The Trans-Pacific Partnership Business and Government in the Global - Case Study Example

The Trans-Pacific Partnership (TPP) Business and Government in the Global Name: Institution: Course: Date: The Trans-Pacific Partnership (TPP) Business and Government in the Global Introduction The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) negotiated among 12 countries which include the United States, Canada, Japan, Malaysia, Chile, Brunei, Mexico, Peru, New Zealand, Vietnam and Singapore. According to negotiators from the United States and other countries, the trade agreement is considered of comprehensive and high standards foreign trade agreement which has the objective of liberalize trade in almost all the goods and services. In addition, this agreement is also meant to liberalize all the rule based commitments to improve on their efficiency beyond those already established by the World Trade Organization (WTO). Successful completion of TPP negotiations would eliminate tariff and nontariff barriers to investments and trade among the party states and provide a template for future trade agreement among member states of the Asian-Pacific Economic Cooperation (APEC). The main objective of this paper si to assess TOPP in terms of its successes and challenges that face the negotiation process of the partnership Evolution of TPP The trans-pacific Strategic Economic Partnership (TPESP) as it was formerly known was a trade agreement that was developed by New Zealand, Singapore and Chile. This was aimed at the development of a path that could ensure the liberalization of the Asian-Pacific region (Lewis 2011, p. 29). After the introduction of Brunei in 2004, the trade agreement was concluded in 2006 to define trade relations between the four countries (Furgesson et al 2015, p. 4). In 2008, the United Stated became a member of the partnership with the desire to help in concluding the pending investments and financial service provisions. The United States showed it intentions of renegotiating the previous agreement and was joined by other countries which included Peru, Australia, Japan, Canada, Mexico and Vietnam in 2008 (Granville 2015, p. 1). The trade partnership evolved into TPP in 2009, when the Obama administration decided to continue with the negotiations by engaging the TPP countries with the objective of developing a regional agreement that would possess a broad-based membership characterized by high standards proposals that are worthy of trade agreement in the 21st century (Furgesson et al 2015, p. 8). This makes TPP one of the most ambitious trade agreements of the century. This is because it would break novel grounds on essential issues arising from the challenges of state owned-enterprises. This would be realized by ensuring the existence of a free-flow of information the form of data across borders (Furgesson et al 2015, p. 13). This would not only enhance the ability of the regional supply chain but it would also high levels of transparency and accountability through the elimination of the red tape that characterizes operation. The conclusion of this trade partnership would also ensure the protection of the labor environment (Gahan 2015, p. 1). This is by ensuring that all workers are protected according to the international Labor laws and in accordance with the health and welfare standards expectations on the international platform. Accordingly it is also an aim of TPP to enter the engagements in the global trade systems and generation some improvements in the rules and the norms of different activities that define trade operations between countries (Granville 2015, p. 1). In terms of its strategic context, the completion of the proposed TPP agreement would deepen and strengthen trade ties among participating countries. There however exists an implication of an even larger and more strategic context that supersedes the immediate participants (Granville 2015, p. 1). For instance, the trade agreement may surpass details of US foreign policy on trade, introduce a different understating of emerging economies in Asia-pacific region and enhance the development of multilateral trade agreements among different counters that are parties to WTO (Kapczynski 2015, p. 213). It is important to note that the member states in TPP are also parties to other bilateral trade agreements on a regional and on the global platform. For instance all the TPP member states are also parties to the WTO. Furthermore these countries also operate on different FTAs whose differences arise from their nature and the forms of agreement (Furgesson et al 2015, p. 22). The U.S for instance already has trade agreement with about 20 countries on the global platform. 6 of these countries (Canada, Chile, Mexico, Australia, Singapore and Peru) are TOPP member states. The Unfired Sates which is an important player on global trade platform is excluded in about 180 preferential trade agreements between countries. From this perspective is possible to argue that the proposed TPP FTAs can be perceived as opportunities for the United States to gain more on the preferential trade agreements (Furgesson et al 2015, p. 22). This would however be beneficial in the US ensures that its goods and services remain highly competitive on the international platform. This would make it possible for the country to continue with its role of developing and shaping a framework that would define future free trade negotiation (Kapczynski 2015, p. 213). There are countries such as South Korea which in 2014 began talks with TPP member states with the objective of being part of the trade agreement. This is an indication that there is a probability of future expansion of TPP membership (Furgesson et al 2015, p. 13). It is important for existing players to ensure that they improve on their ability to influence other member states at the early strategies of the negotiations as this will improve on their strength as player in the agreement. Economic significance of TPP From the economic perspective the conclusion of TPP result in the success of binding a group of economies whose economic activities represent about 40% of global Gross domestic Product (GDP). This would also bring with it strategic advantages for countries such as the United States to be participants in the development