What is the TPP? Why is the TPP so important?

What is the TPP?

What is it all about?

Why you need to know about the TPP!

In the midst of our Presidential campaign, I thought it might be helpful to put forward some facts about the TPP. Both Donald Trump and Hillary Clinton have expressed their doubts about the TPP.  Their comments have certainly created a negative and false impression about the TPP.  However, the TPP is a negotiated trade agreement that has been developed under President Obama.  He wants this agreement in place as one of his legacy accomplishments.  As such, he is doing all he can to pass it before congress before he leaves office.  It is expected to be taken up by Congress during the lame duck session before the next President takes office.

Before you jump to your own conclusion about the TPP, it might be valuable to gather the facts about the TPP.

First, what is the TPP?

The Trans-Pacific Partnership (TPP) is the largest regional trade accord in history.  It will establish new terms for trade and business investment among the United States and 11 other Pacific Rim nations — an important collection of countries with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global G.D.P. and one-third of world trade. Countries participating in the TPP include:tpp-w-map

  • Australia
  • Canada
  • Japan
  • Malaysia
  • Mexico
  • Peru
  • United States
  • Vietnam
  • Chile
  • Brunei
  • Singapore
  • New Zealand

The TPP is the product of years of negotiations that culminated last year with the endorsement of the 12 nations’ trade chiefs.  This partnership agreement may be a significant accomplishment for President Obama, who has pushed for a foreign policy “pivot” to the Pacific rim. It seeks to bind Pacific nations closer through lower tariffs while also serving as a buttress against China’s growing regional influence.

 Why is it important to be done now?

This agreement is important for the establishment of global leadership and the rules for trade.  .  The rules of the road are up for grabs in Pacific arena.   If this group does not pass this agreement and write those rules, competitors will set weak rules of the road, threatening American jobs and workers while undermining U.S. leadership in Asia.

The pact is seen as an avenue to address a number of troubling issues that have become stumbling blocks as global trade has skyrocketed, including e-commerce, financial services and cross-border internet communications. The United States is eager to establish formal trade agreements with five of the nations involved — Japan, Malaysia, Brunei, New Zealand and Vietnam.  It should be noted that the TPP addressed many of the outstanding issues with NAFTA as the U.S., Canada and Mexico are major participants in this agreement.

The Trans-Pacific Partnership is hailed as an “open architecture” document written to ease adoption by additional Asian nations, and to provide a potential template to other initiatives underway, like the Transatlantic Trade and Investment Partnership, between the U.S. and Europe.

Where are the divisions around the TPP?

According to the New York Times, “Supporters say that it would be a boon for all the nations involved, that it would “unlock opportunities” and “address vital 21st-century issues within the global economy.” Opponents in the United States see the pact as mostly a giveaway to business, encouraging further export of manufacturing jobs to low-wage nations while limiting competition and encouraging higher prices for pharmaceuticals and other high-value products by spreading American standards for patent protections to other countries. A provision allowing multinational corporations to challenge regulations and court rulings before special tribunals is drawing intense opposition.”

Where is China?

China is uncomfortable with the TPP.  It sees this pact as opening the doors to competition as the United States tries to tighten its relationship with neighboring Asian countries.  There was some suggestion that China might want to participate as some point, but that has yet to be accomplished.  At the same time, China seems more focused on their own trade agreements in the region that are part of its Silk Road initiative in Central Asia. There is speculation that the TPP’s “open architecture” will eventually allow for China to join along with other important economic powers like South Korea.

Most recently, President Obama has reached out to Ohio Governor John Kasich in support of the TPP.  That could signal a bipartisan effort to ratify this agreement before the end of 2016.  Stay tuned.


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