UPDATED: Updated:TPP or Bust: Where Things Stand Now with the Stalled Trade Agreement
The Trans-Pacific Trade Partnership (TPP) deal has been a volatile issue throughout this previous year. Perhaps no single issue serves as been a better target for the populist anger that has arisen across all lines of political divide. It has made strange bedfellows out of disparate political factions and sown discord amongst those who are usually in agreement with one another. Yet, for as important an issue as it is, it tends to get lost in the background of juicer sound bites and less wonky news stories. So what exactly does the trade deal include, why is it so divisive, and what industries will be most affected by its goal of increased trade liberalization?
The TPP is a trade agreement between 12 countries: United States, Japan, Australia, Brunei Darussalam, Malaysia, Vietnam, Singapore, New Zealand, Mexico, Canada, Peru and Chile. The basic goal is to strengthen trade between these nations through a lowering of tariffs (some 18,000 total) and shared economic policy. If the TPP is successful, it could open up a new single market not unlike the E.U., but far, far larger (the countries that make up the partnership have a combined population almost twice that of the E.U., and they already make up 40% of the world’s trade).
The deal has proven highly unpopular at home, amongst both conservatives and progressives, despite (or perhaps because of) the large amount of bi-partisan support it carries in Washington. It is an issue that has loomed large over the Presidential election. In one of the only areas of agreement between the two, both Hilary Clinton and Donald Trump oppose it in its current form. There has been an overwhelming populist backlash to the deal, which many feel will continue what they see as the legacy of past trade deals, including declining manufacturing in America, as well as growing corporate influence and a continuation of governmental secrecy.
Meanwhile, those in support of it, including political opposites such as President Obama and Ohio Governor and former GOP primary nominee John Kasich, see it as a desperately needed agreement to help shore up America’s power base as a trade leader in the changing global economy, one which could see other countries moving into China’s embrace should the deal fall through. Proponents of the deal also argue that its benefits outweigh its possible negatives; that for as unpopular as globalization has become, especially amongst working class Westerners, it is still the best tool for lifting people out of poverty.
Because the TPP had the unfortunate luck to land on Congress’s desk in the midst of an American presidential election year, the framing of the issue for the larger public has been made in sweeping terms by those both for and against it, as they seek to make their case mostly in regards to the long term effect it will have. However, the details of actual agreement will have very concrete, measurable effects on certain industries. The automotive industry, for example, would see some of the biggest benefits from the deal, as auto tariffs (which can range as high as 70% in certain markets) would be removed. Japan, one of the world’s largest automakers, would be able to export their products to their biggest market – the US – much easier. The US, likewise, would be able to do the same when it comes to their exports.
Tech firms such as Google and Uber would also have an easier time gaining a foothold in other countries, as the agreement would remove restrictions on this industry in foreign markets. The deal has also put the countries involved in agreement about regulations regarding wireless roaming, which could lower prices for consumers by creating more competition between telecommunication companies.
The pharmaceutical industry would be given patent protection on new drugs for up to 8 years (though the US argued for 12). This has been an area of particular argument, as critics feel that any time frame that allows pharmaceutical companies to keep the manufacturing of prescription drugs to themselves will jack up prices, keep desperately needed medicine out of reach for poorer populations, and put a strain on the global healthcare market. The biggest fears about the deal revolve around how it will affect the labor force. Unions worry that jobs will move to countries within the agreement where labor is cheaper, even as the agreement paves the way for those same countries to implement international labor laws (including a minimum wage) in order to abide by the set terms. This is not enough to abate the fears over increased competition between the workforces of the separate nations, and in the end, public outcry from the middle and working class from the more developed countries involved could be what sinks the TPP, much in the same way that it led to the U.K. voting to leave the E.U. earlier this year.
As things currently stand in the US, the TPP is stalled, but nowhere near dead. As the President continues to rally allies from both parties in Congress to ratify the fast-tracked legislation that would allow the US to sign onto it, those in favor and against continue to make their case to the public. The deadline for the overall ratification of the TPP by all of the countries involved will arrive in February of 2018, but although that may seem like a ways off, it may not be enough time considering that each of the 12 countries has to ratify it, or else it all falls apart. The US is not alone in its troubles when it comes to pushing the deal through–Vietnam recently announced it would withhold its vote until next year.
As far as what America decides, much depends on the outcome of the Congressional races for this election. Those who do support it but are wary of saying so during such a tight, emotionally-heightened election season may be more willing to come to the table afterwards, during President Obama’s lame duck session. A passage then may, in fact, be the last monumental achievement of his presidency.
Meanwhile, those in the vertical market sectors such as the auto and high tech industry push for it, even as labor forces kick against it. It will be interesting to measure just how deep the divide between corporate and public interests lie, depending on the outcome of the TPP.
UPDATED 11/14/2016: With the 2016 election of Donald Trump to the office of President of the United States, almost all trade experts and government officials agree that the TPP is effectively dead. What the new U.S. policy on trade will be going forward remains to be seen.
UPDATED 11/22/2016: In his first video address to the public since being declared the winner of the 2016 Presidential Election, President-Elect Trump has promised to cancel America’s part in the treaty on his first day in office, successfully killing the TPP entirely, since passage depended on unanimous ratification by each partner country.