of trade rules which would be major contributors in the development of some form of regional trade influx (Furgesson et al 2015, p. 12). Despite the seeming success that accompanies the conclusion of TPP, there are factors that would be influential in the determination of the levels of economic significance drawn from the trade agreement. One of the factors in the extent to which the trade liberalization achieved would contribute to economic development of each member states. In addition, it would also include on the deliberations on the existing levels and the potential growth of investments and trade among TPP member states (Furgesson et al 2015, p. 12). When this is assessed in relation to the objectives of TPP it is possible to argue that the significance of TPP is in the understanding that it is the largest trade partnership existing between countries on the international platform. The desire to introduce FTAs by trade flows is an indication of the intentions by TPP member states to develop a comprehensive and high standard agreement that would ensure a broad liberalization of regional investment and trade (Kapczynski 2015, p. 213). From the perspective of the US government, a large percentage of this liberalization is already in operation considering the existing FTAs between the US and 6 member states of TPP (Furgesson et al 2015, p. 13). Japan is considered as one of the largest economies in the world. Its decision to join the negotiations helped in increasing the potential economic significance of TPP. Japan is also the largest partner in trade with the US without an existing FTA agreement. In 2014 for instance, Japan was the fourth largest gods export for the United States with an export of $67 billion and an import of $134 billion (Furgesson et al 2015, p. 14). Being countries that operate on almost an equal level of high income, the trade relations between Japan and the United Sates are considerable different from US trade relations with other partners to the negotiations. This means that the participation of japan in TPP has brought with it more interest of more US industries and sectors such as those of agriculture, service and the automotive industry (Lewis 2011, p. 33). Vietnam and Malaysia are also parties to TPP which do not trade with the US on the basis of existing FTAs. These countries can be considered as important players in the US because of high populations and the relatively high economic growth standards in recent years (Lewis 2011, p. 40). Furthermore, Vietnam’s and Malaysia’s average tariffs on imports are at 9.5% and 6% respectively which are considered as the highest levels of tariffs compared to other TPP members (Furgesson et al 2015, p. 14). The introduction of FTAs as part of TPP partnerships would open the markets in Malaysia and Vietnam to foreign trade hence improving on the import and export relations among the member states. The economic significance of TPP negotiations can also be understood from the perspective that all the member states are diverse in terms of their population, geostrategic location, and level of economic development (Williams 2013, p. 12). These factors are beneficial to the US export market considering that the country’s merchandise exports are relatively similar in most of the TPP party states and they include computer equipment, motor vehicles, coal and petroleum products, constructions and agriculture machinery, electronic parts and aircraft (Lewis 2011, p. 38). The top merchandize imports for the US vary in different countries. From Chile, Australia, New Zealand and Peru, the US imports agricultural products and natural resources. From Singapore and Malaysia, the US primarily imports manufactures products such as semiconductors, computers and electronic components. From Vietnam, Mexico and Canada majorly imports crude oil. Motor vehicle parts and motor vehicles constitute about 35% of US imports from Japan (The Economist 2015, p1). From this perspective it is possible to develop arguments that TPP negotiations, with respect to the introduction of FTAs among party states would be an improvement on trade relations and the mutual benefits that these countries could draw from the negotiations. In addition, it would also be a technique for the US to establish a strong position on in the Asian region and on the global platform hence gaining a competitive advantage in term of trade (Furgesson et al 2015, p. 15). In term of value countries such as Mexico and Canada can be considered as the largest trading partners with the United States in terms of the import and exportation of goods. In the service sector these countries are also significant players in the US economy (Martin 2015, p. 1). The geostrategic location of Mexico and Canada arises from the understanding that they share large borders with the United States and are also the oldest partner with the US in terms of FTA relations. Japan is the third largest US- TPP partner and second largest partners in terms of service, investments and trade. When the remaining eight partners are considered Singapore and Australia form the most important partners in the export market for US products while Vietnam, Malaysia and Singapore form the top sources of imports by the United States (Lewis 2011, p. 37). Essential negotiation issues Market access for goods and services One of the defining elements of TPP negotiation is the realization of successful FTA negotiations between the party states. This would ensure market access of different goods and services. There are however non-tariff barriers which include technical barriers to trade and sanitary standards (Furgesson et al 2015, p. 16). Inasmuch as these are perceived as trade rules, they affect the ability of different gods and services to access the best markets. TPP negotiations of these issues are meant to ensure a reduction of tariffs and barriers to ensure that they are not replaced by other forms of protection (Furgesson et al 2015, p. 16). A fundamental worth of all FTA negotiations is to ensure the elimination of all or most of the tariffs and quotas to trade and goods in ways that will improve trade activities between the negotiation patties. On average the most favored nation (MFN) tariff levels among TPP member’s states vary from 0% to 10%. This si