TPP11: Chile’s senate approves divisive trans-Pacific trade agreement
Following its approval in the Chilean senate on 11 October, the Trans-Pacific Partnership trade agreement is close to being ratified by the South American nation, after more than four years of discussion and delays. The agreement’s progress through the upper house comes despite resistance from social movements and a split in the governing coalition of President Gabriel Boric.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known as TPP11, is an agreement among 11 countries of Asia and Pacific regions: Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore and Vietnam. With their combined economies representing around 13% of global GDP, many participating governments see it as the most important trade agreement between Asia and Pacific Rim countries.
What is TPP11?
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, known as TPP11, is a free trade agreement between 11 countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore and Vietnam
The objectives of the TPP11, the Chilean government’s official website says, include economic integration, establishing predictable legal frameworks for trade, facilitating regional trade, and promoting sustainable growth, among other goals.
Chile’s relationship with the agreement began with the original Trans-Pacific Partnership (TPP), a grouping that featured the 11 signatories of the current treaty plus the United States, but which failed to materialise after Donald Trump withdrew the US from the partnership on assuming the presidency in 2017.
A new agreement was subsequently promoted, a process in which the Chilean government actively participated. The proposals of the evolved partnership were similar to the original, but saw the suspension of 20 provisions whose future reactivation has not been ruled out. Only Chile and Brunei have not yet ratified the agreement.
Delayed approval, public rejection
Chile already has bilateral trade agreements with the 10 other countries that make up the treaty, but has been a driving force behind TPP11 since the government of former president Michelle Bachelet (2006-10, 2014-18). The new agreement was signed in March 2018 by then foreign minister Heraldo Muñoz, shortly before the end of Bachelet’s time in office.
It then required approval by the Chilean congress for ratification. This process took more than four years, being approved in the Chamber of Deputies in 2019 during the second government of Sebastián Piñera (2010-14, 2018-22), and now confirmed by the senate this month, during the term of current president Gabriel Boric.
Boric had been one of the main opponents of the agreement while it was with the deputies, so its approval during his government – despite the legal tools in his favour to stop it – has seen him criticised, even within the ruling party.
The president has said that he will comply with the decision of both houses of the congress, despite indicating his continued personal opposition. “I voted against that treaty when I was a deputy, therefore, the final result that came out is not the one I would have liked,” he told a press conference following the result.
“I deeply respect the powers of congress and the democratic will that is expressed in it, regardless of the fact that sometimes I may not like the decisions. Therefore, I have a duty to enforce this,” the president added.
Daniel Jadue, a former presidential candidate of the Communist Party and current mayor of the municipality of Recoleta, said that the government’s role in TPP11’s ratification could generate a political rupture in the ruling party.
“It is clearly a renunciation of his programme and the promises made to voters in our country. This is a part of the programme that is imposed by political forces that arrived after the second round of the presidential elections,” he said. In 2021, Jadue lost out to Boric in the primaries for the presidential candidacy of the left-wing Apruebo Dignidad coalition, but his party has remained part of the governing alliance.
As Jadue points out, Boric’s presidential programme took a clear stance on trade agreements: “As long as all processes of participation of citizens, local and regional governments and native peoples have not been reviewed, as well as parameters of feminist, green and decentralising principles, no new trade agreements will be signed, including the TPP11.”
The problem for Boric is that such participation processes did not take place in relation to TPP11, according to environmental and social organisations, which reject the agreement.
This encourages extractive projects. When the TPP11 is ratified in a country where water is privatised, it will be almost impossible to reverse this situation without resorting to dispute tribunals
One such group is the Movement for Water and Territories (Movimiento por el Agua y los Territorios). In the words of its spokesperson, Francisca Fernández, her organisation rejects the agreement for multiple reasons. “Free trade agreements are made at the cost of sacrificing people’s territories, as within the dynamics of the world economy, smaller, non-industrialised economies are at a disadvantage compared to major economies,” she said.
“This affects nature, for example, by encouraging extractive projects. When the TPP11 is ratified in a country where water is privatised, it will be almost impossible to reverse this situation without resorting to dispute tribunals,” Fernández concluded.
For her part, political scientist Pamela Poo attributes the opposition of social organisations to the economic system that has developed in Chile. “The rejection is based on the logic of the activities that our country promotes, which is the sale of raw materials and some derivatives, generating dependence and exposing us to the ups and downs of the global economy, as well as generating serious consequences in different territories, in terms of the destruction of ecosystems,” she said.
Among the points that have generated most debate is Chapter 9 of the agreement’s text, specifically section B, which covers the settlement of investor-state disputes. This section considers the possibility of requesting arbitration by investor companies that decide to sue states for non-compliance with the TPP11.
What is mentioned in this chapter brings added complexity, “as states are increasingly being challenged by transnational corporations over their decisions,” said Pamela Poo.
Awaiting bilateral letters
After approval in the senate, the TPP11 now only requires the final signature of President Boric for ratification and implementation, which would make Chile the tenth country to ratify the agreement.
The executive has said that it will first await the completion of “side letters” that are being negotiated. These letters are specific regulatory agreements that are worked out bilaterally between participating states and consider safeguards and exceptions to the treaty.
For former agriculture minister Carlos Mladinic, the TPP11 would be beneficial for Chile: “I don’t see any significant difficulties for the approval of the treaty. In terms of investor-state dispute settlement, this text is much more precise than those in force in bilateral treaties.”
Mladinic added that an aim of the bilateral letters is to leave the articles on dispute settlement untouched. “If accepted, then the bilateral treaties, which are of a lower quality, would continue to apply,” he said.
According to the latest statements from the executive, responses to the bilateral letters are expected to be received within the next few months. President Boric is then expected to give the final signature to the agreement.
The progress of the TPP11 through the senate may present another obstacle in an increasingly difficult presidency for Gabriel Boric, whose approval ratings have continued to plummet since taking power in March. The TPP11’s passing could mean the beginning of a breakaway by parties of the governing coalition, such as the Communist Party, that may spell further trouble for Boric.