TPP: An Overview
The Trans-Pacific Partnership (TPP) is a multilateral trade agreement initially joining 12 countries for Free Trade. These countries are Australia, New Zealand, United States, Brunei Darussalam, Canada, Chile, Japan, Mexico, Malaysia, Peru, Singapore, and Vietnam. These countries comprise of 40% of the world’s GDP. Most of them already have strong economies and will be strengthened even more once the TPP is actualized. Once and if implemented, this new single market will surpass double of the EU market. Created for the purpose of fair competition, the TPP will cut tariffs between the mentioned countries. The US was passionate about this agreement during the governance of former President Barack Obama, as this will strengthen ties between the US and other countries neighboring China (its top competitor).
Challenges in enforcing the TPP.
However, after the US presidential election last 2016, initial plans to enforce the TPP had to change. The US which is the largest economic body in the original TPP has already pulled out from the multilateral trade system under the leadership of President Trump. Trump found this deal terrible and unbeneficial to Americans. There has been a protest against the TPP mainly driven by the US workforce who believes that this will result in job losses. Trump’s decision will not only greatly impact the implementation of the TPP, but the very feasibility of the concept.
Following the said Trump administration news, Australia’s Trade Minister Ciobo expressed Australia’s intention to push for the TPP. In addition, New Zealand Trade Minister Todd McClay emphasized that the TPP will be open for those who will embrace the agreement’s strict requirements for environmental and labor protection. Though permissible, enticing new and qualified members to engage will be a challenge. Why you may ask. There is a constant battle between acting for the country’s best interest and leading globalization, and there is a very thin line where both sides meet. It’s a decision that needs a very thorough study of other neighboring countries. If unready, the TPP may be detrimental to a specific country and may be lopsided to supporting the rest of the TPP members. The Philippines, for example, expressed interest to be part of the agreement, but critics questioned the outcome. The main issue is if Philippine products are ready to compete in the same standard. The same issue applies to other countries not yet part of the TPP.
What will happen if the US is out of the picture?
The rest of the members of the TPP will be adjusting to reform the TPP into a smaller scale partnership that does not involve the US. Most countries are willing to push through, aside from Japan who thinks it will be pointless to go on with the deal without the contribution of the United States. At its current form, six countries must agree on all of the terms indicated in the agreement by February 2018 for the TPP to happen. Currently, 11 remaining countries of the TPP are united in the decision to go for it. However, the members will still need the contribution of the United States. Hence, the TPP may no longer be applied in its original form but with modification to fit the new scale. The doors are still open for the United States to go back into the agreement, even if Trump seems to be disinterested to take this position. The Asia Pacific Economic Cooperation Summit which will be held in Vietnam this November 2017, will be a great venue for trade officials to discuss the TPP assessment to member countries as well as the US, Russia, and China represented by their respective leaders. One thing is for certain, the TPP is not going to be the same without the participation of the US.