hoverer based on the understanding that member countries are expected to gradually face out tariffs and quotas for more than 11,000 products categories to enhance trade between member countries. as ta 2011, TPP member states were in agreement that would ensure the gradual introduction duty free access to the products of the member states (Lewis 2011, p. 30). Textile, footwear and apparel There are potential differences that will probably arise between the developing and the developed countries that form TPP. For Vietnam there is a high probability of differences arising in the elimination of tariffs on labor intensive products such as apparel, footwear and textile (Lewis 2011, p. 32). In the US tariffs in this sector have been introduced as a way of protecting domestic producers from the adverse consequences resulting from importation of highly sensitive products such as footwear (Rowley 2011, p. 3). While countries such as Vietnam are advocating for lower tariffs to gain access to the highly lucrative footwear market in the US, there are other developing countries which are also advocating for preferential access to larger market to enhance their competitive advantage over other producers such as China (Furgesson et al 2015, p. 17). Trade in service One of the main objectives of US regional and bilateral negotiations for FTAs at the TPP has been improved market access for service providers on the international platform (Martin 2015, p. 1). The financial sector that provides insurance, banking, legal services, education, telecommunication, express delivery, data flows, e-commerce and other professional service sectors in the US consider the international market as essential in realizing high profit margin and a competitive advantage on the international platform (Furgesson et al 2015, p. 20). Agriculture Successful negotiation of agricultural terms and the realization of trade liberalization in this sector forms an essential part of the overall TPP agreement (Petri & Plummer 2012, p.3). In this process bilateral negotiations between the US and Japan seeks to develop a mutual agreement of the defining terms of market access for different agricultural products that japan considers sensitive and in need of continued protection from the interests of the US (Furgesson et al 2015, p. 21). Despite the presence of other agricultural issues such as Tobacco and sugar, market access issues related with Japan are crucial for the substantial conclusion the TPP agreement. Japan endeavors to protect producers of port, rice, wheat, barley, beef and dairy products by restricting imports (Martin 2015, p. 1). Rules An additional content of TPP are several provisions that are built on rules and disciplines as defined by WTO’s Uruguay Round agreement. Rules on intellectual property rights (IPR) for instance have become essential in the definition of the TPP negotiations. The U.S for instance is advocating for increased IPR protection as part of FTAs (Furgesson et al 2015, p. 29). This is aimed at the protection of different aspect that the country considers as part of its competitive advantage with regard to film, music, books and technological innovations. Some of the provision includes the application of existing intellectual property rights protection to digital media. The need for IPR protection has opened doors to additional negotiation of provisos that surpass the level of protection as provided by WTO (Furgesson et al 2015, p. 30). Countries such as the US have sought to have TPP partners sign the Performance and Phonogram Treaty by the World Intellectual Property Organization (WIPO) which countries such as Vietnam, Brunei and New Zealand are not party to (Lewis 2011, p. 32). Conclusion The Trans-Pacific Partnership (TPP) is proposed regional free trade agreement (FTA) negotiated among 12 countries. According to negotiators from the United States and other countries, the trade agreement is considered of comprehensive and high standards foreign trade agreement which has the objective of liberalize trade in almost all the goods and services. One of the main objectives of US regional and bilateral negotiations for FTAs at the TPP has been improved market access for service providers on the international platform. There are potential differences that will probably arise between the countries that form TPP with regard to tariffs and quotas, IPR in different sectors such as media and agriculture. References Furgesson, Ian., McMinimy,Mark & Williams, Brock.2015. The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress. Washington, DC: Congressional Research Service. Gahan, Eoin. 2015. The Trans Pacific Partnership: Trade and Globalization. Harvard: Cenetr for Business and Government. http://anglejournal.com/article/2015-06-the-trans-pacific-partnership-trade-and-globalisation/ Granville, Kevin. 2015. The Trans-Pacific Partnership Trade Deal Explained. New York Times. http://www.nytimes.com/2015/05/12/business/unpacking-the-trans-pacific-partnership-trade-deal.html Kapczynski. Amy. 2015. The Trans-Pacific Partnership — Is It Bad for Your Health? N Engl J Med 2015; 373:201-203. DOI: 10.1056/NEJMp1506158. http://www.nejm.org/doi/full/10.1056/NEJMp1506158 Lewis. Meredith. K, 2011. The Trans-Pacific Partnership: New Paradigm or Wolf in Sheep’s Clothing? , 34B.C. Int'l & Comp. L. Rev. 27, http://lawdigitalcommons.bc.edu/iclr/vol34/iss1/3 Martin, Peter. 2015. Trans-Pacific Partnership: still alive and capable of doing us harm. Economic Editor: The Age. http://www.theage.com.au/comment/transpacific-partnership-still-alive-and-capable-of-doing-us-harm-20150802-gipqoa.html Petri, Peter & Plummer, Michael. 2012. The Trans-Pacific Partnership and Asia-Pacific Integration: Policy Implications. Peterson Institute for International Economics. No. PB 12 Rowley, Anthony. 2011, “What the TPP Is Really About,” Business Times (Singapore), February 2, 2011. The Economist. 2015. What’s the Big Deal? Why a whiff of panic has entered America’s Pacific trade negotiations. http://www.economist.com/news/asia/21647330-why-whiff-panic-has-entered-americas-pacific-trade-negotiations-whats-big-deal Williams, B. R. 2013. Trans-Pacific Partnership (TPP) countries: Comparative trade and economic analysis.Washington, DC: Congressional Research Service. Read More