The Trans-Pacific Partnership — Explained

By Jonas Murphy

The Trans-Pacific Partnership (TPP) is the largest regional trade accord in history that sets out to deepen economic ties between the United States, Canada, and 11 other Pacific Rim nations, setting new terms for trade and business investment among signatories.  Some of the largest, most dynamic, and fastest growing economies in the world are included in the TPP. The collective signatories have an annual gross domestic product of nearly $28 trillion, representing approximately 40 percent of global G.D.P. and one-third of world trade. The TPP is also a vital component of the Obama Administration’s “pivot to Asia,” providing an economic counterbalance to China’s growing influence in the region and setting the stage for deepened relations between the U.S. and Asia for decades to come[1].  The TPP has not escaped controversy, however, as many environmental groups and labor unions argue that the agreement will allow for the further degradation of the environment and will hurt American workers. In this analysis, I hope to clarify the purpose and content of the TPP, as well as its geopolitical implications for the United States, China, and signatories of the agreement.

The TPP, which has been under negotiation for almost a decade, has the goal of deepening trading ties between many of the world’s largest and most dynamic economies by eliminating tariffs on goods and services, cutting many non-tariff barriers and harmonizing competitive, labor, environmental, and many other regulations among signatories. Traditional trade agreements that have been negotiated in past decades dealt primarily just with goods. These agreements established rules on the number of goods that could be imported at a set price with certain stipulations for environmental and labor standards. Modern trade agreements like the TPP encompass a broad range of regulatory and legal issues, making them a much more central part of foreign policy and even domestic lawmaking.[2]

A centerpiece of the Obama administration’s foreign policy strategy has been the “pivot to Asia”—a strategic rebalancing after too many years of American foreign policy being bogged down in the Middle East—which plans to place a greater focus on a region that nearly half of the world’s population calls home and which is experiencing unprecedented economic development. Former national security adviser to President Obama, Tom Donilon, called the TPP the “centerpiece of our economic rebalancing” and a “platform for regional economic integration.[3]” The administration has argued that the TPP is a platform for engagement and growth in the Asia-Pacific Region that solidifies relationships with our allies and firmly establishes the United States’ leadership role in the Pacific.  Further, they argue that it is essential for the U.S. to write the trading rules for the region; otherwise, competitors (namely China) will craft the rules in ways that entrench their interests in the region while disadvantaging U.S. exporters, threatening American jobs and competitiveness, and impairing the U.S.’s ties to the region.[4]

Trade agreements have historically been controversial enterprises, but the TPP has drawn particularly sharp criticism from labor unions, environmental groups, and progressive legislators in the U.S. due to the its unprecedented size and scope. They have voiced concerns about provisions that they argue benefit corporations at the expense of workers and that lead to job losses and further environmental degradation[5]. However, an independent report by the Peterson Institute for International Economics found that the TPP would increase incomes, exports and growth in the United States, but is unlikely to add to overall employment. The TPP would not cost overall employment either, but inevitably some jobs, especially in manufacturing, would be lost even as more export-industry jobs are created[6].

While Congress gave President Obama Trade Promotion Authority in June 2015, which is the authority to submit the TPP to Congress for an up or down vote without the option for any amendments that could imperil the agreement, it still requires final approval from Congress. Speaker of the House Paul Ryan is a trade proponent, but his willingness to aggressively shepherd the agreement through Congress is questionable, as he has deferred to his party colleagues. Most Congressional Republicans support the TPP, but Senator Mitch McConnell, the Senate majority leader, has suggested delaying debate until after the 2016 elections. President Obama has garnered some support from Congressional Democrats as well, but most remain opposed to the agreement. Among presidential candidates, Hillary Clinton and Bernie Sanders have opposed the agreement, as have Republicans Donald Trump and Ted Cruz[7].

The TPP is a massive trade agreement that has the potential to deepen economic ties between the U.S. and many of the world’s most dynamic emerging economies in the Asia-Pacific Region. Additionally, improved political and diplomatic relations are a corollary of tighter economic integration. While the TPP’s future and ultimate ratification are not certain, the agreement holds the potential to transform economic and political relations between many of the world’s largest economies by expanding trade and investment, boosting U.S. exports to some of the world’s fastest-growing economies, and providing a forum for harmonizing and raising labor standards and resolving disputes.

[1] Lydia DePillis, “Everything you need to know about the Trans Pacific Partnership,” Washington Post,  Dec. 11, 2013

[2] DePillis, Everything You Need to Know About the Trans Pacific Partnership

[3] DePillis, Everything You Need to Know

[4] Office of the U.S. Trade Representative, “The TPP”

[5] AFL-CIO, ” The Trans-Pacific Partnership Free Trade Agreement (TPP)”

[6] Jackie Calmes, “Trans-Pacific Trade Pact Would Lift U.S. Incomes, but Not Jobs Overall, Study Says,” New York Times, Jan. 25, 2016

[7] Calmes, The Trans-Pacific Trade Pact