that agreement that we need. Then at the last moment you can make the decision. From my point of view you can decide to leave the process at any moment with higher or lower costs, but you can do it. But what is not logical is to decide to leave the process without seeing if you can change the things with which you have problems.
You’ve pointed out that Latin America has a lot of shared interests with Asian countries and I wonder if you could just expand on that and explain your view.
Yes, I think that for example, in terms of pharmaceutical issues or intellectual property, maybe in terms of the environment, we have different interests from a country such as the US, or maybe New Zealand. In some ways we have common ground of course, but in other ways we have differences. In those different circumstances, we have to consider that we are a developing country, and we have a lot of things to do in the future. Everything is not done here. So we have to take care not to make huge changes in the system that will be at the end of the day more difficult to implement. The path needs to be smooth. And I think that that problem is the same that countries like Malaysia or Vietnam, are facing.
Some have said that the U.S. interest in this trade agreement is to counter China’s influence in the region. Do you have thoughts about this, and do you expect that China could also enter the negotiations?
Yes I have heard that. I’m not sure but it’s not the objective under consideration for Chile. We have excellent relations with China, and we don’t want to affect those relations with the TPP being interpreted as trying to exclude China. In no way is it our ambition, and I know that for most of the countries participating in the TPP, it’s not the objective and they don’t share that view either.
Would you welcome them to the agreement?
Of course. I would be very happy to have them here in the process. Again, it’s a way to find common ground, to finalize the spaghetti bowl with those very different kinds of agreements. It would be very positive, but really, being realistic, I don’t think that China could be interested in this actual TPP. Because it’s very different from what they usually negotiate. So, just looking at the facts, I don’t see a possibility that they would enter the agreement. Even if Chile would welcome them, and I’m sure most of the countries or all of the countries of the TPP would as well, I don’t know if China would be interested to do so with this agreement.
You have also said that Latin American countries need to push more for their interests against higher income countries in the negotiations. Is this something that you believe is beginning to happen, or if not, how do you see this changing?
No, I don’t think that this is happening in the ways that it should be. Again, I’m thinking about how to have the best result. And for that, we have to have a lot of discussions, we have to be flexible, we have to reach a result that could be possible for everybody. You could have a very high-level agreement, but if that agreement requires changing a lot of laws and regulations that would be very difficult to change in the congress and that you will face as a government a lot of opposition from stakeholders in your country-- well, so it’s not clear that that very high-level agreement would be possible to materialize if you can’t go through those steps. It’s a practical thought.
Do you see Colombia joining the talks as a real possibility? Could the entire Pacific Alliance getting involved strengthen the interests of Latin America in the talks?
Yes I see it as a possibility, and I see it as a good recommendation for the process. We have expanded the TPP to include more countries from Asia and more from North America, and I think it could be a good recommendation to add another Latin American country to this process like Colombia, that is a very like-minded country. Its inclusion into this process could be very easy. I don’t think it’s an issue that you’d be including a country with a totally different model of trade. I think that Colombia matches very well in this process. So even considering that the process would be delayed for a few months, it could be idea to think about including Colombia. Someone has interpreted that the TPP should only be between APEC countries, but that’s not a rule. Preferably, the country should be from APEC, but it’s not a necessity.
Presidents Obama and Piñera have said that they will try to conclude the negotiations by the next APEC meeting in November. How likely do you see this as happening? Is your feeling that there is more momentum now as the negotiations start to wind down?
I think it is possible, but I am not sure if we have the momentum to do it. It’s possible if you keep pressing and are in a continuous series of meetings from now until October or November in order to try to solve all of the pending issues. But we don’t have very much time; we have four or five months. So in order to solve the huge differences that we have, we should be in a more urgent, or aggressive rhythm than what we have now been in until now. From that point of view, I think the possibility of closing this agreement is not so clear. Technically, if you put all the pressure that you need on the negotiations, maybe you can fix it. And if you get the political commitments of all the countries—I think in that way the U.S. has been very efficient in talking country with country, like now with President Piñera in order to facilitate the process—but it’s difficult to solve everything by November. If we see it being changed in the frequency of the meetings of the groups, it could happen. The negotiations are very pressed for time, but it could be.
By Rosalind Adams (rosalind@santiagotimes.cl)
Copyright 2013 - The Santiago Times
The Trans-Pacific Partnership (TPP) is a trade deal currently being negotiated among 12 major economies in the Americas and Asia Pacific regions that aims to reduce tariffs and ease the movement of goods across the Pacific. Although often called a “state of the art” trade deal by its proponents, it is not without controversy, as the negotiations have come under fire for their lack of transparency.
