Peru and the TPP

With the global market as prominent as it is, any major global trading agreement is something to research and understand. The TPP, or Trans-Pacific Partnership, is one of the bigger agreements made in recent history, and one of the major players in this agreement is Peru. What part does Peru play and what are some of the benefits they will get from being a member of this agreement? The article “The TPP will give Peru direct access to markets such as Australia and New Zealand” (http://www.amcham.org.pe/publicaciones/articulos.php?art=3) touches on these questions and dives into their respective answers. Three of the main takeaways with respect to Peru are shown below:

  1. “Peru will see its exports increase by $3.2 billion by 2025, once the TPP is finalized.
  2. Peru will now have access to Australia, New Zealand, Malaysia, and Vietnam and their corresponding markets.
  3. “Many of the benefits will be seen in non-traditional sectors, such as agricultural exports”

With the TPP being such a talking point, especially now during the Presidential debates, it will be interesting to monitor the progress of this agreement, and how Peru actually benefits from being part of this free trade agreement. Will the benefits be the same as this article predicts? Only time will tell.

Singapore Supports the TTP, Anticipates US Agreement

In the articles Singapore PM: Rejecting TPP Means War, Shifting Alliances in Pacific More Certain, the author examines how Singapore views the TTP and as well as how Singapore anticipates the US will sign on to the TTP, thus avoiding possible future conflict in the pacific.  These observations stem from the political meeting between President Obama and the Prime Minister of Singapore Lee Hsien Loong in August of this year, where Prime Minister Lee spoke at the White House about the TTP, and how not passing it could be potentially disastrous.

The TTP is a 12-nation trade agreement, which primarily has stalled out in the US congress.  Nonetheless, president Obama, a stark supporter of the TTP, and believes it will get passed.  Singapore’s Prime Minister pointed out that in the next 50 years, the major superpowers in the world can work toward interdependence and peaceful cooperation or towards rivalry and a higher risk of conflict.  Lee also pointed out that the reason there is manageable relationships between countries in the Pacific is because of mutually beneficial trade.  On the flip side, Americans are worried about localized job losses because of an agreement like the TTP, and Obama acknowledged this, though he did not give specifics on how such people will be helped should the agreement pass.

Singapore views the TTP through a Confucian mindset in that the trade agreement is about relationships between countries and how these countries balance their obligations and benefits of the agreement.  In the same thread, Lee likened the US to a bride in this relationship, in that if the bride does not show up, many countries will be hurt.  With both US potential presidential candidates against the TTP, it will be interesting to see what happens.  Surprisingly and optimistically, Lee ended the conference with a statement regarding Singapore’s previous dealings with US Democrats and Republicans, noting that relations have been good with either party in power.

 

Do you think that actual war could break out if the TTP is not passed?

Does the US have the most to lose, or gain, from the TTP?

Do you think that the presidential candidate elected will change his/her stance on the TTP once in office?

 

http://www.breitbart.com/2016-presidential-race/2016/08/02/singapore-pm-rejecting-tpp-means-war-shifting-alliances-pacific-certain/

 

Canada Weighs Benefits and Drawbacks of TTP

In the article Not joining TPP will cost Canada billions in economic growth: report, the author investigates how Canada is examining its involvement in the Trans-Pacific Partnership (TTP), and how the release of a new study could say its opinion.  Canadians have been back and forth in deciding if signing on to the TTP is the right move for the country. It now appears that now signing on to the TTP, baring major countries, like the US, not signing on, is the right move because Canada could lose significant future trade revenue by not being part of the TTP.

Recently, one of Canada’s own top economists, Andre Downs, published a paper advising Canada’s ruling part, the Trudeau Liberals, that failure to sign onto the TTP would cost the country upwards of 5.3 billion dollars in lost trade revenue.  On the other hand, signing on to the agreement would generate long-term gains for the Canadian economy, expanding output by $4.3-billion.  With such large numbers in play, it’s obvious that a decision on the TTP is very important to Canada’s future economy.

The curveball in Canada’s decision is the ratification of the TTP by the other countries who could be involved, primarily the US.  All of Canada’s recent estimates assume the US will ratify the TTP.  It is interesting to consider that both US presidential candidates are currently publicly against the TTP.  Furthermore, there is protectionist sentiment in Canada, and there are voices that believe any benefit of the agreement will be nullified by its increased cost to Canadians.  These extra costs include billions of dollars in compensation for farmers as well as bigger price tags for copyrighted goods and patented medicines.  With all of this information in mind, it will be interesting how the future of trade unfolds for Canada based on the participation and ratification of the TTP.

 

Do you believe Canada will end up agreeing to the TPP?

If the US backs out of the TTP, will any other countries agree to the TPP?

Do you believe that Canada’s fears of lost trade revenue or justified or overblown?

 

http://www.theglobeandmail.com/news/politics/not-joining-tpp-will-cost-canada-billions-in-economic-growth-report/article31809986/

 

Mexico’s Procurement Commitments within the TPP

The article “TPP Procurement: Mexico’s Commitments” (http://trade.djaghe.com/) provides an excellent summary of Mexico’s procurement plans under the new Trans-Pacific Partnership agreement. The article divides these plans into five main segments which are thresholds, coverage of entities, coverage of goods and services, traditional measures, and permanent measures.

