What is the Trans-Pacific Partnership (TPP)?
The Trans-Pacific Partnership (TPP) is a 21st century, high standard, comprehensive regional free trade agreement (FTA) among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The negotiations started in 2008, when the P-4 nations (Brunei, Chile, Peru and Singapore which signed an FTA in 2005), were joined by the eight additional nations. An agreement on the TPP was reached on October 5, 2015 and the TPP full text is now publicly available.
There are 21 working groups negotiating 29 chapters under the TPP, covering traditional areas such as market access, technical barriers to trade, sanitary and phytosanitary measures, rules of origin, customs cooperation, investment, services, and legal and institutional issues; and new areas such as government procurement, competition, the digital economy, labor, environment and horizontal issues.
The negotiations cover the following: legal texts and side letters which prescribe rules, disciplines, non-conforming measures, exemptions, and phase in periods on the subject areas, and market access commitments which confer preferential market access opportunities for goods, services, procurement and investment.
- Comprehensive market access: to eliminate tariffs and other barriers to a wide a range of goods and services trade and investment, so as to create new opportunities for workers and businesses and immediate benefits for consumers.
- Fully regional agreement: to facilitate the development of production and supply chains among TPP members, supporting a goal of creating jobs, raising living standards, improving welfare and promoting sustainable growth in member countries.
- Cross-cutting trade issues: to build on work being done in APEC and other fora by incorporating in TPP four new, cross-cutting issues. These are:
- Regulatory coherence. Commitments will promote trade between the countries by making trade among them more seamless and efficient.
- Competitiveness and Business Facilitation. Commitments will enhance the domestic and regional competitiveness of each TPP country’s economy and promote economic integration and jobs in the region, including through the development of regional production and supply chains.
- Small- and Medium-Sized Enterprises. Commitments will address concerns that small- and medium-sized enterprises have raised about the difficulty in understanding and using trade agreements, encouraging small- and medium-sized enterprises to trade internationally.
- Development. Comprehensive and robust market liberalization, improvements in trade- and investment-enhancing disciplines, and other commitments, including a mechanism to help all TPP countries to effectively implement the Agreement and fully realize its benefits, will serve to strengthen institutions important for economic development and governance and thereby contribute significantly to advancing TPP countries’ respective economic development priorities.
- New trade challenges: to promote trade and investment in innovative products and services, including related to the digital economy and green technologies, and to ensure a competitive business environment across the TPP region.
- Living agreement: to enable the updating of the agreement as appropriate to address trade issues that emerge in the future as well as new issues that arise with the expansion of the agreement to include new countries.
TPP in the context of US-ASEAN relations
The Trans-Pacific Partnership represents the primary economic dimension of America’s geo-political rebalance towards Asia strategy and the centerpiece of U.S. trade policy in the region. But even when complete, it will initially only include four ASEAN members, thus missing the largest ASEAN economy, the two U.S. treaty allies, and three of the four newest ASEAN members. Together, these countries make up three-quarters of the region’s population and two-thirds of its GDP. It is hoped that once the agreement goes into force, it will serve as a catalyst for encouraging other ASEAN nations to join the TPP in the future. Until such time, all ten ASEAN nations will also be involved in their own regional economic integration effort with the launching of the ASEAN Economic Community on December 31, 2015. In addition, all ten ASEAN nations are participating in the ongoing Regional Comprehensive Economic Partnership (RCEP) FTA negations with Australia, China, India, Japan, Korea and New Zealand.
Looking ahead, it will be critical for the United States to continue to include economic related initiatives to demonstrate its support for the cohesiveness of ASEAN and the success of the AEC as an important strategic and economic partner. The US-ASEAN Business Council will continue to focus its programs in areas which create opportunities to broaden and deepen U.S.-ASEAN economic ties, and pave the way for all ASEAN countries to join the TPP, an eventual APEC-wide free trade region, or alternatively a U.S.-ASEAN FTA.
- Schott, Jeffrey J., Barbara Kotschwar, and Julia Muir. Understanding the Trans-Pacific Partnership. Washington: Peterson Institute for International Economics, 2013. Print. Policy Analyses in International Economics 99.
- Ferguson, Ian F., William H. Cooper, Remy Jurenas, and Brock Williams. “The Trans-Pacific Partnership Negotiations and Issues for Congress.” Congressional Research Service, 17 June 2013. Web.
- Williams, Brock R. "Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis." Congressional Research Service, 10 June 2013. Web.
- Petri, Peter A., Michael G. Plummer, and Fan Zhai. “The Trans-Pacific Partnership and Asia Pacific Integration: A Quantitative Assessment.” East-West Center Working Papers: Economic Series, no. 119. East-West Center, 24 Oct. 2011. Web.