Leaders meet in Yokohama, Japan in November, 2010 for TPP negotiations Photo via Pete Souza / White House Flickr
The trade deal originally grew out of the P4 trade agreement between Chile, New Zealand, Singapore and Brunei Darussalam and has grown to include Australia, Peru, Vietnam, Malaysia, Mexico, Canada, Japan as well as the United States, who is leading the negotiations.
Rodrigo Contreras is the former lead negotiator for Chile who spent three and a half years negotiating the agreement, before leaving the position several months ago, for what he described in the interview as personal reasons. He talks with The Santiago Times about the negotiations and gives insight into what’s at stake for Chile.
Chile already has free trade agreements with 62 countries. Can you discuss what you see are the biggest advantages for Chile joining this partnership?
Yes, certainly a lot of theories have demonstrated that free trade is good between countries: it’s better to have free trade than to close your borders to exchange with other countries. But when you negotiate with a set of countries bilaterally, even if you gain market access in the other country to reduce the tariffs-- you’re not enjoying all the possible benefits of producing free trade between all the countries. Because in all the agreements you have rule of origin measures that in some way condition the way you have to produce products in order to receive a reduction of the tariff in the other countries.
So in the case of TPP, when you have 11 bilateral agreements, it’s not the same as a free trade agreement. And the main difference, and the main interest of Chile is to finalize the spaghetti bowl, with its multiplicity of measures and conditions, and to have full accommodation between the countries, in order to buy some materials of one country and export it to other countries.
What do you think about the critics that have said there’s been too much secrecy around the process. As someone who’s been in the negotiations, do you think there’s value to this, and keeping draft texts out of the hands of the the public or do you believe there should be more transparency?
I do have a personal opinion about that. It’s very common—in all the negotiations and in all past negotiations the texts have been secret. So in that way, there’s nothing strange about that. It’s difficult-- the high-pressure, the demand for the texts in this moment. It has never been that way before. It’s very difficult, quite impossible to negotiate through the media and through all the different parties.
But what I am against, is that apart from the secrecy of the text, we must be able to discuss the project. We can share ideas, we can listen to civil society, we can have discussions at the universities. It’s perfectly possible. And I think, when we were negotiating with the EU, for example, that we should have discussions through the media and its important to have feedback from everybody, to listen to everybody. It’s very risky to continue the process with trying to quiet any possible comment. Because at the end of the day, we can face difficulties, especially at the moment of implementation.
Some of the text has been leaked of course, despite the secrecy. Are there parts of the text that haven’t been leaked that should be in discussion, or do you feel the most important parts are in the public?
No, I think the most important parts of the negotiation are being discussed now. Of course the text is very wide, more than 25 chapters, some of them very technical and not part of the common language or interests of the people. But I think the most important things are on the table, yes.
What are the main problems that you see now with the agreement now?
Intellectual property issues, certainly. Foreign investment as well. For me, this problem is something that I think we need to be putting pressure on. If you look at what the central or the common factors in the last economic crisis were--it was the big flow of capitals between the countries. So we have to take that into consideration and not push for a full liberalization of that. Because it has been demonstrated that you need to have some minimum control in order to ensure that an economy remains stable.
The pharmaceutical issue, it’s also something very sensitive for developing countries. We have systems that are not perfect, we have a lot of services lacking in the system of basic necessities. So if you put more expenses on the system, more requirements, if you get to higher costs, really I don’t think that would be helpful for us, or that that could be acceptable for us.
From what I’ve read it seems as if the U.S. is staying very firm on the issues you raise. Do you think these could cause the negotiations to fail or do you see this partnership going through?
To push so strong in any negotiation, in any process is not so good. There are a lot of thoughts that it’s better to have something good but not perfect rather than nothing at all. And I think that here, some parties are reaching towards a perfect agreement, or have the intention to finalize the agreement in a short period of time. It’s very difficult to create a very high level agreement, to finalize it with that level, and not only that, to finalize it in a couple of months. So yes, I think that more flexibility would help to assure the finalization of the process.
What I’m asking also is, do you think that Chile could walk away from these negotiations? Allowing the free-flow of capital and driving up prescription drug costs don’t seem like small issues that could just be included in a “good deal,” rather than a perfect deal.
