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Several facts about Trans Pacific Partnership
12 January 2017

The Trans Pacific Partnership (TPP) is a partnership between the United States, and 11 other countries around the Pacific rim, although, this partnership notably does not include China. TPP is a companion to the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union. If signed, TPP is expected to bring 25 percent of the world’s exports, 30 percent of the world’s GDP and more than 800 million consumers together. This partnership will provide its own agency to resolve disputes, and the implementation of special protective measures within the group of countries. This agency will act similar to the WTO, but the rules are not contrary to the rules of the WTO, excluding countries outside of the partnership (conditions of trade could be significantly different). 

In 2005, the original 4 countries apart of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4) were Brunei, Chile, New Zealand and Singapore. These countries had decided that by 2006, there was to be 90% reduction in tariffs between member countries, and an elimination of all trade tariffs to zero by 2015. Because of the discussions, beginning in 2008, the other 8 countries became interested in joining this organization, and talks began about creating the TPP. Now, the aim of TPP is promote economic growth, support the creation and retention of jobs, increase productivity and competitiveness, and promote transparency, good governance, and enhanced labor and environmental protections. The TPP contains measures to lower both non-tariff and tariff barriers to trade, and establish an investor-state dispute settlement mechanism. 

The areas of business proposed to be affected by TPP are trade, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy. This agreement will cut over 18,000 tariffs, will require expedited customs procedures, as well as additional privacy, security and consumer protections for online transactions (This will be particularly beneficial for small businesses).

Negotiations began in 2008 between countries, but in 2015 (after 19 rounds of negotiations), the official round tables ended, but other negotiations and meetings have continued to modify TPP in hopes of reaching an agreement. There are currently a few things holding up the process to get TPP ratified in the United States. The first is the disputes between the discussion of intellectual property and services and investments, and the second is the delay in the United States Congress between President Barak Obama (who wants TPP to be passed), and President-Elect, Donald Trump (who doesn’t want TPP to be passed). Wikileaks has also exposed disagreements with intellectual property and environmental between countries (19 disagreements with intellectual property alone), but as of right now, everyone is just playing the waiting game. 

The positives of having TPP pass is the open access of trade goods, as well as shared intellectual property that everyone can benefit, grow, and learn from. Under TPP, all countries have also agreed to cut reduce environmental abuses, and cut down on wildlife trafficking. Like other trade agreements, countries with fewer tariffs can gain access to more markets, lower costs and can provide goods to consumers around the world cheaper. The U.S. has already withdrawn 80% of these trade tariffs on foreign imports. TPP evens the playing field. The potential gains for the United States to bring jobs back to America don’t benefit them as much as TPP benefits other countries, but being in TPP forces China (who is a huge trader with the U.S. and is trading partners with other Pacific rim countries) to conform to TPP standards and stop its attempts at keeping foreign national companies out of global trade. 

A few negatives that TPP exemplifies is the contribution of income inequality of high-wage countries by promoting cheaper goods from low-wage countries and the competitiveness in Asian countries could reduce incentives in Asia to protect the environment. To overcome some of these obstacles, Japan, the United State and Canada will lose some tariff protection for beef, dairy and poultry producer as well as limit the availability of generic drugs, making drugs more expensive.

Since TPP is such a broad agreement, certain products and services, as well as intellectual property and patent enforcement would be abused. But, the biggest disconcerting thing about TPP is that all 12 countries are trying to keep everything behind closed doors. This lack of transparency makes it hard for stakeholders and experts to provide any input in on the process.

Pertaining to Russia, TPP poses a moderate threat. For the Asian countries that want to be a part of TPP, even a small decrease of 2-3% in custom import fees would put Russia businesses behind competitors who have that advantage, because Russia would not be a part of the trade agreement. A few of the biggest industries that TPP could affect for Russia are the agricultural export to Asian countries, refined copper to the Malaysian market and Vodka to Australia. Russia’s current tariffs (in respective countries) for refined copper and vodka is 25%, 5%, respectively, which even if TPP wasn’t around could definitely cause problems, but TPP amplifies the problem. Russian Prime Minister Dmitry Medvedev has been critical of TPP, saying that "the WTO is being encroached upon" and this might lead to the "destruction of world trade." 

The biggest winners of the TPP deal are Vietnam, Malaysia and the United States. Vietnam’s and Malaysia’s GDP’s would be expected to increase by 10% and 5% in the following ten years, respectively. This is in part because Vietnamese manufacturing (textiles, garments and footwear) exports will have access to the U.S. market to sell their goods and their real wage of unskilled and skilled workers could increase by 0.4% and 0.6%, respectively. The Malaysian’s businesses would have access to four new markets (U.S., Canada, Mexico and Peru) and in the U.S., 180,000 new full-time jobs are expected to be created, and there is an estimated growth of imports and exports by 1.1% and 1%, respectively. For all countries, TPP would strengthen relationships, harmonize regulations, increase certainty, and decrease trading costs with other countries involved in the partnership. 


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