  1. Thresholds: Mexico has decided to mirror the procurement thresholds utilized under NAFTA, a few of which are $79507 for goods and services, as well as $10,335,931 for construction services.
  2. Coverage of Entities: Similar to the Thresholds section, Mexico has agreed to use the same coverages as are used under NAFTA. Additionally, as in NAFTA, Mexico will not cover any sub-central entities.
  3. Coverages of Goods and Services: Contrary to Coverage of Entities and Thresholds, Mexico will not follow their pre-arranged coverages of goods and services established under NAFTA, in which, as of 2005, utilizes a negative list of excluded services. Like most parties within the TPP, Mexico plans to use a positive list for goods purchased, while continuing to exclude the same services that are excluded under NAFTA.
  4. Transitional Measures: Mexico has stated they will utilize the same transitional measures that were applicable to NAFTA between 1994 and 2002. These transitional measures, however, do not apply to Canada, Japan and the US.
  5. Permanent Measures: Following after Transitional Measures, Mexico plans to mimic the permanent measures used under NAFTA that favor its domestic industry.

While more in-depth information is available in the article listed above, as well as through other sources, this provides a great overview of Mexico’s strategic plan within the TPP, as well as the similarities and differences from NAFTA.

South Korea, Mexico and the TPP

South Korea, one of Asia’s strongest countries, was not included in the TPP deal. South Korea has expressed interest in joining the Trans-Pacific Partnership, but until now has not been allowed access. However, as expressed in the recent article “South Korea, Mexico Agree to Restart Free Trade Discussions” (http://www.livingstonintl.com/international-regulatory-updates/south-korea-mexico-agree-to-restart-free-trade-discussions/) there have been recent talks of a trade deal between South Korea and Mexico. President Park Geun-hye visited Mexico in early April, and “hinted at an interest in developing an agreement with her country’s top Latin American trade partner. President Park was also quoted saying “I think it’s meaningful for South Korea and Mexico to sign a free trade agreement to expand trade investment and strengthen economic cooperation.” The logic behind her suggesting is that while Mexico is part of the TPP, the 12-nation trade agreement is still a long way away from being implemented. As stated in the article “with the status of the agreement gummed up in the U.S. Congress and no clear path in sight for the TPP, the Mexican government seems to have decided that a deal with South Korea is worth pursuing.” Once the TPP is implemented, Mexico will have access to various Asian markets, and a free trade agreement with South Korea may not be necessary. How will these trade negotiations affect South Korea’s chances of being admitted into the TPP? Will Mexico receive push-back from other TPP members for these recent negotiation talks? Will this delay the TPP adoption even further? In the case of South Korea, Mexico, and the other TPP members, only time will tell.

The TPP, Trump’s wall, and Mexico

In the article “TPP May Hamper Mexico’s Apparel Industry” (http://news.apparelresources.com/trade-news/tpp-may-hamper-mexicos-apparel-industry/), the complex relationship between the TPP, the United States, and Mexico is examined. It is important to understand the current U.S.-Mexico relationship; last year the US exported “6.5 billion of apparel and textile to Mexico… $4 billion was fabric and $1.2 billion apparel parts”. There was also “$665M of textiles and yarn”, based on AAFA data. Likewise, Mexico sent “$4.5 billion to the U.S., about $3.5 billion of which was apparel and #1 billion textiles”. With such a successful relationship, what it happening? Upon inspection it appears that Mexico’s apparel “kryptonite” may be Vietnam. According to the article “eighty products is nothing compared to the 1,300 textiles categories that could be affected by this arrangement”. The second major hurdle for Mexico is Trump’s proposed US-Mexico wall. Mexico estimates that “$11 billion in trade flows could fall 20%, or $2.2 billion, in the wall’s first year”. What can Mexico do to elevate their apparel potential? Is it possible to form another deal with the US? What other potential avenues can they take to better their economic performance?

Mexico Reaping Rewards from the TPP

In the article “American Jobs Leaving for Mexico – Ford Motors Just Showed Us What the TPP Will Do to the US Economy” (http://www.dcclothesline.com/2016/02/11/american-jobs-leaving-for-mexico-ford-motors-just-showed-us-what-the-tpp-will-do-to-the-us-economy/) , a recent announcement from Ford Motors is discussed due to the TPP, as well as other future actions that TPP may cause. Per the article Ford Motor Company recently announced plans to manufacture 500,000 vehicles at a new facility in Mexico. This announcement comes at the heels of a similar announcement by General Motors, who announced a $5 billion investment to double its productions capacity in Mexico by the year 2018. Is this caused directly by the TPP? “While the TPP has been touted by politicians as an extraordinary benefit to the US, Mexico’s labor costs will instead help that country’s economy reap the rewards, already evidencing the enormous trade deal’s similarities to NAFTA(the North American Free Trade Agreement), which many have come to view as a disaster for the US”. According to the article, Ford’s announcement comes after negotiations by the United Auto Workers union for more expensive labor contracts. Incidentally, hourly rates in the US are already around five times greater than those in Mexico, and are expected to expand further in the future. Will this trend continue with other auto manufacturing companies? Will it extend to other manufacturing industries as well?