Trans-Pacific Partnership Could Be a Done Deal by March
The new and improved Trans-Pacific Partnership is going forward without the United States as the other original members of the accord hashed out their differences in January, with a new free-trade pact expected to be signed as early as March.
The new agreement is rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, one year after President Donald Trump said the United States would be the only country in the pact to drop out.
But with the new negotiations, Trump is saying he might be willing to join the new trade accord if the United States were able to make a better deal with the 11 Pacific Rim countries that are part of what is now called CPTPP. Still, Trump insists he is more inclined to make bilateral trade deals because if they go sour you can terminate them more easily.
It was under President Barack Obama that the Trans-Pacific Partnership gathered momentum and was close to being approved by the U.S. Congress until the 2016 presidential elections muddied the waters. All 12 member countries signed the pact on Feb. 4, 2016, and were waiting for their legislators to approve the TPP.
U.S. retailers and clothing importers were eager to see a deal passed because it would have lowered tariffs on thousands of items coming in from member countries such as Vietnam, which is a major clothing manufacturer to the United States. It would have also installed uniform intellectual-property stipulations and enforced uniform labor and environmental laws among the member countries.
The Trans-Pacific Partnership was the largest free-trade pact ever negotiated by the United States and would have lowered tariffs on everything from cars to farm products. It represented 40 percent of the world’s gross domestic product but blatantly shunned China as a member.
Besides the United States, the other signatory countries were Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
With the United States out of the accord, the 11 other countries decided to march forward and rework the agreement.
In two days of meetings in Tokyo in January, the trade accord was tweaked to help bring on Canada, which had been one of the last holdouts in the negotiations.
Canada wanted certain sticking points surrounding the automobile industry to be resolved. Canada also wanted to resolve non-tariff barriers with Japan and hammer out a binding dispute-settlement mechanism that had been included in the original TPP but was dropped when the United States stepped away.
The Tokyo talks were the first major meetings since November, when high-level trade talks took place on the sidelines of the Asia-Pacific Economic Cooperation summit in Danang, Vietnam.
By not joining this vast free-trade agreement, the United States could see itself shut out from a lucrative trade deal that would have benefited U.S. companies with added export opportunities and helped consumers save money by seeing reduced costs for goods due to the elimination of duties that can be as high as 59 percent on some products.
At one time, the U.S. Trade Representative’s Office estimated that the Trans-Pacific Partnership would boost U.S. exports by $123.5 billion by 2025.
For Canada, the deal is a boon because it will open up access to Japan’s economy, which is the third largest in the world, and provide a new market for such industries as agriculture, seafood and forestry.
In Australia, farmers are looking forward to a bigger market for their barley, fruit and vegetable crops. Australia is also expecting to see a jump in its merino wool exports, and winemakers are popping corks as they contemplate the rise in wine sales, which account for about half of Australia’s exports.
For the 11 members, the new trade pact is expected to raise the value of their exports by 4 percent, or $23 billion, by 2030.
While the United States already has free-trade agreements with some of the CPTPP members—Canada, Chile, Mexico and Peru—it would have greatly benefited from a trade deal with Japan, which is a major source of automobiles for U.S. consumers. Also, goods such as high-end Japanese denim would have been cheaper to import for the premium-denim industry in Southern California.
Currently, imports of Vietnamese apparel accounts for about 12 percent of all clothing brought into the United States from overseas factories. That undoubtedly would have increased under the TPP.