Trans-Pacific Back in 2016, when the presidential campaigns were at peak, there were lots of rhetoric that rotated around the Trans-Pacific Partnership (TPP). Most people debated on whether the Asia-Pacific trade agreement was bad or good deal for the U.S.
Despite the fact that President Obama influential in pushing for free-trade agreement deal through, most people acted harsh on his decisions to support the 12 nation trade agreement.
President Trump publicly showed his opposition to the pact between countries that encircle the Pacific Ocean. He termed it as being “horrible” and “disaster” and that didn’t do the nation any good. Hilary Clinton, the Secretary of State during the ruling of president Obama also came against the agreement during the campaign.
Once Trump became the president, he withdrew from the TPP. The pact still had life as there remained other 11 nations.
What is the TPP and what made it debatable?
The Trans-Pacific Partnership, the largest regional trade pact in history, dates back to 2005 where it was known as the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP). Initially, TPSEP was an agreement between New Zealand, Singapore, Chile, and Brunei. Its main aim was to encourage economic and trade interactions among the four countries.
After about three years, eight more countries began to negotiate on expanding the original agreement into a more inclusive agreement that had a broader reach. In February 2016, the 12 countries signed the TPP agreement. The agreement aimed at enhancing the economic relations, to do away with the trade barriers and to minimize tariffs.
The United States’ economic power uplifted the TPP making it boast some impressive numbers such as:
+ The 12 nations that participated in the agreement account for more than half economic clout of the world.
+ More than 800 million people were signatories of the pact – which represent a tenth of the world’s population.
+ The mitigation in import taxes included more than 18,000 tariffs.
The remaining 11 countries went ahead with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), after the withdrawal of the U.S. Although not as strong as it would have been with the United States participation, the CPTPP is still one of the largest field of free trade in the world. It’s the third just behind the Europe’s Single Market and the North American Free Trade Agreement (NAFTA).
Reasons for U.S. Withdrawal from the TPP
As originally negotiated, the TPP was expected to increase the exports of the US across various sectors, including agriculture and auto industry. The benefits were expected to exceed $ 120 billion by the year 2025. The country also expected to have the agreement better its people’s incomes.
However, the TPP turned out to non-beneficial to most people. The income gains ended up benefiting only people who already were earning more than $ 87,000. The pact also failed in the country as its language about copyright and patents protection ended up discouraging the entrance of cheap generic medical drugs into the market. Finally, the secretive nature of the agreement made most of its opponents suspecting its intentions.
President Trump maintains that the agreement remains to be “horrible” for the country. In 2018, however, the president showed a will to reconsider his deal should the agreement be re-negotiated with term that favors the US.
Comparison between the TPP and NAFTA
The US together with its neighbors Mexico and Canada are the leading members of the NAFTA. NAFTA’s goal is to create free trade between the three major economies of the North America. Also, the agreement offers regulations and guidance between the three nations on disputes, customs, procurement, investment, and protection of rights.
Comparing the TPP and the NAFTA, the two agreements seem to have some diffreneces. One of them is more of a global deal involving 12 countries and integrating multiple economies and spheres while the other is a regional agreement although it is very influential.
However, when closely inspected, the two trades have much in common including:
+ They both aim at promoting free trade via removal of trade barriers and tariff reduction.
+ They both are opposed by President Trump.
+ They both have the provisions that do away with the bureaucracy of interactions of customs, and easier dispute resolution.
The TPP was meant to broaden the United States influence across the Pacific and Asia as it offers a counter to unfettered development of China. It is not possible to identify how the TPP would have shaped trade policy and economy of both the US and the world. The NAFTA still remains to be the source of a long-term trade effect of a more robust US.
Author Bio: This article has been shared by Anna Kucirkova who is a copywriter over 4 years and loves traveling.