Turnbull shifts tone of US alliance to economics

An article published on January 19th, 2016 in The Australian Financial Review, http://www.afr.com/news/politics/malcolm-turnbull-backs-us-leadership-in-asia-as-essential-to-china-20160118-gm8nwu, discusses several economic issues between Australia and the United States. It states that Australian Prime Minister Malcolm Turnbull is urging the US Congress to pass the 12 country Trans Pacific Partnership deal. According to Mr. Turnbull, “Free trade is not just good for jobs. It is good for security. The more we trade, the more we rely on each other; the more our supply chains stretch across countries and borders the more there is to lose by a disturbance in the security and order on which our prosperity is founded.” Mr. Turnbull not only stressed the economic importance of signing the trade deal, but also how the international norms and institutions that the US has promoted over the last 75 years has helped provide stability and security in prior free trade deals. Turnbull states, “So central is the Asia-Pacific to the world economy, to global stability, that the preservation of the international order and the peace that it brings has been a consistent and absolutely central objective of both the United States and Australia.” It is very apparent that both the TPP and the Asia-Pacific economy are vital to the continued success of many nations, including both the US and Australia.

What could hold back Congress from approving the TPP? Will the presidential elections have any effect on the US ruling for the TPP?

The Macro Economic tool ignored by TPP

With the finalization of TPP, all the partners face an uphill task of passing the agreement in their respective structures. While countries like Vietnam, Malaysia etc. will have no issues ratifying the agreement, the US faces a daunting task. Jeff Spross in his article “The Trans-Pacific Partnership’s biggest failure” published in The Week, dtd. 11/6/2015 (http://theweek.com/articles/587248/transpacific-partnerships-biggest-failure) notes that the TPP agreement does not offer any protection against currency manipulation. The author is concerned that as a result, devaluation of the currency of partner country could potentially lead to trade imbalances and changes in trading volume. The rising value of dollar against other currencies has led to a huge trade imbalance for US and could be a potential boon to Vietnam and Singapore. The article points out that US has indeed had this issue in the past with Japan, Malaysia and Singapore, all partners in TPP. Does this represent not only a risk for US, but also all the other countries? And if this scenario becomes true, what effect will it have on the trade in the future? Considering the impact of currency manipulation in China on the world, how would a currency manipulation affect non TPP countries?

Manufacturers endorse TPP after ‘careful analysis’

An article published on Monday January 4th, 2016 in the Washington Examiner, http://www.washingtonexaminer.com/manufacturers-endorse-tpp-after-careful-analysis/article/2579505, states that the National Association of Manufactures (NAM) officially endorsed the Trans Pacific Partnership on Monday, and they are strongly urging Congress to approve the trade deal between the 12 proposed nations. The TPP will face some criticism in Congress from both Republicans and Democrats, and it might not be possible for it to be brought up for vote until after the Fall Presidential Election. Many trade associations and trade groups, including the NAM, are worried about specific details in the TPP. Even with their criticisms, the NAM decided to back the trade deal after “careful analysis.” According to NAM President Jay Timmons, “Open markets encourage cooperation and prosperity among nations and governments, rather than conflict, and the NAM has a long and proud history of promoting free and fair trade.” The NAM backing the TPP is a big step towards the completion of the trade deal, but the TPP will not be completed in the United States until Congress approves it.

Do you think that Congress will approve the TPP? Should they try to approve it before the Fall Presidential Election?

