In The News
The Trans-Pacific trade deal has been headlining media reports for various reasons. As world leaders gathered in Beijing on Monday for the two-day Asia-Pacific Economic Cooperation or APEC summit, the major topic of discussion among others was the 12-nation Trans-Pacific Partnership or TPP pact. Barack Obama, Stephen Harper and leaders of 10 countries situated along the Pacific Ocean will soon be closing a ‘historic’ deal that will liberalise trade between these economies. This deal is expected to overtake the NAFTA when it comes to importance.
Barack Obama, the president of U.S said on Monday that the TPP has “the potential for being a historic agreement.” The deal may be reaching closure though U.S officials ruled out a major announcement about it. The negotiations between these 12 countries have been on for about a decade now.
What is TPP and why is it important?
TPP is a proposed deal which will bring about free trade between the U.S, Canada and 10 countries in the Asia-Pacific region. In essence, the deal will help eliminate or significantly reduce trade tariffs on goods and services, resulting in stronger economic times and improved investment flows. It was originally hailed as the Trans-Pacific Strategic Partnership Agreement and was supposed to encompass only Singapore, Chile, New Zealand and Brunei in 2006. U.S took on the lead from 2009.
With the GDP of member countries currently valued at $27.5 trillion, i.e. about 40 percent of global GDP and one-third of world trade, the TPP will ensure new market access, strong labour and environmental standards, new rules on state-owned enterprises, a robust and balanced intellectual property rights framework and a thriving digital economy. However, it is widely acknowledged as Obama’s effort to counter China’s rising power in Asia.
Who are opposed to the deal?
Like deals before, the TPP deal has also met with stiff resistance from various member countries when it comes to opening domestic markets too widely. U.S and Japan, in particular, have failed to come to an agreement on tariffs over farm products stalling the deal since September 2013.
Japan is not ready to comply with U.S’ suggestion to lower barriers to import agricultural and diary products. A suggestion that didn’t go down too well as Tokyo is intent on protecting sensitive domestic industries with pork, beef, dairy and sugar. Japan, on the other hand wants U.S to remove tariffs on car imports. U.S though seems keen on protecting on its domestic car makers.
China meanwhile has been working parallely on a separate trade agreement called the Free Trade of the Asia Pacific. This is largely seen as an attempt to divert attention from the TPP deal. If the TPP deal becomes effectual, China could very lose about $1 billion a year in exports.
Further, the secrecy surrounding the deal has not gone down too well in the world in general. Some groups have also raised concerns about the impact of the deal on national laws about intellectual property rights and patent enforcement. U.S is supposedly demanding stronger copyright protection for the music and film industries as well as for broader patents. There is also growing concern that the deal might affect the scope of patents in sectors such as medicine, promote evergreening and affect the distribution of generic drugs.