The Trans-Pacific Partnership trade deal: An overview
This page was last updated in 2017, when the United States ended Trans-Pacific Partnership trade deal negotiations. Please contact us us with any updates.
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In his contract with American voters—the ”100-day action plan to Make America Great Again”—President Donald Trump (R) said that he would "announce our withdrawal from the Trans-Pacific Partnership" during his first 100 days in office. Calling the TPP "a potential disaster for our country," Trump reiterated his promise to withdraw from TPP in a video released on November 21, 2016. He added, "Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back on to American shores."[1]
On January 23, 2017, Trump signed a memorandum that withdrew the United States from negotiations involving the Trans-Pacific Partnership trade deal (TPP). The action ended U.S. involvement in the multilateral trade deal, which had not been ratified by Congress.[2]
Background
| "Trans-Pacific Partnership Signing Ceremony," February 4, 2016. |
After more than five years of negotiations, President Barack Obama's (D) U.S. Trade Representative Michael Froman announced that the United States and 11 other countries signed the Trans-Pacific Partnership (TPP) trade deal on February 4, 2016, calling it "an historic achievement for the Asia-Pacific region."[3] Froman and Obama argued that the TPP would create new jobs by opening up foreign markets for exporting goods and set minimum standards for working conditions in the 11 other nations, leveling the playing field in the global market.
Shortly before the signing ceremony, Froman said that the deal would put America "squarely where it needs to be when it comes to both the global trading system and global leadership. It sends a signal that we’re prepared to lead a 21st century race to the top on trade and set new standards on everything from intellectual property rights, to a free and open internet, to labor and environment, to disciplines on state-owned enterprises."[4]
The proposed goal of the TPP was to make it easier for businesses in the United States and the 11 other Asia-Pacific countries to export and import goods by eliminating taxes, creating a fair regulatory environment, and removing other trade barriers. The deal also included provisions aimed at protecting workers, the environment, and intellectual property.
All 12 countries were given up to two years to ratify the trade deal before implementation.[5]
Summary of the Trans-Pacific Partnership trade deal
The Trans-Pacific Partnership (TPP) is a trade deal that was negotiated by the United States and 11 Asia-Pacific countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The goals of the trade deal were to promote trade and strengthen the relationships between the 12 nations by reducing and eliminating tariffs, fostering competition, and creating greater opportunities for businesses. The countries also agreed to promote environmental protection practices and enforce laws protecting workers.[6][7]
Key features of the Trans-Pacific Partnership trade deal
According to the Obama administration's summary of the deal, the TPP proposed:[8]
- Eliminating or reducing tariff and non-tariff barriers;
- Facilitating "the development of production and supply chains, and seamless trade;"
- Addressing "new trade challenges, ... including the development of the digital economy, and the role of state-owned enterprises in the global economy;"
- Helping "small- and medium-sized businesses" take advantage of regional trade; and
- Creating a platform to allow countries in the Asia-Pacific region to enter into the agreement in the future.
Projected impact of TPP on employment and incomes in the United States
| "Obama Touts TPP At Nike HQ- Full Speech," May 8, 2015. |
Multiple studies were released in an attempt to forecast the impact of the TPP on employment and incomes. A study conducted by the Peterson Institute for International Economics and the U.S. International Trade Commission predicted slight gains in employment and incomes if the TPP was implemented, while a Tufts University predicted decreases in employment and increases in income inequality. All three studies predicted that workers in the manufacturing sector would be hurt the most by the TPP due to increases in imports from other countries.
