Issue link: https://read.dmtmag.com/i/132424
The Trans-Pacific Partnership – The Next Big Thing! PRESIDENT'S POST The hottest topic in world trade these days is the Trans-Pacific Partnership (TPP). Hailed as a state-of-the-art free trade agreement (FTA), it will unite eleven countries: Australia, Brunei, Malaysia, New Zealand, Singapore, Vietnam, Canada, Chile, Mexico, Peru and the United States. The TPP would represent a combined GDP of approximately US $21 trillion, or about 30 percent of the world GDP, and $4.4 trillion in exports of goods and services, or about one fifth of total world trade. If you add Japan and South Korea, which are both actively exploring entry later this year, TPP would cover 40 percent of the world GDP and nearly a third of world exports. The eleven nations involved are looking to build upon a trade agreement that was originally signed between Singapore, New Zealand, Chile and Brunei. The eleven countries that are currently part of the negotiations are all members of the Asia-Pacific Economic Co-operation (APEC). Many of the TPP participants already have FTAs with each other, and many have trade agreements with partners not expected to join the pact. In Latin America, some countries with existing strong ties across the Pacific are in negotiations; others are not. TPP, as currently conceived, may also disrupt existing intra-American integration arrangements, with some countries and trade blocs left out entirely. Such overlapping trade agreements and commitments among members and non-members represent one stunning block to a deal. Another is determining who to let in and when. However, if these issues are handled well, TPP will serve to update and expand existing pacts, as well as reinforce their integration into global supply chains. Equally important, TPP can help set the standard for trade reform not just for the Asia-Pacific region, but for the global trading system. Precedents developed in the TPP could become the foundation for new initiatives to revive the flagging multilateral trade talks in the World Trade Organization (WTO). The Trans Pacific talks have been unique among modern trade negotiations. New members, most Roger Terán IDA President 2011-13 recently Canada and Mexico, have been allowed to join during the course of discussions and negotiations. All current TPP members are members of the Asia Pacific Economic Cooperation (APEC), a group of countries that includes Australia, Canada, Chile, China, Indonesia, Japan, Mexico, Peru and the United States. While TPP is designed to broaden and deepen trade and investment ties in the region, it has not pulled in all countries with FTAs. One major reason Canada and Mexico had to join was to avoid disrupting the deep integration of North American markets that has evolved since the establishment of the North American Free Trade Agreement (NAFTA). One cannot ignore the fact that the initiative is being led by the U.S., the world's biggest economy and biggest trading nation, and one that sees AsiaPacific as key to its future growth. Some analysts have even suggested that the U.S. may be trying to use the TPP as a means to undermine China's growing economic might in the region. Many believe that other members of the APEC bloc may also join the agreement in the coming years, making it an even more important pact. The Trans-Pacific Partnership (TPP) agreement currently being negotiated between select countries in the Western Hemisphere and the Asia Pacific region may be one of the most important global trade and diplomatic initiatives since the end of the Cold War. If played right, it may also improve and deepen the U.S commitment to Latin America and world trade. Roger Terán IDA President 6 IDA UNIVERSAL May-June 2013