TRANSATLANTIC-TRADE PACIFIC

This job could be done senior government workers, please it is not done by politicians.

It should not be used as a political gain, any party could sign it... 

The Trans-Pacific Partnership (TPP) is a free-trade agreement between the United States and 11 other trading partners bordering the Pacific Ocean. On October 4, 2015, negotiations between the countries were successfully concluded. It now has to go to each country's legislature for approval.

The TPP is between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

 The countries involved produce 40% of the world's total GDP (Gross Domestic Product) of $107.5 trillion, 26% of its trade, and 793 million of its consumers.

The TPP trade area is bigger than the North American Free Trade Agreement (NAFTA), currently the world’s largest free trade area. Current trade between the countries is $1.5 trillion in goods (2012 estimate) and $242 billion in services (2011 estimate).  It would be slightly smaller than the other large regional trade agreement being negotiated, the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union.

Notably, the agreement excludes China. That's deliberate. It's meant to balance the trade dominance of both China and India in East Asia. It also provides a trade alliance that gives the United States an excuse to intervene in trade disputes in the oil-rich South China Sea. China has been beefing up its military to back its incursions in the area.

However, all parties have signaled that other members can join in the future.

So far, the Philippines and China have indicated an interest.

Like most other trade agreements, it removes tariffs on goods and services and sets reciprocal trade quotas. Unlike most agreements, but like the TTIP, it removes non-tariff blocks to trade and harmonizes regulations and statutes.

The TPP covers a broad range of goods and services, including financial services, telecommunications, and even food safety standards. In this way, it affects foreign policy and even laws within countries. For example, it suggests that countries set up an agency like the U.S. Office of Information and Regulatory Affairs to analyze the costs and benefits of new regulations.

Pros

The TPP boosts exports and economic growth, creating more jobs and prosperity for the 12 countries involved. It increases exports by $305 billion per year by 2025. U.S. exports would increase by $123.5 billion, focusing on machinery, especially electrical, autos, plastics and agriculture industries.

It does this by removing 18,000 tariffs placed on U.S. exports by the other countries. The United States has already removed 80% of these tariffs on their goods and services. The TPP evens the playing field.

The agreement adds $223 billion a year to incomes of workers in all the countries, with $77 billion of that going to U.S. workers. (Source: US Trade Representative, TPP Fact Sheet)

All countries agreed to cut down on wildlife trafficking, especially elephants, rhinoceroses, and marine species. It prevents environmental abuses, such as unsustainable logging and fishing. Those that don't will face trade penalties. 

Cons

Most of the gains in income would go to workers making more than $88,000 a year. Free trade agreements contribute to income inequality in high-wage countries by promoting cheaper goods from low-wage countries. 

That would be especially true of the TPP because it protects patents and copyrights. Therefore, the higher-paid owners of the intellectual property would receive more of the income gains.

The agreement regarding patents will reduce the availability of cheap generics, making many drugs more expensive. Competitive business pressures will reduce the incentives in Asia to protect the environment. Last but not least, the trade agreement could supersede financial regulations. (Source: Public Citizen, Eyes on Trade, September 12, 2013)

The Negotiators Overcame These Obstacles

There were five major areas that were sticking points that stood in the way of the deal. Here's how they were overcome.

The United States agreed to shorter patents, especially for biologic drugs. Pharmaceutical companies can keep their formulas secret for five to seven years instead of 12 years.

All stated-owned enterprises must comply with global trade standards that protect their workers and the environment.  The United States had to overcome objections from Vietnam, Singapore, and Malaysia.  Those countries must now allow labor unions or face penalties.

The United States, Japan, and Canada will lose some tariff protection for dairy, beef and poultry producers. Farming subsidies received by U.S. and EU companies prevented the success of the Doha round of trade talks held by the World Trade Organization.  

These countries also agreed to open up their automotive industries. That could cost local jobs while lowering the price of cars and trucks. (Source: Tokyo Offers to Cut Tariffs, Japan Times News, February 2, 2015)

The United States got the Investor-State Dispute Settlement Mechanism. That givesforeign companies more rights to sue the government than their domestic companies have.  In return, the U.S. agreed to restrictions on the trade of tobacco. Cigarette companies will no longer be allowed to use arbitration panels to sue countries that tax or otherwise restrict cigarette advertising. (Source: "Sticking Points in the TPP Negotiations" Peterson Institute. "Trans-Pacific Partnership Trade Deal Is Reached," The New York Times, October 5, 2015. "Negotiators Strike Pacific Trade Deal," Financial Times , October 5, 2015)

Next Steps

Each country's legislature must ratify the agreement before it can go into effect. The U.S. Congress has 90 days to review and debate the agreement. It can only vote "yes" or "no" on the deal. It cannot change any of the terms of the agreement. That's because Congress gave the President the fast-track trade promotion authority on June 29, 2015. (Source: On Trade, Here's What Was Signed, Whitehouse.gov, June 29, 2015)  Article updated October 5, 2015.