The US-VN Plan for Enhancement of trade and labor relations

There has been some time since the TPP full text has been in the public view. If we look closely, there is a separate section for labor relations with Vietnam (https://ustr.gov/sites/default/files/TPP-Final-Text-Labour-US-VN-Plan-for-Enhancement-of-Trade-and-Labor-Relations.pdf), Malaysia and Brunei. Of all three, Vietnam is the most expansive plan clearly signaling how important Vietnam is to US for trade deals. In many blogs, there has been criticism of current Labor practices in Vietnam and also the supposed US soft stand on those issues(Article credit: “After Trans-Pacific Partnership Text Released, Labor Advocates Say Human Rights Protections ‘Not Enforceable’”, by Abigail Abrams, 11/05/15 http://www.ibtimes.com/after-trans-pacific-partnership-text-released-labor-advocates-say-human-rights-2171278). But if we see from a normal standpoint (I am not commenting on the legality of the agreement or enforceability), TPP can usher in a bevy of reforms in Vietnam. The agreement calls out for a variety of reforms, especially for formation of labor unions, their autonomy and effectiveness, formation of ministry and department of labor, abolishment of forced or debt labor, provide capacity for labor department, child labor and the implementation of the same. Also, Vietnam will have to be transparent on its budget, inspection and status of unions. Most of these articles need to be implemented by the time TPP is in force. Only one article regarding enactment of laws for formation of labor unions across enterprises and verticals has to be implemented in five years, which is currently being contested by International Labor Organizations. However, is getting in 90% of reforms better than having nothing at all? Can the pressure of having these reforms be considered a violation of Viet Nam’s sovereignty? And which courts will the violations be addressed in?

 

Australia greedy in TPP talks: US senator

A recent article published on November 7th, 2o15 in THE AUSTRALIAN, http://www.theaustralian.com.au/news/latest-news/australia-greedy-in-tpp-talks-us-senator/story-fn3dxiwe-1227599807448, states the US Senate Finance Committee chairmen Orrin Hatch, whose support is crucial to passing the TPP, is unhappy that intellectual property protections for biologic medicines have not been extended to 12 years. The US proposal would have made life-saving medicines more expensive for Australians, and Australian Trade Minister Andrew Robb says that he is never going to accept it. According to Mr. Robb, “We have absolutely no intention of increasing the cost of medicines to the Australian public by seeing any increase in the period of data protection.” Australia currently has a 5 year data protection period rule, which protects the makers of biological drugs by blocking other manufacturers from using similar research to a produce a copy of their product, which is known as a biosimilar. Hatch believes that Australia has been greedy in resisting the longer monopoly period and that the US should have never agreed to it. His plan is study the text of the deal and might suggest that negotiations go back onto the table. But, according to Hatch, “at the end of the day, the alternative to renegotiation may very well be no TPP at all.” Mr. Robb believes that Australia’s resistance was “strongly supported” by the other countries in the deal, but it appears that this issue might bring negotiations for the TPP back to the table.

What would the impact be for the TPP if negotiations are brought back to the table? Do you think that Australia or the US is being greedy?

More info’s necessary on Trans Pacific Partnership

An article in TDN (November 3, 2015) titled “More info’s necessary on Trans Pacific Partnership” (http://tdn.com/news/opinion/more-info-s-necessary-on-trans-pacific-partnership/article_7656dc2a-482e-5cfe-9444-e9b649baefd7.html) describes the main benefits and next steps of the TPP deal. The author highlights the advantages that the agreement represents for fruit growers in a state that exports about 30% of its apples, cherries, and pears. Fruit is just one set of products, the commercial deal will cover hundreds of billions of dollars from medicine, airplane parts to intellectual property. The relevance is that the 12 nations that are part of the TPP account 40% of the world’s economy. Critics have raised the question about the secrecy of the TPP process. What could be the main trade offs not publicly shared yet that this agreement involves?

How the Trans-Pacific Partnership will benefit U.S. beef

An article in Beef (November 2, 2015) titled “How the Trans-Pacific Partnership will benefit U.S. beef” (http://beefmagazine.com/beef-exports/how-trans-pacific-partnership-will-benefit-us-beef) describes the benefits that the TPP agreement will provide to the U.S. beef industry. The United States already had free trade agreements with Canada, Mexico, Australia, Peru, Chile, and Singapore. Therefore, the greatest advantage of the agreement represents the inclusion of Japan and Vietnam in this commercial trade deal. Even though Japan is leading the market for the U.S beef exports, the North American country has been in significant disadvantage in comparison to Australia. The Japan Australia Economic Partnership Agreement lowered the import tariffs to 28.5% for Australia, while the tariff rates for U.S. were 38.5%. Thanks to the TPP the U.S tariff will be cut to only 9% in 16 years. How will Australia react to the future market conditions? Will the Japan Australia Economic Partnership Agreement reduce the Australian tariffs in order to maintain Australia’s current advantage?