Peru and the Old TPP

In the article “Peru’s New Leader Champions Trade in the Trump Era” (https://www.ft.com/content/2e2af8ee-b293-11e6-a37c-f4a01f1b0fa1) , an overview is given of Peru’s trade strategy now that the TPP will most likely be stopped. Per the article, Peru’s president Pedro Pablo Kuczynski believes that it is “fundamental that world trade grows again and that protectionism be defeated”. Currently Peru’s top trading partners are China and the US. Although Kuczuynski confirms that Peru’s relationship with the US remains strong, he is “seeking to deepened ties with Beijing”. Additionally, the day after Trump vowed to scrap the TPP, Peru hosted the Chinese president Xi Jinping. Although Kuczynski hasn’t totally given up on the TPP, he stated that Peru is “considering the merits of a rival Chinese initiative, the Regional Comprehensive Economic Partnership”, which is essentially a new TPP reformed to exclude the US. How many countries would wish to participate in such an agreement? Would the US discourage such an agreement? Only time will tell.

PRESIDENT-ELECT TRUMP: IS THE TPP DEAD?

In the wake of Donald Trump winning the election to be the next President of the United States, there are discussions currently ongoing about how that will affect the TPP agreement. Will he scrap the deal as he promised to do during his campaign? How would he do that? Would it be a popular decision?

http://abcnews.go.com/Business/trump-trade-president-elect-tear-tpp-nix-nafta/story?id=43467294

TPP Ratification Unlikely Under Trump, Singapore Unhappy

In the article Singapore disappointed TPP is unlikely to be passed under Donald Trump: PM Lee, the author seeks to examine Singapore’s stance on the TPP given that Donald Trump is now the president elect in the United States.  As I’ve written before, the US is the pivotal player in the TPP deal.  If the US does not ratify the TPP, it is highly unlikely the deal will be ratified in other countries, including Singapore.  Singapore has been a stark supporter of the TPP, and it’s not surprising that with the prospect of the TPP fading, Singapore has voiced public disappointment.

As another indication that the world was watching the US election, Singapore’s Prime Minister Lee indicated he was well aware of Donald Trump’s stance on the TPP.  Lee’s exact word were that Trump “had no sympathy for the TPP at all.”  Singapore’s main reason for its pro-TPP stance is that it would to enjoy lower tariff and non-tariff barriers for both goods and services, but Singapore is also a very small player in the grand TPP scheme.  The TPP accounts for 40% of global trade amongst its participating countries.  PM Lee has also noted previously that not ratifying the TPP would make the US lose credibility with countries around the world.

Moving forward, it looks like Singapore’s stance on the TPP is all or nothing.  When PM Lee was asked if the deal could be amended to add new countries like Russia or China, he responded that the deal would be a completely new animal.  He called such a deal a “new exercise,” a strong indication that the deal as it is right now is the only way Singapore would like to see the deal ratified.  As President elect Trump begins to enact his policy, the world will be watching with interest to see how deals such as the TPP created under the Obama administration will be handled.  If Trump does keep any of his campaign promises, it will not be surprising if the TPP is completely scrapped.

 

What countries will be involved if a new TPP style deal is crafted?

Will there be significant global fallout if the TPP is not ratified in the US?

How much consideration should Trump give to smaller countries like Singapore as compared to the larger countries not in the agreement such as Russia and China?

http://www.straitstimes.com/asia/se-asia/singapore-disappointed-tpp-is-unlikely-to-be-passed-under-donald-trump-pm-lee

 

Schoolyard Brawl

In a recent article on the website, yahoo.com, they discuss the hostile environment in the Japanese Diet over the ratification of the TPP. Japanese lawmakers recently voted to ratify the TPP, but the sensitive top quickly dissolved into and Jerry Springer episode as fights broke out on the committee floor. Many lawmakers disagreed with many of the provisions. While the deal will lower many of the tariffs for Japanese exports, the open markets will create more competition for Japanese farmers and businesses. Will more fights break out as they try to reconcile their differences? Will the deal get ratified? Will other countries show the same hostility toward each other as they attempt to ratify the deal?

 

Tuft’s Study Predicts Negative Effects of TPP For Canada

 

In the article TPP’s Economic Impact Will Be Fewer Jobs, More Inequality, New Study Says, the author seeks to examine a study released at the beginning of this year regarding the TPP.  Interestingly, the study actually predicts a shrinking of the US and Japanese economies ten years after the TPP would come into being and a very modest growth in the Canadian economy.  Overall, the study claims that job losses will occur due to the TPP due to shifting production to goods for exportation as well increased competition.

