Trans Pacific Partnership Paper

Unit 2 Paper

Michele Simmons

Trans-Pacific Partnership

The Trans-Pacific Partnership (TPP) is a free trade agreement. As of 2014 the following countries are participating in negotiations to create this agreement. Those countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. This agreement if passed is going to be one of the biggest trade agreements to date. It involves 26 percent of the world’s trade and in 2012 numbers it represented 39 percent of the world’s GDP (International Financial Law Review, 2014) and two of the top three economies of the world – the U.S. and Japan (Donnan, 2015).

Some of the areas the TPP will address are customs, e-commerce, environmental issues, financial services, government procurement, intellectual property (IP), investment, labor, dispute resolution mechanisms, market access for goods, rules of origin, telecommunications, and trade remedies. The TPP will aim to reduce tariffs and barriers to trade and investment among member states which will then help to create economic integration, growth and innovation (IFLR, 2014).  One criticism of the TPP is that by easing trade, investment and other economic opportunities among member nations the agreement will essentially increase barriers between member nations and non-member nations (IFLR, 2014).

In this paper I will discuss the impact of the agreement on the United States, Japan and China.

The United States uses Trade Promotion Authority (TPA) when discussing free trade agreements. This authority allows the government to negotiate agreements and bring the agreement to Congress for them to approve or deny as is in its entirety. Congress isn’t allowed to pick it apart or change parts of the agreement (The Economist, Nov. 2014). In the case of the TPP, President Obama has not sought to gain this authority in advance of negotiations. Instead, negotiations have been taking place secretly and without the public knowing what the negotiations involve (Feldman, 2014).  Feldman sees the U.S. strategy for negotiation and ratification as “backwards” (2014). The goal was for the President to bring Congress a deal they couldn’t refuse. If TPP fails this would take the pressure off Japan and China allowing them to refuse to reform their economies. The credibility of the U.S. would also now be in question. Yet when President Obama talks about TPP, he doesn’t talk about our credibility or making sure we are still a dominant power in the world, he mainly talks about protecting American jobs (Nov. 2015).

The U.S. sees opening up Japan as one major benefit of this agreement (Economist, Nov. 2014). According to Michael Froman, the U.S. trade representative, “the TPP is about ensuring high labor standards, exposing state-owned enterprises to level competition with private enterprises and including digital activity “to ensure a free and open internet.” Proponents of TPP are telling Americans that this agreement will give American workers and companies a big new advantage against competition from China (Gomez, 2015). “The US, he says, needs to be at the forefront of setting global rules of commerce. Countries like China are engaged in their own rival bids to create regional blocs that exclude the US and do not include the sort of rules the US is pursuing on labor, intellectual property or the internet. Ceding ground to such rivals "has got to be worse for American workers and the American middle class than even the status quo" (Donnan, 2015).

Japanese Prime Minster, Shinzo Abe expected that the TPP would “pep up the economy” (Economist, Oct. 2014). So far Japan has not been willing to offer many concessions. They are still unwilling to offer large tariff cuts and they are still heavily protecting their farmers and agriculture. The farmers are few and far between and getting older. Despite producing only 0.8 percent of Japan’s GDP, these farmers produce Japan’s most cherished harvests and therefore have as much power as the U.S. Congress in regards to the allowing the TPP to be passed or not (Nov. 2014).

While at this time China is not a member of the agreement they are still a major factor in the discussions. According to an article in The Economist the U.S. would like to eventually include China to create an entity similar to that of the European Union (Backer, 2014). However, China will likely be reluctant because they are not willing to submit to American rules regarding state owned business and the internet (2014). The Trans-Pacific Partnership is expected to expand over time and will not only include China, it will also likely include Russia. Should the TPP members move closer to the EU model, the governance of these nations will be removed from each nation and be given to a governing body (Backer, 2014).