Last week in Atlanta, the trade ministers of Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam, announced that they had successfully concluded the Trans-Pacific Partnership. Their statement said that ‘after more than five years of intensive negotiations, we have come to an agreement that will support jobs, drive sustainable growth, foster inclusive development, and promote innovation across the Asia-Pacific region. Most importantly, the agreement achieves the goal we set forth of an ambitious, comprehensive, high standard and balanced agreement that will benefit our nation’s citizens.’
The TPP covers nearly 40 percent of the global economy and once ratified will have a significant impact on cross-Pacific trade and global politics. A final text is still being discussed by lawyers but an accompanying statement (see below) outlines the main points of the agreement.
The deal is a major success for Obama and Michael Froman (USTR) who have been playing up the geostrategic implications as much as the economic benefits to Americans. Froman has suggested that the deal will bring $300 billion annually in benefits to the global economy.
But securing approval in the US Congress will not be easy. Already the TPP has run into significant opposition with Hillary Clinton, Donald Trump and most other presidential candidates refusing to endorse it. Apart from the numerous opponents on Capitol Hill most labour leaders and civil society activists are against TPP. Most business and trade associations are supportive. The ratification period will run into 2016 which is an election year and it may be difficult for Obama to secure the necessary bipartisan votes he will need to secure Congressional approval.
The deal will have wider geopolitical dimensions. It will put pressure on China, which has been pushing its own alternative trade grouping, and India, to open their markets and accept greater competition. South Korea will also reflect on the dangers of being excluded from TPP. David Pilling in the Financial Times, has argued that it makes little sense to exclude China, the world’s largest economy, when Vietnam, with its numerous state owned enterprises, was able to join.
The deal should also help some leaders, such as Japanese Premier Abe, to take some necessary, but politically difficult, domestic steps to reform the economy.
It may also give a boost to the faltering Trans-Atlantic Trade and Investment Partnership (TTIP) and the EU’s FTA negotiations with Japan and India. If the TPP and TTIP are both brought to a successful conclusion it will mean over 60 percent of the global economy will be covered by high-standard trade deals with the US at the centre of the Atlantic and Pacific pivots. Time for the EU to get its act together.