Francisco de Rosenzweig is the Undersecretary for Foreign Trade at Mexico’s Ministry of the Economy (Secretaría de Economía) and is responsible for the overall coordination of Mexico’s negotiating team to the Trans-Pacific Partnership Agreement (TPP). We invited Undersecretary Rosenzweig to respond to some questions about the TPP and its implications for Mexico, the United States and the Asia-Pacific region.
Q: What is the TPP?
Francisco de Rosenzweig (FR): The TPP is the most relevant and ambitious trade initiative worldwide. The objective of the negotiations is to develop a free trade agreement capable of adapting and incorporating new issues, and interest of its Members.
The TPP goes further than other traditional trade agreements, because it not only includes the traditional legal framework on tariff reductions for goods, but also incorporates provisions to deal with 21st century concerns, such as digital technologies, regulatory coherence, small and medium enterprises, and development and supply chain issues, among others.
As of today, the TPP has established more than 20 working groups in different areas and 14 negotiation rounds have been celebrated. The 15th will take place in Auckland, New Zealand in December, and Mexico will be able to participate formally in the negotiations for the first time.
Q: Why did the TPP suddenly become attractive to countries other than the original Trans-Pacific Strategic Economic Partnership (SEP) nations (Brunei, Chile, New Zealand and Singapore)?
FR: The eleven TPP economies together (including Mexico and Canada, who recently joined TPP, and the United States) account for 19% of world’s exports, 22% percent of global imports and almost a third of the world’s GDP. That indicates how important the negotiations are. Moreover, Mexico has a long-standing tradition of supporting free trade and has been a strong advocate against protectionism.
For Mexico, the TPP will also contribute to consolidate Mexico’s network of free trade agreements, which currently grants us with preferential access to one billion consumers, 70% of global GDP and two thirds of world’s exports. Currently, 60% of Mexico’s GDP comes from foreign trade.
Mexico’s participation in the TPP also makes the negotiations more appealing to other countries: we are the second most populated country among the TPP Members and the largest economy in Latin America Pacific.
The TPP could also serve as a vehicle to reinvigorate other negotiations, such as the Doha Round of the World Trade Organization (WTO).
Q: What are the expectations for negotiations with respect to the investment and arbitration chapters? Are there any developments or novel features being negotiated in this respect in the TPP?
FR: The aim of these types of investment chapters is usually to ensure non-discriminatory treatment, subject to the lists of reservations, in addition to rules on expropriation and other disciplines to protect foreign investments in our country and Mexican investments abroad. In line with the above, Mexico expects from the negotiation of this chapter to get a sound legal framework of protection for Mexican investors abroad, through disciplines known as “standstill” and “ratchet,” from countries which are currently not our trading partners. It also seeks to get stronger disciplines to improve the investor’s protection than the current ones under the investment chapters with those TPP trading partners with which Mexico has already entered into treaties.
As to the second part of the question, since we are talking about an ongoing negotiation, there is not much information we can share on the specific content of this chapter. However, we can say that countries are taking the opportunity to incorporate in the negotiations the experience they have gained from previous negotiations and cases.
Q: What are the biggest obstacles you have found (or you anticipate) in moving the TPP negotiations forward: the labor and environmental agreements, the “new generation” disciplines?
FR: As previously mentioned, the negotiations are still ongoing, and Mexico will participate for the first time in the next round to be held in December 2012. Thus, there is not much information that I can share regarding specific obstacles or points that will complicate the negotiations, other than the experience that other previous TPP members may have shared.
However, I strongly believe that the participants in this process are committed to have an ambitious, modern, high-degree of quality agreement, and they will work in that direction. Clearly, there are items where countries need to work more intensively, be more innovative and creative, but I am confident that we will succeed in this objective.
Q: Why is TPP important for Mexico’s trade and investment agenda?
FR: There is no doubt that Mexico’s competitiveness has been increased by NAFTA. Nonetheless, it is a fact that the most dynamic nations in terms of growth are currently in the Asia-Pacific region.
In this regard, Mexico has been aware for a long time of the importance of linking itself commercially with the world’s most dynamic region: Asia. Therefore, Mexico established in 2005 an Economic Partnership Agreement with Japan, which, though increasing Mexico’s presence in the region, is still not enough to fully develop the potential that our trade may have in Asia.
Mexican exports to the Asia-Pacific region have grown more than 20% in the last year. There are some individual examples that stand out, with rates much higher than the average: 36% for Australia and New Zealand with 57%.
Finally, the TPP will provide Mexico with the opportunity to deepen our integration in North America and find new export and investment opportunities with Asia, as our supply chains have integrated in the past twenty years due to NAFTA.
Q: What does Mexico generally expect to obtain from the TPP?
FR: All in all, the TPP will give Mexico the opportunity to have greater presence in the region and market access in countries such as Australia, Malaysia, Singapore and Vietnam, whose economic cycles are linked with those of China and India.
Additionally, the TPP will give Mexico the opportunity to consolidate a strategic connection in the global value chains in Asia and North America, raising the Mexican value added built-in exports to these regions.
Q: How definitive are the changes that the TPP would bring to Mexico and the other negotiating members? Would countries be able to reverse any of the TPP agreements in the future?
FR: All the TPP changes will be definitive, as they will be approved and implemented by all the countries according to their internal procedures. I am also convinced that participating countries are engaged in a process that, we hope, will build upon or free trade aspirations, and not go backwards.
Q: What are your proudest achievements while participating in the TPP negotiations? How has the approach you have taken—or the goals you have pursued—in these negotiations differed from those taken by Mexico in previous trade and investment treaty negotiations?
FR: Being able to participate in this initiative is in itself a source of pride, as we believe that the TPP will be the model to be followed in future trade negotiations.
Regarding the objectives and how Mexico has approached the negotiations, we have proceeded as in other negotiations in the past: engaging with our domestic stakeholders and providing a serious assessment of the texts and our national objectives, in order to define our negotiating position for each chapter.
Q: Do you foresee the TPP serving as a model for future free trade agreements?
FR:I am certain that future agreements will be influenced by what is achieved in the TPP. ■