In an updated version of a 2012 study on the potential impact of the TPP, the Peterson Institute for International Economics found in their 2016 study that the trade deal would increase incomes and exports but not employment. According to Peter A. Petri and Michael G. Plummer, the authors of the study, the TPP would “increase annual real incomes in the United States by $131 billion, or 0.5 percent of GDP, and annual exports by $357 billion, or 9.1 percent of exports, over baseline projections by 2030, when the agreement is nearly fully implemented.” They also projected that TPP would raise wages for American workers, but it would not increase employment levels. Petri and Plummer found that the TPP would “slightly increase ‘job churn’ (movements of jobs between firms) and impose adjustment costs on some workers.” Because some workers, specifically workers in the manufacturing industry, would be displaced by the TPP, the authors wrote that, although most workers would be able to find new employment, some “may experience serious transition costs including lasting wage cuts and unemployment.” They then suggested that policies should be created to compensate displaced workers “using a fraction of the total US gains.”[9]
A January 2016 study released by Tufts University predicted a more dismal outcome. The Tufts study found "that TPP would lead to losses in employment and increases in inequality. This is true particularly for the United States, where GDP is projected to fall slightly, employment would decline, and inequality is projected to increase as labor’s share of income falls." Tufts' researchers estimated that "GDP would be 0.54 percent lower than it would be without TPP, 10 years after the treaty enters into force," and 448,000 jobs would be lost in the United States.[10]
In May 2016, the U.S. International Trade Commission (USITC) released a study that found the TPP would have a small but positive impact on the U.S. economy and employment. The model used by the USITC found that the agriculture, food, and service industries would benefit slightly from the TPP, while output and employment in manufacturing, natural resources, and energy industries would be hurt slightly if the deal was implemented. The results of the model used by the USITC were compared to baseline projections if the TPP was not implemented. The major findings from the study were:[11]
- Income: “By year 15 (2032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than the baseline projections;”
- Gross Domestic Product: “Real GDP would be $42.7 billion (0.15 percent) higher;”
- Employment: “Employment would be 0.07 percent higher (128,000 full-time equivalents);”
- U.S. exports and imports: “U.S. exports and U.S. imports would be $27.2 billion (1.0 percent) and $48.9 billion (1.1 percent) higher, respectively, relative to baseline projections;”
- Exports: “U.S. exports to new FTA partners would grow by $34.6 billion (18.7 percent);"
- Imports: “U.S. imports from those countries would grow by $23.4 billion (10.4 percent);”
- Agriculture and Food: “Among broad sectors of the U.S. economy, agriculture and food would see the greatest percentage gain relative to the baseline projections; output would be $10.0 billion, or 0.5 percent, higher by year 15;”
- Services: “The services sector would benefit, with a gain of $42.3 billion (0.1 percent) in output;”
- Manufacturing, Natural Resources, and Energy: “Output in manufacturing, natural resources, and energy would be $10.8 billion (0.1 percent) lower with the TPP Agreement than it would be compared with baseline estimates without the agreement.”
Economists noted that citizens should be aware that "[p]redictions of growth and income due to trade agreements are difficult to make before the deals are implemented, and assessing the actual impact of trade agreements such as the North American Free Trade Agreement is still difficult years down the road," according to The Wall Street Journal.[12]
Status of the TPP trade deal
On January 23, 2017, President Donald Trump (R) signed a memorandum that withdrew the United States from negotiations involving the TPP. The action ended U.S. involvement in the multilateral trade deal, which had not been ratified by Congress.[2] The future of the TPP for the remaining nations was uncertain after the U.S. withdrew.
Major players in the trade deal negotiations in the United States
President Barack Obama
Completing the TPP was a major focus of President Barack Obama's (D) economic policy agenda.
In a May 2016 op-ed, Obama wrote,
| “ | Simply put, once the TPP is in place, American businesses will export more of what they make. And that means supporting more higher-paying jobs. This agreement also strengthens America’s national security. When fewer people suffer in poverty, when our trading partners flourish and when we bind our economy closer to others in a strategically important region, America is both stronger and safer. But none of this will happen if the TPP doesn’t become a reality. That’s because the Asia-Pacific region will continue its economic integration, with or without the United States. We can lead that process, or we can sit on the sidelines and watch prosperity pass us by. If we don’t get the TPP done, American goods will continue to face high tariffs and other trade barriers in the region. American businesses will lose competitive access to Asian markets, which would mean fewer of the cars our autoworkers manufacture would make it to growing markets, more of our farmers’ and ranchers’ products would run into barriers abroad, and small-business owners hoping to sell their goods abroad would still find themselves ensnared in red tape. If we don’t get the TPP done, employers across America will lose the chance to compete with other countries’ companies on a level playing field. And when American workers and businesses compete on a level playing field, no one can beat us."[13] | ” |
| —President Barack Obama[14] | ||
U.S. Trade Representative Michael Froman
U.S. Trade Representative Michael Froman was the lead negotiator on the TPP deal.
