Trans-Pacific Partnership (TPP) and its implications

What is TPP?: Agreement between 12 countries of Asia Pacific rim:

1. Australia
2. Brunei
3. Canada
4. Chile
5. Japan
6. Mexico
7. Malaysia
8. New Zealand
9. Peru
10. Singapore
11. USA
12. Vietnam

The Trans-Pacific Partnership pact reached recently between the United States and 11 Pacific Rim nations including Canada and Japan, has raised both hopes and concerns.

What is Trans-Pacific Partnership pact?

It is a trade pact that is intended to cut trade barriers and establish common standards for 12 countries.

What it does?

• New terms for trade and business investment among the United States and 11 other Pacific Rim nations.
• It would phase out thousands of import tariffs as well as other barriers to international trade.
• It also would establish uniform rules on corporations’ intellectual property, open the Internet even in communist Vietnam and crack down on wildlife trafficking and environmental abuses.

Its significance:

• This is the largest trade pact in 20 years.
• The agreement covers 40% of the world’s economy.
• It is seen as a means to address a number of important issues that have become necessary as global trade has soared, including e-commerce, financial services and cross-border Internet communications.

What its supporters say?

• The pact would boost growth in the U.S. as well as the Asian economies.
• It would be a boon for all the nations involved.
• It would unlock opportunities and address vital 21st-century issues within the global economy.

What its opponents say?

• Critics in the US say it would only help American companies send jobs abroad. Some people call it a “trade disaster”.
• Critics in other countries say it would benefit large corporations, particularly American big pharma, with the common people at the receiving end.
• Some people say it would reduce access to generic medicines in developing countries.
• Internet freedom campaigners see it as a big threat.

Why is the US interested in this deal?

• It is seen as a way to bind Pacific trading partners closer to the United States while raising a challenge to Asia’s rising power, China.
• Traditionally, the U.S. has tried to isolate its enemies and integrate allies with its own worldview. With China it couldn’t do either.
• China is now the world’s second largest economy, which has invested trillions of dollars in U.S. treasury bonds. Hence, isolating such an economy is next to impossible.
• Now, with China emerging as an economic powerhouse with new institutions such as the Asian Infrastructure Investment Bank in place, the U.S. is trying to form a grand alliance that would shore up its influence in Asia.

Economists such as Joseph Stiglitz have pointed out that the TPP would hardly meet either its declared commercial goals or its undeclared strategic ambitions, and could turn counterproductive.

Credits: Insights, Wiki