The TPP, the largest regional trade agreement in the world, would set new terms and conditions for America and 11 other Pacific Rim nations. This makes the accord a history setter and it will have potential force to change the course of action of global trade. However, The TPP has been made a big villain in the US presidential campaign by both Hillary and Trump
Billed as the most important trade deal of the 21st century, the Trans-Pacific Partnership (TPP) is awaiting the approval of the American Congress since October 2015 when the agreement was formally signed by all 12 nations.
The TPP, the largest regional trade agreement in the world, would set new terms and conditions for America and 11 other Pacific Rim nations. The entire group of 12 nations has a GDP of nearly $28 trillion, which represents around 40 per cent of the global GDP and one-third of the international trade. This makes the accord a history setter and it will have potential force to change the course of action of global trade.
Having said so, why is it so important for the US to pass itIJ
The TPP has come as a product of years of negotiations in and around 12 nations mainly spearheaded by the lobbyists and politicians of the US. It is a great victory for US President Barack Obama.
For him, it will work as a strong foreign policy pivot to the Pacific Rim countries against China’s aggressive expansion in the region. This treaty bears special significance for all the 12 signatories as it aims to reduce and eliminate trade and investment barriers, making the movement of the goods and services faster, better and hassle free among all these nations.
And the TPP will all have the mechanism to establish new rules and disciplines to regulate trade practices among these nations. For America, the TPP will bring substantial improvement in incomes and exports, but it will not raise the scope of more jobs back home.
In an increasingly interconnected world, the US has all the good reasons to pass the TPP in the Congress though the Republicans and the Democrats are at loggerheads over the current presidential election. Why America will isolate it from passing the TPP at a time when China is literally engulfing the whole world starting from Asia to Africa.
Thus the proponents of the deal, including the US Administration officials, feel that the TPP will not only help cementing the US role in authoring the rules of the international trade, but will also herald a new age for Washington to play its strategic leadership in the Asia-Pacific region.
But the sceptics within and outside the Congress have raised serious doubts over the real benefits of the TPP for the country. Republican presidential nominee Donald Trump has promised to tear up the deal and says America does not need this.
In fact, the TPP has been made a big villain in the US presidential campaign by both Hillary Clinton and Trump.
When she was the Secretary of the State, Hillary Clinton, the Democratic presidential nominee, supported the TPP, saying, “We need to keep upping our game both bilaterally and with partners across the region through agreements like the TPP…This TPP sets the gold standard in trade agreements to open, free, transparent, fair trade and the kind of environment that has the rule of law and the level- playing field. And when negotiated, this agreement will cover 40 per cent of the world’s total trade and build in strong protections for workers and environment.”
However, now Hillary opposes the TPP indicating it will not protect American jobs. She indeed took the same position like that of other Democratic presidential candidate Bernie Sanders that the TPP would lead to loss of jobs and competitive wages for Americans. Thus she won a large number of Sanders supporters in the run up to the final victory as the Democratic presidential nominee.
Trump with all his rhetoric spread the message that today the middle class is losing jobs in the country and they are not getting sufficient wages. But the truth is that trade has affected all the industries and it is not solely migration that has taken the jobs of the natives across the globe. Rather it is the fast changing information and communication technologies (ICTs), advanced manufacturing for which the industries need fresh and skilled trainers and finally, the largely market-driven supply chain systems are responsible to a great extent for the mass displacement and loss of jobs in major countries.
Thus today, the deal hangs in the opposition from both the presidential nominees and their parties are not willing to take it up in the Congress till the elections are over.
In fact, the supporters of the TPP know it pretty well that whoever wins the presidency, the passage of the agreement in the Congress is currently dim. looking at the atmosphere, they would like to wait for a vote during the lame-duck session after the presidential poll in the country. This makes sense and it will finally see the TPP becomes the most powerful trade treaty of the 21st century.
It is felt that failure to pass the TPP will definitely send a wrong message to the Asia-Pacific nations who are eagerly waiting to see the US Congress approval coming on its way. Else the US leadership will make the partners feel that it is weak and it will reflect its non-committal nature and possibly a retreat from its protectionist role in the region. More importantly, for the Asian partners, the TPP is the economic centerpiece of the Washington’s long-term commitment to its old allies in the region. So backtracking from the TPP will bring an irreparable damage to the leadership of the US.
Therefore, the blame game on migration and outsourcing of American firms may not be the good reasons to sign up the TPP deal by the US Congress. America must display its greatness and allow the trade benefit to follow in the promising economies of the Asia-Pacific countries. America has the power and portfolio to promote the global trading system and irrespective whosoever occupies the White House, it must go on playing its pivotal role.
While expanding trade, America may face both losses and gains. So the country must build up enough resources to support those who have lost jobs because of technological advancements and a huge tilt in the market dynamics. Fighting for job and wage security is not to resort to protectionism, but to galvanise enough resources and readiness of the industry houses to open doors for more vocational training and wage insurance.
In an atmosphere of election war, the parties are simply exaggerating the ill effects of trade rather than outlining the long-term benefits of American business. Also branding China as an unfair trader and calling for retaliatory measures will not help in expanding American interests in six countries of the region who are partners in the TPP and beyond them.
Besides such election rhetoric and undiplomatic gestures may invite equally forceful steps from China against US exports to the Asia Pacific. Therefore, instead of stressing on anti-China slogans, the US policy makers should enhance trade standards and make a congenial atmosphere so that China may join the TPP sooner or later. This kind of a comprehensive approach may obviously support the agreement for building up sustained impact on global trade. losing Chinese market will be a huge loss for the rest of the world and hence, it would be much better for the TPP nations to open the door for a Chinese entry.
Thus supporters of the trade treaty say that it would be a boon for all nations involved and it would unlock opportunities and address vital 21st century issues within the global economy. It must further be designed in such a way that it encourages more and more countries to enter the bloc and in this China must be included barring all its ideological and aggressive display of interests. The TPP is not giveaway to business as many American experts say. It is not exactly selling out more manufacturing jobs to low-wage nations like Vietnam. Probably, it is not limiting competition and encouraging higher prices for pharmaceutical products and other high-value goods. The TPP must be viewed as means to address a number of festering global issues that are fast becoming roadblocks with the rise of global trade like e-commerce, financial services and inter-continental ICT networks.
Obama has tried for a final push to the TPP deal, but still there is a long way to go. Though Obama had a detailed talk with the bi-partisan group about the rich benefits of the deal, yet all eyes are on the post-election Congress which will definitely have less political fallout for the respective parties.
(The writer is Senior Editor, The Pioneer)