Memento Mori: Membership Issues in the Entry into, Modification of, and Withdrawal from the TPP

Abstract

The Trans-Pacific Partnership (TPP) Agreement was signed in February 2016. It has attracted huge attention concerning the potential impacts it may have once it takes effect. Compared to the substantive obligations such as tariff reduction or intellectual property rights, less attention has been paid to systemic, administrative concerns that the TPP might face after its entry into force, such as failure to reach consensus among the member states, which may delay the amendment process and eventually lead to membership decline by withdrawal of unsatisfied parties. Streamlining the decision-making mechanism is essential to ensure effective functioning of the TPP after its entry into force. This paper casts light on systemic issues of “membership” for this purpose. It tries to give a broader perspective about this issue by dealing with membership issues throughout the life cycle of the TPP regime. Needless to say, there must be a sufficient number of members for the TPP to take effect in the first place. In addition, accession is a key topic regarding membership. However, there are many other aspects of the membership issue that would affect the orderly functioning of the TPP.We examine three membership issues that cover different life stages of the TPP, namely, ratification of the TPP, ratification of an amendment and withdrawal from the TPP. More specifically, we first look into the requirements for an original signatory to be a Party to the TPP after it takes effect for other original signatories (the “late ratification” issue). Second, we analyze the role of additional requirements for an amendment to take effect once adopted by the Commission, the TPP’s highest decision-making body (the “second ratification” issue). Third, we evaluate if withdrawal is a real option, in relation to the threat of ISDS arbitration afterwards (the “litigation risk of withdrawal” issue).Our findings can be summarized as follows. First, imposing an additional burden on late ratifiers to membership of the TPP may create incentives for early ratification. However, it may also incentivize rent seeking in early participants by way of renegotiation or side payment, which would endanger the fragile balance that the original signatories reached in October 2015. Second, the rationale to require ratification by all member states for an amendment to take effect is not clear. The current requirement may prevent the TPP’s expedited adjustment to subsequent changes in circumstances. Third, a member state is free from the risk of ISDS arbitration if notification of the withdrawal from the TPP precedes the request for consultation by a foreign investor. Finally, we found that membership issues are important in a broader context in ensuring the effective functioning of the TPP.