14 Jan The Trans-Pacific Partnership Agreement
The Trans-Pacific Partnership Agreement (TPP) is a much-speculated trade treaty between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States. It was signed on February 4th, 2016. However, the agreement was not taken into effect after the United States withdrew its signature. Since then, a lot of amendments & advanced negotiations have come into play. After a lot of dilly-dallying, a new trade agreement called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership finally came into effect on December 30th, 2018.
The agreement has brought about some far-reaching decisions. One of the provisions of this agreement cuts over 18,000 tariffs. All U.S. manufactured goods and most of the U.S. farm products would be completely duty-free. As per the Congressional free Research Service, TPP has the potential to be the largest U.S. FTA by trade flows by enabling $905 billion in U.S. goods and services exports and $980 billion in imports in 2014. Also, the agreement prohibits customs duties from being applied to electronic transmissions. This is a big step towards removing trade barriers & small businesses are expected to reap the harvest.
The intellectual property section grants copyright for the lifetime to the author plus 70 years. It also puts provisions for applying criminal penalties in case of a violation of copyright protections. Many intellectuals & authors have expressed concern over such strict measures as it might prove to be a hindrance to the release of great creative content. Ken Akamatsu, the author of Japanese manga series Love Hina and Mahou Sensei Negima, said TPP would destroy derivative dōjinshi (self-published works) and consequently the entire Manga industry might face a severe loss.
The TPP agreement works on an investor-state dispute settlement (ISDS) mechanism model, empowering investors with the freedom to sue foreign governments for treaty violations. As per the United States Trade Representative, the TPP has imposed binding and fully enforceable responsibilities on participants to guard the freedom of union formation and collective bargaining. TPP also proposes measures to eliminate exploitative child labor and employment discrimination. The Peterson Institute for International Economics affirms that TPP incorporates more protections of labor rights than any previous US free trade agreement. On the other hand, U.S. Senator Elizabeth Warren said that there was a wide gap between the standards of past US free trade agreements and the actual enforcement of those terms.
Economists and business analysts still hold a mixed opinion on the potential economic impact of the TPP agreement. Nobel Memorial Prize-winning economist Joseph Stiglitz suggested that, based on leaked drafts of the TPP – it serves the interests of the wealthiest. The U.S. International Trade Commission is rather optimistic about the positive effects of the TPP on the economy. It projects a 25% gain for the unskilled labor, 41% for the skilled labor and 34% for business owners. According to a World Bank Report, the TPP agreement could raise GDP in member countries by an average of 1.1% and trade by 11% by 2030, and boost regional trade growth, which had slowed to about 5%, on average, during 2010-14 from about 10% during 1990-07. The TPP also aims at creating an economic impact on China by making her economy less competitive & monopolistic in East and South East Asia, which will possibly result in the liberalization of the Chinese economy in the future.
Nobel Memorial Prize-winning economist Paul Krugman stated that “there isn’t a persuasive argument for this treaty, from a global or a national point of view.” Harvard economist Jeffrey Frankel is of the opinion that the inclusion of currency manipulation language in TPP would be a mistake.
Opponents argue that this bill will promote outsourcing and will hurt domestic jobs. Proponents believe that it will encourage seamless business, leading to a stronger economy, more jobs and higher incomes for American workers.