The Trans-Pacific Partnership (TPP) Explained

Summary

The Trans-Pacific Partnership (TPP) is a proposed trade agreement among 12 Pacific Rim countries, aiming to boost economies by eliminating tariffs and creating a level playing field. It could supersede existing deals like NAFTA and promote higher-value goods and services. The TPP also includes standards for environmental and labor protections. While it faces criticism over potential job losses and high medicine costs, proponents argue it could increase U.S. economic output by over $100 billion annually and counterbalance China's influence. The deal's success hinges on ratification by each country's legislature.

Takeaways

• 🌏 The Trans-Pacific Partnership (TPP) is a significant trade deal involving 12 countries, aiming to strengthen their economies by linking them together.
• 🕒 Negotiations for the TPP have been ongoing for over ten years due to numerous points to be agreed upon.
• 💰 The 12 countries involved account for a combined 40% of the global GDP, indicating the potential impact of the TPP on the global economy.
• 🛑 The TPP aims to supersede previous trade agreements like the North American Free Trade Agreement (NAFTA) by building on and improving them.
• 🚫 Trade between TPP countries is expected to be boosted by eliminating tariffs and other protectionist measures that shield domestic industries from foreign competition.
• 🏭 Examples of industries that are often protected include beef and cars in Japan, dairy and sugar in the U.S., and state-owned enterprises like Chile's copper company and Vietnam's telecommunication service.
• 📋 Along with trade barriers, the TPP requires member countries to meet certain standards, such as environmental protections and enhanced labor standards, to ensure a level playing field.
• 🌳 Environmental standards include bans on trading in endangered species and illegal logging, while labor standards involve the right to form unions, abolition of child labor, and banning workplace discrimination.
• 🇺🇸 The Obama administration is using the TPP to incentivize governments to adopt more responsible social policies in exchange for stronger economic ties with the U.S.
• 🤔 There has been domestic pushback in the U.S., with concerns that the TPP could be detrimental to American workers and lead to job losses.
• 💼 Critics argue that certain patent and copyright rules in the TPP could keep the cost of medicine high, while others fear a repeat of job losses seen after NAFTA.
• 📈 Despite criticisms, proponents argue that the TPP could increase American economic output by over 100 billion dollars a year and open new markets for U.S. businesses.
• 👥 A challenge is ensuring that income gains from globalization are distributed among all Americans, not just the top investing class.
• 🐘 China is notably absent from the TPP talks, as the deal is partly aimed at offsetting China's power by strengthening North America's ties with China's neighbors.
• 📝 The initial agreement must be finalized among the first 12 countries, with each country's legislature needing to pass and ratify the TPP's terms.
• 🌐 The TPP could be a precursor to a TransAtlantic Partnership with Europe, potentially boosting U.S.-EU trade by over 50%.

Q & A

What is the Trans-Pacific Partnership (TPP) and why is it significant?

The Trans-Pacific Partnership (TPP) is a proposed trade agreement that could be the largest in history, involving 12 countries. It is significant because it aims to strengthen the economies of the participating countries by linking them together, accounting for a combined 40% of global GDP, and superseding past trade deals like NAFTA.

How long have the TPP negotiations been ongoing, and what is being negotiated?

The TPP negotiations have been ongoing for over ten years due to the numerous points that need to be agreed upon, such as trade barriers, environmental protections, labor standards, and more.

What are some examples of protected markets that the TPP aims to open up?

Examples of protected markets that the TPP aims to open up include beef and cars in Japan, the dairy and sugar industries in the United States, and state-owned enterprises like Chile's largest copper company and the Vietnamese telecommunication service.

What are some of the negotiated standards that all countries involved in the TPP must meet?

Countries involved in the TPP must meet certain negotiated standards, such as environmental protections that ban trading in endangered species and illegal logging, enhanced labor standards like the right to form a union, the abolition of child labor, and banning workplace discrimination.

How does the Obama administration view the TPP in terms of social policies?

The Obama administration sees the TPP as an opportunity to incentivize governments to create more responsible social policies in exchange for stronger economic ties with America and some of its closest trading partners.

What concerns do Democrats in Congress have regarding the TPP?

Democrats in Congress are concerned that the TPP could be detrimental to American workers, as they want guarantees that the US will enforce rules preventing foreign companies from flooding the US market with goods and services that undercut American products.

What criticisms have been raised about the patent and copyright rules proposed in the TPP?

Critics argue that certain proposed patent and copyright rules in the TPP could keep the cost of medicine around the world higher than it should be, potentially affecting global healthcare.

How has the North American Free Trade Agreement (NAFTA) impacted the US economy?

While some argue that NAFTA resulted in the loss of hundreds of thousands of American jobs, in the six years following its enactment, the United States created 2 million jobs each year. It helped retool the US economy to produce more higher value goods and services.

What are the projected economic benefits of the TPP for the United States?

Projections suggest that the TPP could increase American economic output by more than 100 billion dollars a year, opening new international markets to service and high tech businesses in the United States.

What is the main objective of the TPP in relation to China, and which countries might be included in the future?

One of the main objectives of the TPP is to offset the power of China by strengthening North America's connection to several of China's neighbors. The deal has been crafted to eventually include others like South Korea, Indonesia, the Philippines, Taiwan, Laos, Columbia, and Thailand.

What steps are required for the TPP to be finalized and ratified among the initial 12 countries?

For the TPP to be finalized and ratified, an initial agreement must be reached among the first 12 countries involved. Following this, the legislature of each country needs to pass a vote to accept the TPP's terms and ratify their membership.

What potential trade agreement could follow the TPP, and what impact could it have on trade between the US and EU?

If the TPP is successful, a TransAtlantic Partnership with the Europeans could follow. This could potentially boost US-EU trade by more than 50%.