Trans-Pacific Partnership Deal is Reached

According to the article, (http://www.nytimes.com/2015/10/06/business/trans-pacific-partnership-trade-deal-is-reached.html?_r=0), the 12 Pacific Rim countries involved in the TPP reached a final agreement on Monday, preparing President Obama for what could be the toughest fight of his final year of presidency: securing approval from Congress.

Now that negotiations of the TPP have come to an end, the deal will face months of scrutiny in Congress, where opposition is imminent. Regardless, for President Obama the deal could be a legacy-making achievement; the TPP draws together countries representing 40% of the global economy, and spins them into a web of common rules governing trans-Pacific commerce. The argument that the TPP will be key in limiting China’s power in the global economy is Key to the President’s hard sell of the act to Congress. Obama stated: “When more than 95 percent 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.”

TPP: Why it’s too early to pop the champagne

According to the article, (http://www.cnbc.com/2015/10/06/tpp-why-its-too-early-to-pop-the-champagne.html), it will take many years before the economic benefits of the TPP are actually felt. To start, there are several hurdles to overcome before it is implemented.

First, the deal must be ratified by each country’s legislature, which is looking to be very difficult in the US; both Democrats and Republicans are opposed to the deal, meaning it is possible that the TPP will be blocked in Congress.

Second, and finally, tariffs are due to be lowered and market access increased only gradually, meaning the effects of the deal will be insignificant in the near future. However, the long-term significance of the deal still should not be downplayed.

Trans-Pacific Free Trade Deal Agreed Creating Vast Partnership

According to the article, http://www.bbc.com/news/business-34444799, the Trans-Pacific Partnership (TPP), the biggest trade deal in decades, was struck on Monday after five years of bitter and tense negotiations. The TPP cuts trade tariffs and sets common standards in trade for 12 Pacific Rim countries and covers about 40% of the world economy. However, although negotiations have been finalized, the deal is yet to be ratified by law makers in all 12 countries.

For President Obama, the TPP trade deal is a major victory. He stated: “This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products.” In opposition, however, US Senator and US Democratic presidential candidate hopeful Bernie Sanders argues that Wall Street and big business have “won again,” stating that the TPP deal will cost US jobs and hurt consumers.

Additionally, China was not involved in the TPP agreement, however the Obama administration is hoping that it will be forced to accept the majority of the standards outlined by the TPP. He was quoted: “When more than 95% 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.”

Furthermore, the final round of TPP negotiations were delayed over how long pharmaceutical companies should be permitted to maintain a monopoly on their drugs. The US wanted twelve years of protection, while Australia and New Zealand argued for five. A compromise was reached, however the definitive protection period has yet to be confirmed.

Finally, the auto industry as well as the agriculture industry were also areas of intense negotiations. In regards to the auto industry, countries agonized over how much of a vehicle must be manufactured within a TPP country in order to qualify for duty-free status. Agriculture was another sticking point, as countries such as New Zealand wanted more access to markets in Canada, Mexico, Japan, and the US; Canada wanted to keep access to its dairy and poultry markets strictly limited, however.

Five Questions about the Big TPP Negotiations

According to the article (http://www.ctvnews.ca/business/five-questions-about-the-big-tpp-negotiations-1.2587022), there are five key questions regarding what is at stake with the TPP agreement, as follows:

  1. Would the TPP agreement eliminate NAFTA? No. NAFTA would continue to exist, but certain parts would be superseded by the new agreement.
  2. What will happen to Canada’s auto sector? It depends on who you ask. Some auto-parts companies are solidly in support of the new deal, while some are adamantly against it.
  3. Will there be more imports of foreign dairy? Almost certainly. According to some sources, the U.S. has requested and opening of the Canadian dairy market greater than the 2% share that they granted to Europe in the Canada-EU deal.
  4. Will drug prices go up? Possibly. The U.S. is demanding greater protection for pharmaceutical companies as well as longer exclusivity for cutting-edge medical treatments, which could increase prices.
  5. Could this affect Canada’s election? Absolutely. The race is a nail-biter, and depending on how successful the industries affected by the TPP are, the election could go either way.

Froman Says US Won’t Rush TPP Deal

According to the article, (http://www.politico.com/tipsheets/morning-trade/2015/09/pro-morning-trade-behsudi-210439), although US trade officials have been talking up the benefits of the proposed TPP agreement while it is still incomplete, they are also adamant that they will not rush to get the pact done at the expense of its benefits. “The president has made clear that he will only accept a TPP agreement that delivers for middle-class families, supports American jobs and furthers our national security,” U.S. Trade Representative Michael Froman said in a statement to POLITICO Pro. “The substance of the negotiations will drive the timeline for completion, not the other way around.”

While there are several issues that have yet to be resolved, they are very doable with a little bit of compromise. One tough issue that still needs to be resolved before a deal is reached is how long countries will be required to protect test data for biologic medicines. Another issue involves sorting out rules for the auto-parts industry and clinching a deal that benefits all partners in the TPP. Finally, the Canadian dairy industry would like a deal that will put them on equal footing with growing Asia-Pacific markets.

New Signs of TPP Dairy Movement

According to the article (http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11520114), there are reported signs of a deal coming together on access to dairy products in North America ahead of trade talks happening this week in Atlanta, Georgia. Reports over the weekend suggest that, despite protests from the dairy sector in both the US and Canada, both countries are preparing to move on their highly protected markets.

According to several news outlets, the US is signaling willingness to open its dairy market to some extent for imports from New Zealand and Australia.  The US National Milk Producers Federation and Dairy Export Council are expressing alarm at this, fearful that without sufficiently consulting the US industry they will potentially open the US market to Canadian imports without a reciprocal ability for US dairy producers to enter the Canadian market. “Tariff elimination on key products without reciprocal treatment by Canada would seriously undermine the US dairy economy,” the two organizations said in a joint statement.

Thailand’s Bid for the TPP – Time for Trade, or Trade for Time?

According to the article (http://www.huffingtonpost.ca/2015/09/28/ontario-quebec-agriculture-ministers-to-shadow-feds-during-key-tpp-talks_n_8210684.html), the Thai government, under Yingluck Shinawatra, announced an interest in joining the TPP in 2012, however the interest was lost under their current military dictatorship. However, Thailand’s Deputy Prime Minister, Somkid Jatusripitak, has recently indicated that they are now interested in joining the TPP.

Although Thailand claims that by joining the TPP their membership would help put the Kingdom back on the trade bloc’s radar, this could be a ploy to wind its way into the good graces of its neighbors as well as the United States.

Two key events have contributed toward Thailand’s newfound embrace of the TPP: the July release of the US State Department Trafficking in Persons Report and the deadly Erawan shrine bombings. Both of these events not only forced Thailand’s human rights situation into the open, but made it front page news as well. Therefore, the timing of Thailand’s sudden interest in joining the TPP is convenient and somewhat suspicious. Serious questions are now being raised regarding whether Thailand’s alleged commitment to democratic reforms is legitimate, or if it is merely a way to get back into the world’s good graces.