A Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Key points

  1. The ministers responsible for the Trans-Pacific Partnership (TPP) of 11 countries have announced that the core elements of a Comprehensive and Progressive Agreement for Trans-Pacific Partnership are agreed (CPTPP). While much of the original TPP looks to remain intact, 20 provisions of the TPP are suspended, in particular with respect to Investor–State Dispute Settlement (ISDS) disputes for initial approvals of investments and financial services. There are also 4 items to be finalised by the Parties’ consensus.
  2. The final impact of these changes can only be determined after the release of the full text. Current indications are that the differences will not significantly change the shape of ISDS under the TPP. Investors making investments into these 11 countries will still want to proactively consider how to take advantage of the protections given by this agreement if it comes into force.
  3. This is a significant step forward to implementing a mega-regional agreement for the Asia-Pacific region, which substantially is the form rejected by the United States early this year.

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The European Court of Justice renders its opinion on the EU-Singapore free trade agreement: investment chapter is not within EU’s exclusive competence

On 16 May, 2017 the European Court of Justice (the Court) rendered its Opinion on the competence of the European Union to conclude the Free Trade Agreement (FTA) with Singapore. The Opinion recognises exclusive EU competence over most of the agreement and largely settles a long-standing dispute between the Commission and the Member States on the division of competences under the Lisbon Treaty.

Importantly, in the context of investor-state dispute resolution, the Court's Opinion is likely to render any agreement including protection for non-direct foreign investments or investor-state dispute settlement (ISDS) provisions a so-called "mixed agreement" which requires each of the Member States as well as the EU itself to become party, unless certain aspects commonly found in such agreements are removed or the Member States otherwise agree (discussed further below).  

The Opinion will have a major impact on the negotiation of future EU trade agreements, whether pending or anticipated (including the potential FTA between the UK and the EU following Brexit).

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Advocate General issues opinion that the EU does not have exclusive competence to conclude the EU-Singapore Free Trade Agreement

In an opinion issued on 21 December 2016, EU Advocate General Eleanor Sharpston QC has concluded that the EU-Singapore Free Trade Agreement (EUSFTA) will need to be finalised by the European Union and the Member States acting jointly, i.e. entered into by the EU and all of its Member States (as a so-called "mixed agreement"), not just by the EU alone. Although the opinion does not bind the CJEU, the court tends to follow the approach adopted by the Advocate General. The CJEU is expected to issue its own judgment in 2017.

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Final Award published in the South China Sea arbitration

On 12 July 2016, the final Award in the arbitration between the Republic of the Philippines and The Peoples' Republic of China was issued by the Tribunal constituted under the United Nations Convention on the Law of the Sea ("UNCLOS").  Much international media attention has been focused on the arbitration, which concerned a number of issues in relation to the rights and maritime entitlements in the South China Sea, in respect of an area known as the "nine-dash line". The Award has been hailed as "historic" in terms of the interpretation and application of UNCLOS. 

In the Award, the Tribunal emphasised that in light of limitations on compulsory dispute settlement under UNCLOS, it would not rule on any question of sovereignty over territory and would not delimit any boundary between the Parties.  The Tribunal found in favour of the Philippines on the main points in issue.  In the Award, amongst other things, the Tribunal made a number of important statements on the interaction between UNCLOS and claimed historic rights, the nature and features of "low tide elevations", "rocks" and "islands", and the obligations of States in relation to the protection of the marine environment. 

A summary of the 500-page Award and the key findings of the Tribunal are set out below.

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A step towards finalising the Trans-Pacific Partnership Agreement: what does this mean for businesses?

As discussed in our blog post here, the TPP is a major free trade agreement between twelve countries in the Asia Pacific and the Americas that has been under negotiation for over four years. These twelve countries are the USA; Canada; Japan; Australia; New Zealand; Singapore; Vietnam; Malaysia; Chile; Peru; Mexico; and Brunei.

On 24 June (Washington DC time), the US Congress voted to give President Obama “Trade Promotion Authority”. Trade Promotion Authority authorises the President to enter into trade deals and eases the TPP’s passage to ratification by disallowing any Congressional amendments. Although the authority is not the signing of the TPP itself, it is a significant signal that the TPP is to be signed imminently.

As negotiations enter the final stages, it is clear that the TPP will bring about broad-reaching changes to the way organisations across the world do business. We have created the Trans-Pacific Partnership Hub to keep you up to date with the latest developments. We will continue to update the Hub as the implications for specific sectors and businesses are delivered.
For further information, please contact one of the TPP Expert Team listed below, or your usual Herbert Smith Freehills contact.