Well, I’m not sure if the right decision is to walk away or run away, but what we personally think, as a responsible negotiator of a country should do, is to be there, in the negotiations until the last moment, trying to balance, trying to reach that agreement that we need. Then at the last moment you can make the decision. From my point of view you can decide to leave the process at any moment with higher or lower costs, but you can do it. But what is not logical is to decide to leave the process without seeing if you can change the things with which you have problems.
You’ve pointed out that Latin America has a lot of shared interests with Asian countries and I wonder if you could just expand on that and explain your view.
Yes, I think that for example, in terms of pharmaceutical issues or intellectual property, maybe in terms of the environment, we have different interests from a country such as the US, or maybe New Zealand. In some ways we have common ground of course, but in other ways we have differences. In those different circumstances, we have to consider that we are a developing country, and we have a lot of things to do in the future. Everything is not done here. So we have to take care not to make huge changes in the system that will be at the end of the day more difficult to implement. The path needs to be smooth. And I think that that problem is the same that countries like Malaysia or Vietnam, are facing.
Some have said that the U.S. interest in this trade agreement is to counter China’s influence in the region. Do you have thoughts about this, and do you expect that China could also enter the negotiations?
Yes I have heard that. I’m not sure but it’s not the objective under consideration for Chile. We have excellent relations with China, and we don’t want to affect those relations with the TPP being interpreted as trying to exclude China. In no way is it our ambition, and I know that for most of the countries participating in the TPP, it’s not the objective and they don’t share that view either.
Would you welcome them to the agreement?
Of course. I would be very happy to have them here in the process. Again, it’s a way to find common ground, to finalize the spaghetti bowl with those very different kinds of agreements. It would be very positive, but really, being realistic, I don’t think that China could be interested in this actual TPP. Because it’s very different from what they usually negotiate. So, just looking at the facts, I don’t see a possibility that they would enter the agreement. Even if Chile would welcome them, and I’m sure most of the countries or all of the countries of the TPP would as well, I don’t know if China would be interested to do so with this agreement.
You have also said that Latin American countries need to push more for their interests against higher income countries in the negotiations. Is this something that you believe is beginning to happen, or if not, how do you see this changing?
No, I don’t think that this is happening in the ways that it should be. Again, I’m thinking about how to have the best result. And for that, we have to have a lot of discussions, we have to be flexible, we have to reach a result that could be possible for everybody. You could have a very high-level agreement, but if that agreement requires changing a lot of laws and regulations that would be very difficult to change in the congress and that you will face as a government a lot of opposition from stakeholders in your country-- well, so it’s not clear that that very high-level agreement would be possible to materialize if you can’t go through those steps. It’s a practical thought.
Do you see Colombia joining the talks as a real possibility? Could the entire Pacific Alliance getting involved strengthen the interests of Latin America in the talks?
Yes I see it as a possibility, and I see it as a good recommendation for the process. We have expanded the TPP to include more countries from Asia and more from North America, and I think it could be a good recommendation to add another Latin American country to this process like Colombia, that is a very like-minded country. Its inclusion into this process could be very easy. I don’t think it’s an issue that you’d be including a country with a totally different model of trade. I think that Colombia matches very well in this process. So even considering that the process would be delayed for a few months, it could be idea to think about including Colombia. Someone has interpreted that the TPP should only be between APEC countries, but that’s not a rule. Preferably, the country should be from APEC, but it’s not a necessity.
Presidents Obama and Piñera have said that they will try to conclude the negotiations by the next APEC meeting in November. How likely do you see this as happening? Is your feeling that there is more momentum now as the negotiations start to wind down?
I think it is possible, but I am not sure if we have the momentum to do it. It’s possible if you keep pressing and are in a continuous series of meetings from now until October or November in order to try to solve all of the pending issues. But we don’t have very much time; we have four or five months. So in order to solve the huge differences that we have, we should be in a more urgent, or aggressive rhythm than what we have now been in until now. From that point of view, I think the possibility of closing this agreement is not so clear. Technically, if you put all the pressure that you need on the negotiations, maybe you can fix it. And if you get the political commitments of all the countries—I think in that way the U.S. has been very efficient in talking country with country, like now with President Piñera in order to facilitate the process—but it’s difficult to solve everything by November. If we see it being changed in the frequency of the meetings of the groups, it could happen. The negotiations are very pressed for time, but it could be.
By Rosalind Adams (rosalind@santiagotimes.cl)
Copyright 2013 - The Santiago Times