The TTP would encompass 40% of the world’s economy so it’s not surprising that competition could get very fierce given new areas of trade for many of the countries involved.  The study conducted by Tufts’ Global Development and Environment Institute predicts that Canada’s economy would grow 0.28% as opposed to not being part of the TPP.  This 0.28% equivocates to only $5 billion dollars.  Interestingly, the Tuft’s research contradicts some early research that states there would be bigger benefits to employment and economic growth.  One contradictory study from the Fraser institute has the net benefits being at $9.9 billion for Canada, basically double what the Tuft’s research shows.

One finding the Tufts research that many have argued as a downside to the TPP is the loss of jobs and income inequality created by the TPP.  The amount of income flowing to business owners and shareholders would increase, relatively, while the amount of income flowing to wage earners would shrink, the Tufts study predicts.  A negative impact to income distribution scares many in Canada.  The exact numbers used are a reduction of the labor’s share of the GDP of 0.86%.  It’s important to note that Canada already more unequal than the US when it comes to the labor’s share of the GDP.  It will be interesting to see how Canada interprets conflicting studies about how the TPP will affect it’s economy in the future.

 

The Tuft’s study appears to confirm the fears of everyday citizens in countries that are included in the TPP, do you believe this study is valid?

If Canada does not ratify the TPP, could the results be worse than ratifying it?

If the TPP is scrapped, do you believe a new trade agreement will have to be crafted in its place?

http://www.huffingtonpost.ca/2016/01/20/tpp-economic-impact-canada-us_n_9029892.html

Trump, Mexico, and the TPP

The article “Mexico ready to discuss NAFTA with Trump, eyes non-US TPP” discusses Mexico and their actions with respect to the TPP post the Donald Trump vote. (http://www.reuters.com/article/us-usa-election-mexico-idUSKBN1352N0?il=0) Per the article “Mexico is willing to discuss NAFTA with U.S. President-elect Donald Trump but may seek to circumvent the United States on a broader trans-Pacific deal if necessary…”. The main mission of the discussions are to “persuade Trump how beneficial NAFTA… had been for North America”, and how “… the world is not competing by country, it’s competing by region…”. While currently no date has been established, both parties are anticipating one soon. “Mexico and the United States do about half a trillion dollars in trade every year, with the balance of commerce favoring the smaller country by tens of billions of dollars”. Despite this, Mexico is the US’s second-biggest foreign goods market after Canada. How will these negotiations play out? Only time will tell.

TPP: What’s in it for Vietnam?

In this article we will discuss the impact of TPP on Vietnam.

Vietnam is likely to be the biggest winner of the Trans-Pacific Partnership. Vietnam’s economy relies largely on exports and TPP slashes an estimated 18,000 tariffs among the dozen participating countries. In a decade, the country’s gross domestic product will be boosted 11 percent and exports may soar 28 percent in the period as companies move factories to the Southeast Asian country.

FOREIGN INVESTMENT- Vietnam’s low-wage economy means a lot of foreign firms would look to relocate their operations here. Key industries for this are- logistics, industrial parks, fisheries and garments.

APPAREL– Reduced import duties in the U.S. and Japan will benefit the country’s apparel manufacturers. Vietnam may have a 50 percent increase in apparel and footwear exports in 10 years, according to the Eurasia Group.

SEAFOOD– Elimination of import taxes on shrimp, squid and tuna, now averaging 6.4 percent-7.2 percent will benefit this industry. However, Vietnam will still face strict rules-of-origin on materials, which could limit these benefits.

GLOBAL COMPETITION– Vietnam’s agricultural industry, particularly livestock, and pharmaceutical companies are expected to struggle with the more efficient global operators.

Current Situation

Overall, the TPP is very favorable for Vietnam; it is aggressively seeking economic partners to balance its relationship with China. However, the agreement still needs to be passed by the governments of the 12 nations. The failure of TPP would leave Vietnam more economically isolated and dependent on China. The uncertainty of the TPP is holding Vietnam from committing to the deal.

Source- http://www.bloomberg.com/news/articles/2015-10-08/more-shoes-and-shrimp-less-china-reliance-for-vietnam-in-tpp