The Trans-Pacific Partnership: Who wins, who loses, why it matters
As President Obama travels to Mexico on Wednesday to meet with Mexican President Enrique Pena Nieto and Canadian Prime Minister Stephen Harper, the one-day summit is expected to focus partly on the Trans-Pacific Partnership, an ambitious 12-nation trade pact being negotiated between North American and Asian countries. Here is a primer on the talks:
Q: What is the Trans-Pacific Partnership?
A: The Trans-Pacific Partnership, or TPP, is a free-trade pact being negotiated among 12 Pacific Rim countries. The TPP is an ambitious effort to shape a comprehensive agreement that would not only reduce tariffs and other barriers to open markets, but establish standards on a range of issues affecting trade and international competition. For instance, negotiators are working to set up rules on intellectual property rights, government procurement and the role of the state in private enterprise.
Q: Who is in the TPP, and who isn’t?
A: There are currently a dozen countries that in total account for almost 40% of the global economy. As the largest economy, the U.S. is seen as the leader of the negotiations. The other nations, in order of economic size, are Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei. South Korea has expressed interest in joining.
Conspicuously absent from the talks is China, the world’s second-biggest economy.
Q: How did the TPP get started?
A: The negotiations began in talks more than a decade ago among Singapore, Chile and New Zealand. An original agreement was reached by those three countries, plus Brunei, in 2005, and it became the model for the TPP and was extended to other nations. The U.S. announced that it would join the discussions in 2008.
Q: What’s in it for the U.S.?
A: Many analysts generally see liberalizing trade as a benefit to the economy. The TPP has the potential to boost U.S. exports and investments by lowering tariffs and leveling the playing field in some large or rapidly growing markets. The White House has said the TPP could create more U.S. jobs and generate an additional $123.5 billion a year in U.S. exports by 2025.
Beyond the commercial implications, many experts regard the TPP as a key part of American foreign policy. Amid the rise of China and its increasing exercise of political and military power in East Asia, the Obama administration has said it would turn its attention more to the East, the so-called pivot to Asia, in an effort to strengthen U.S influence in that region.
Q: Why is the TPP controversial?
A: The TPP is a major multilateral trade undertaking, the most significant for the U.S. since the North American Free Trade Agreement, which took effect 20 years ago. Labor unions and other critics of NAFTA say that the deal pushed American manufacturing operations overseas and has cost hundreds of thousands of jobs. The U.S. Chamber of Commerce and other business interests say the pact led to booming trade and commercial activity in North America.
Beyond the general dispute over free-trade agreements, the TPP negotiations have been criticized by a number of organizations and lawmakers for not being transparent enough. Some groups are worried that the TPP will establish intellectual-property rules that could lead to restrictions on affordable generic medicines in developing countries. Others are concerned that the TPP won’t set very high standards -- or the enforcement mechanisms needed -- to protect the environment and labor rights.
Q: What are the major sticking points?
A: Every country has some products that it is particularly sensitive about and wants to protect. The U.S. wants access to Japan’s politically powerful farm sector, including rice. Japan and the U.S. also remain at odds over what both sides see as barriers to each other’s car market. Australia and New Zealand, meanwhile, are seeking greater openings for their dairy goods, and Vietnam for its textile and footwear exports. Besides car companies, U.S. producers of sugar and textiles, among some others, are concerned that they will suffer from increased foreign competition.
Q: When will negotiations be finished?
A: TPP negotiators, including President Obama’s top trade official, Michael Froman, had set a goal of reaching agreement by the end of last year. However, their last meeting in December in Singapore ended without a deal, and it appears they have lost some momentum. A new target for concluding talks hasn’t been set, and though there are hopes that an agreement will be completed this year, the midterm elections in the U.S. could present more challenges as free trade has been a hot political issue in the past.
Q: Will Congress approve it?
A: Under the Constitution, treaties require the approval of two-thirds of the Senate. But the administration is seeking congressional approval for trade-promotion authority. Also called fast-track authority, it would give the president the power to negotiate a trade agreement that Congress can approve with a simple majority and with minimal debate and no amendments.
Traditionally, Republican lawmakers have supported trade agreements, but it’s unclear whether tea party or other conservative members of the GOP will back the TPP, especially as it is being negotiated by a Democratic White House. Perhaps more challenging for the administration is the reluctance by senior Democratic lawmakers to grant the president fast-track authority and throw their weight behind the TPP.
A large bipartisan group in both chambers of Congress has pressed the administration to include a provision in the TPP that would prevent trading partners from engaging in currency “manipulation” -- a touchy subject that top U.S. trade officials have yet to bring to the TPP table.
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