The Trans Pacific Partnership may be a signed deal, but it is far from seeing the light of day. Following seven years of mostly secret negotiations, 12 member countries signed the TPP last week in New Zealand, taking the first step in uniting more than 40 percent of the world’s economic output. The TPP aims to deepen economic ties among the member countries by fostering trade and promoting growth.
The TPP has become a controversial topic on the 2016 campaign trail in the United States, with many of the front-runners on both sides opposing it. And the pact will likely have a long road ahead as it makes its way through a contentious debate in the U.S. Congress.
At its core, the TPP debate focuses on whether the increased U.S. commitment to East Asia is significant enough to risk losing jobs at home.
Those arguing for the trade deal say that it will help promote U.S. exports by breaking down the protectionist policies of many of America’s current trading partners. It is projected to increase real incomes in America by $131 billion and boost exports by $357 billion by 2030. According to the U.S. Chamber of Commerce, "Completing the TPP would pay huge dividends for the United States. The agreement would significantly improve U.S. companies' access to the Asia-Pacific region, which is projected to import nearly $10 trillion worth of goods in 2020."
Supporters maintain that the most important impact TPP will have on Asia cannot be measured in numbers or projections—it is the ability the U.S. will have to help in the development of its East Asian trading partners. By fostering better trade practices, the U.S. aims to lead the TPP nations towards a more united Asia Pacific.
The TPP is the economic foundation on which the Obama Administration’s “Asia Pivot” rests. The TPP solidifies longstanding relationships with the other member countries, as well as acts as an investment in the development of some of the less developed nations. The trade deal intends to provide the groundwork to allow these countries to better tackle larger political problems. TPP also helps ensure that the global economy reflects U.S. interests and values by requiring other countries to operate by higher standards, such as fair wages, safe workplaces and strong environmental regulations.
As the Asia-Pacific continues to thrive within the global economy, the TPP provides the framework to establish a global trading system built on American values. And former consultant for the U.S. Trade Representative, Claude Barfield, tells The Cipher Brief, TPP “will have far-reaching strategic implications for both the world trading system and the future of the Internet.”
Many are concerned that easier trade will drive manufacturing overseas, bringing U.S. jobs with them. While projected impacts vary, one highly publicized study out of Tufts University has estimated approximately 450 thousand jobs will be lost just in the United States by 2025. Much of the difficulty in predicting the cost the TPP may have stems from the sheer size of the pact—the 30 chapters cover much more than trade and tariff laws. Other concerns with the TPP are over longer patents for pharmaceuticals, intellectual property rights, and potentials for currency manipulation.
It is impossible to discuss the TPP without mentioning the giant panda in the room: China. Beijing has close economic ties with many of the other nations involved in the TPP, and the Ministry of Commerce said, “China is studying the possibility of joining the TPP.” Although the trade agreement allows for China to join later down the road, the high standards of the agreement may prove difficult for the PRC to meet. Additionally, Beijing sees their new One Belt, One Road initiative as a similar pact, but one where China sets the terms.
In his 2016 State of the Union Address last month, President Barack Obama emphasized that, although it involves many other nations, under the TPP, “China doesn’t set the rules in that region, we do.” When The Cipher Brief asked trade analyst Tobias Harris about the importance of TPP, he went so far as to say “the future of U.S. leadership in Asia may ultimately depend” on whether Congress approves TPP. President Obama challenged Capitol Hill to endorse the deal. “You want to show our strength in this century,” the President asked, “Approve this agreement. Give us the tools to enforce it.”
Alexandra Viers is an International Producer with The Cipher Brief.
