The new deal will help shape the contours of the global economy—from Washington, not Beijingby Andrew Hammond / October 6, 2015 / Leave a comment
In a dramatic, last minute-breakthrough, trade ministers from a dozen countries in the Americas and Asia-Pacific reached a deal on Monday to secure a Trans-Pacific Partnership (TPP) agreement. Should it be ratified by domestic legislatures, the landmark deal will represent the biggest regional free trade agreement in history, and is the largest trade deal struck since the 1994 completion of the Uruguay Round which created the World Trade Organisation.
The deal is important not just because the 12 countries—the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—encompass around 40 per cent of world GDP. In addition, TPP has an important rules-setting component and President Barack Obama has asserted that the treaty will enable Washington, rather than Beijing, to create the foundation stone for “21st century trade rules,” including standards on trade, investment, data flows and intellectual property.
As Obama noted Monday, “when more than 95 per cent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”
Following the TPP breakthrough, the stakes have been raised for Europe to agree a Transatlantic Trade and Investment Partnership (TTIP) deal with the United States. Longstanding negotiations have yet to reached a breakthrough for what would be a free trade deal potentially accounting for some 50 per cent of the global economy.
The TPP talks in Atlanta were scheduled to finish last Thursday and negotiating partners pushed hard for a deal at the weekend recognising that the “window of opportunity” for agreement may be fast-closing because of domestic politics. Elections in Canada are held on 19th October which may see the pro-free trade Conservative Party lose power; while ballots are also scheduled in the United States, Japan and Peru next year where incumbent politicians are under pressures to protect key market sectors from overseas competition.
The development that enabled the breakthrough, after some 5 years of negotiations, was passage in late June in the US Congress of so-called Trade Promotion Authority (TPA). TPA is potentially…