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Singapore signs the Hague Convention on Choice of Court Agreements: a step in the right direction for the Singapore International Commercial Court

In our previous article The New Frontier, we discussed the launch of the Singapore International Commercial Court (“SICC”) and in particular we questioned whether issues of cross border enforceability might impact the effectiveness of the new SICC. Last week, Singapore took a first stride towards addressing the issue by becoming a signatory to the Hague Convention on Choice of Court Agreements (the “Convention”).  Continue reading

Repaving the Southeast Asian Silk Road: EU-Singapore Free Trade Agreement negotiations concluded

In the wake of the recent agreement of the EU-Canada Comprehensive Economic and Trade Agreement (EU-Canada CETA) and after just over a year of negotiations, the EU and Singapore have released their free trade Agreement (EUSFTA) to the public.  (See our recent blog post on CETA here). According to a statement released by the European Commission, the EUSFTA aims to ensure a high level of investment protection, whilst preserving the EU and Singapore’s right to regulate.  It will replace the 12 existing Bilateral Investment Agreements (BITs) between Singapore and European Member States.  The text of the EUSFTA can be found here.

Whilst the conclusion of this agreement is highly significant, the reference to the European Court of Justice to which it has given rise could perhaps be even more so.  Please see our recent blog post here, explaining the European Commission’s request for an ECJ Opinion on the EU’s competence to enter into EUSFTA.

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Developments in resolving cross-border disputes

With the increase of global commerce, it also becomes increasingly important to provide for effective and quick dispute resolution mechanisms across state borders. A number of developments in international law recognise this trend and seek to address it. These developments include:

  • The inclusion of Investor-State Dispute Resolution mechanisms in the Trans-Pacific Partnership Agreement and the Transatlantic Trade and Investor Partnership,1
  • Further global acceptance of the importance of the New York Convention, which now has 152 signatories (Bhutan and Guyana being the most recent state to become parties), and
  • The European Union Justice Ministers approval of a decision to ratify The Hague Convention of 30 June 2005 on Choice of Court Agreements.

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European Commission requests European Court of Justice Opinion on competence to enter into EU-Singapore FTA

On 30 October the European Commission issued a press release announcing its intention to seek an opinion from the European Court of Justice as to the interpretation of the Lisbon Treaty in the context of the EU-Singapore Free Trade Agreement.

There has been a great deal of furore surrounding the negotiation of the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States of America and the agreement in principle of the text of the Comprehensive Economic Trade Agreement (CETA) between the EU and Canada, largely focused on the need for investment protection and the use of Investor State Dispute Settlement (ISDS). As a result, the conclusion of the Free Trade Agreement talks between the European Union and Singapore on 17 October 2014 has been overlooked by many. However, the conclusion of these talks has brought one of the many unresolved issues in this area to a head.

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Indonesia’s Ratification of the ASEAN Agreement on Transboundary Haze Pollution

On 16 September 2014, the Indonesian parliament ratified the ASEAN Agreement on Transboundary Haze Pollution (“Haze Treaty”), making it the last country to do so from among the ten ASEAN member signatories.

The ASEAN Agreement on Transboundary Haze Pollution

The Haze Treaty is a regional environmental treaty that obliges states party to prevent and mitigate haze pollution ‘through concerted national efforts and intensified regional and international cooperation‘. Executed in June 2002 in response to the growing haze issue in the region, the Haze Treaty prescribed a slew of measures designed to strengthen individual state commitment and enhance cooperation amongst parties in the fight against haze pollution. Primarily, these required each state party to:

  1. take measures to prevent and control activities that may lead to transboundary haze pollution, including implementing education and awareness building campaigns alongside legislative and other regulatory measures;
  2. take appropriate steps to monitor (i) areas prone to the occurrence of land and/or forest fires, (ii) environmental conditions conducive to such fires and (iii) any resulting haze pollution, and to designate a National Monitoring Centre for such purposes;
  3. ensure that appropriate legislative, administrative and financial measures are taken to mobilise resources necessary to respond to and mitigate the impact of haze pollution;
  4. facilitate the exchange of experience and relevant information among enforcement authorities of the signatory states, in particular to respond promptly to requests for relevant information sought by a state or states that are or may be affected by transboundary haze pollution; and
  5. promote and support scientific and technical research programmes related to the causes and consequences of transboundary haze pollution.

The Haze Treaty also provided for the setting up of a central ASEAN Co-ordinating Centre for Transboundary Haze Pollution Control to coordinate and monitor information on pollution, and the establishment of a Transboundary Haze Pollution Fund to be applied toward effective implementation of the Haze Treaty.

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