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Insights into Editorial: The rebirth of the Trans-Pacific Partnership


Insights into Editorial: The rebirth of the Trans-Pacific Partnership





The Trans-Pacific Partnership (TPP), which was thought to be a finished deal after the withdrawal of US, is now gaining fresh momentum. Many relevant players, eager to prevent the TPP from crumbling, have begun to discuss moving forward without the US. Japan and New Zealand have shown interest to take the bloc forward. If they succeed, TPP signatories will benefit substantially—and the US may find that it has missed a massive opportunity.


What is TPP?

The Trans-Pacific Partnership or TPP is one of the biggest trade deals in history. It was signed in February in New Zealand by 12 Pacific Rim countries. The TPP involved 12 nations (the US, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). Together these countries account for the 40% of the global economy and 26% of world trade.


What it does?

  • It would set new terms for trade and business investment among the United States and 11 other Pacific Rim nations.
  • It would phase out thousands of import tariffs as well as other barriers to international trade.
  • It also would establish uniform rules on corporations’ intellectual property, open the Internet even in communist Vietnam and crack down on wildlife trafficking and environmental abuses.


Which goods and services are involved in the TPP?

  • Most goods and services traded between the countries are named in the TPP, but not all tariffs – which are taxes on imports – were going to be removed and some would take longer than others. In all, some 18,000 tariffs were included.
  • For example, the signatories said they would either eliminate or reduce tariffs and other restrictive policies from agricultural products and industrial goods.
  • Under the agreement, tariffs on US manufactured goods and almost all US farm products would have gone almost immediately. But some “sensitive” products would have been exempt until a later agreed date.


What’s good about TPP?

Those in favour say this trade deal will unleash new economic growth among countries involved. It is being said that the TPP has high potential to promote economic growth and improve people’s living standards by facilitating the free cross-border movement of key factors of economic activity, such as goods, people, money, and information. Failure to bring the TPP into force would be a great loss to not only the TPP countries such as Japan and the US but also the global economy they argue.


Why Trump is against this deal?

Trump thinks such deals will hurt American workers and undercut US companies. His stance on trade is protectionist: he has vowed to shield Americans from the effects of globalised trade by slapping hefty tariffs on cheap Chinese imports of up to 45%.

Trump says, “The TPP creates a new international commission that makes decisions the American people can’t veto, making it easier for our trading competitors to ship cheap subsidised goods into US markets – while allowing foreign countries to continue putting barriers in front of our exports.”


Way ahead:

The mega-regional approach may have one more advantage, shared with the WTO: the involvement of more parties can dilute the authority of a major country and thus limit its ability to strong-arm its negotiating partners into an unbalanced agreement. Indeed, this may be precisely why Trump, with his penchant for “deal-making” and promises of an “America first” trade policy, rejected the TPP. In his view, bilateral negotiations put the US, as a political and economic hegemon, in a stronger bargaining position.

  • What Trump fails to recognize is that, while a small country may feel intimidated by the US at the negotiating table, it can still stand up and walk away. More important, even if the US can use its weight to secure more favourable provisions in a bilateral negotiating context, the benefits do not necessarily outweigh those of larger-scale agreements.
  • That is certainly the case with the TPP, which contained some provisions that were highly beneficial for the US economy. And when the new TPP, excluding the US, begins to flourish, US businesses will be wishing Trump had not cancelled their tee time.



It is hard to see who exactly benefits from the United States’ withdrawal from TPP. Certainly, U.S. industry and other TPP members are disappointed. Indeed, this could be seen as a massive self-goal for the United States. Trump will gain credibility with some of his base by actually fulfilling one of his more contentious campaign promises, but that base is weak to begin with, and unless there are tangible gains in manufacturing jobs (due to other factors), the electoral impact is likely to be negligible.