Abstract
This Presentation examines Indonesia’s recent declaration to join the Trans-Pacific Partnership (TPPA), as announced by President Widodo during a State visit to the United States in October 2015, and his subsequent announcement that this accession would occur within two years. The Presentation explores both the implications for Indonesia of TPPA membership as well as the likelihood of achieving the President’s two-year aspiration. It focuses on one of the more controversial elements of the TPPA, namely, the inclusion of Investor-state dispute settlement (ISDS) provisions, particularly in light of former President Yudhoyono’s 2014 determination to terminate all its bilateral investment treaties with ISDS provisions. In joining the TPPA, Indonesia commits to its ISDS provisions, likely without carve-outs or reservations. The change may perhaps be driven by a perceived imperative to open up Indonesian economy to greater international investment, and to compete with other growing ASEAN economies. However, the future of the TPPA is not necessarily assured, with the U.S. Presidential election and U.S. domestic politics having a major impact on its future status, or even very existence. President Obama considers it a key element of his Presidential legacy, and has Congressional agreement for a “fast-track” vote, but both Presidential candidates, as well as members of both parties in Congress, have at times soundly criticised or even rejected the TPPA. It appears increasingly unlikely that he will succeed in achieving ratification as he enters his Presidency’s “lame duck” period. The Presentation also examines the implications for Indonesia and for the TPPA if the United States unduly delays or even rejects its own domestic ratification of the TPPA.
Highlights
The Trans-Pacific Partnership Agreement (TPPA) is a multilateral free trade agreement involving 12 Pacific Rim countries, namely, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam
The crucial questions that arise, are what might be the likelihood of the Agreement not being ratified by either the United States or Japan, or both, and in the event of that being the case will the Agreement come into force? This raises a further question for Indonesia, namely, what strategy should it adopt in respect of its own aspirations for membership of the TPPA
In the case of the United States, the passage of the TPPA to ratification is subject to legal procedures as laid down in the Trade Promotion Authority (TPA) granted to the President by Congress in June 2015
Summary
The Trans-Pacific Partnership Agreement (TPPA) is a multilateral free trade agreement involving 12 Pacific Rim countries, namely, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. During the November 2010 APEC summit the nine negotiating countries set a target for settlement of negotiations by the subsequent APEC summit in November 2011 It has taken another four years of intense and at times contentious negotiation and deal-making to reach sufficient consensus to enable an agreement to be settled in October 2015 and signed in February 2016. The signatories agreed to continue to work bilaterally with interested economies to ensure that these interested economies understand the standards and rules set forth in the TPPA and the requirements that they need to meet if they wish to join after the Agreement enters into force.
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