| “ | Consider the alternative path to leading on trade: TPP fails and the rest of the world moves on. Markets that would have been open to us remain closed, while our competitors eat away at our current position. Rather than launching a race to the top, we find ourselves in a race to the bottom, without strong labor and environmental protections, without disciplines on state-owned enterprises, without rules to keep the Internet open and free, and without protections for our innovators. How could that alternative be more in the interest of American workers, farmers, ranchers and businesses than the path represented by TPP? So there’s an urgency here that’s undeniable. The world is not simply watching to see whether the United States will lead on trade. It’s moving forward without us. The question is whether the United States will move forward as well or be left on the sidelines. Delay is costly, both in economic terms and in terms of U.S. leadership. Why wait and allow thousands of foreign taxes on American exports to persist? Why wait on supporting additional high-paying middle class jobs here in the United States? Why wait and allow other countries like China to write the rules of the road? As President Obama asked Congress last night, 'You want to show our strength in this century? Approve this agreement. Give us the tools to enforce it.' I couldn’t say it any better. The namesake of this institution once said, 'The world has a habit of leaving those behind who won’t go with it.' Through TPP, we can do more than go along with the world. We can lead it. Let’s get it done.[13] | ” |
| —U.S. Trade Representative Michael Froman's remarks at the Woodrow Wilson International Center for Scholars on January 13, 2016[15] | ||
Senator Bernie Sanders
Senator and former 2016 presidential candidate Bernie Sanders (I-Vt.) was a major opponent of the TPP. In an op-ed published on July 8, 2016, Sanders urged the Democratic Party to include an amendment in the party's platform rejecting the TPP. His efforts were unsuccessful.
| “ | In my view, the trade deal would result in job losses in the United States, make the global race to the bottom even worse, harm the environment, undermine democracy and increase the price of prescription drugs for some of the poorest people in the world. This should not be controversial. It is the exact same position that Secretary Clinton and I have taken during the campaign, and opposition to the TPP is the position of the overwhelming majority of Democrats in Congress. One of the major reasons why the middle class has been in a 40-year decline: poverty has been increasing and the gap between the very rich and everyone else has been growing wider and wider due to our disastrous trade policies. You do not need a Ph.D. in economics to understand that our trade agreements have failed.[13] | ” |
| —Sen. Bernie Sanders[16] | ||
Senator Orrin Hatch
Although Senate Finance Committee Chairman Orrin Hatch (R-Utah) joined with President Obama to get trade promotion authority (TPA) passed, he expressed concern about a number of problems that he saw with the deal. According to Politico, "Hatch offered a stinging review [of the deal] and warned that the administration may have ignored congressional marching orders in a number of areas, including securing strong intellectual property protections for a new, cutting-edge class of drugs called biologics."[17] Without Hatch's approval, TPP had little chance of passing the Senate.
| “ | It’s also no secret that many stakeholders and members of Congress – including myself – have some doubts as to whether the agreement meets the high standards necessary to gain congressional approval. … I’m quite certain the President wants to get a strong TPP agreement passed as soon as possible. I share that goal. But, Congress has a history of taking the time necessary to consider and pass trade agreements, and the process set out under TPA demands that we do so. Despite a number of claims to the contrary, Congress does not rubber stamp trade agreements and we will not do so in this case.[13] | ” |
| —Sen. Orrin Hatch[18] | ||
Senator Elizabeth Warren
Senator Elizabeth Warren (D-Mass.) was a major opponent of TPP.
| “ | Most of the TPP is about letting multinational corporations rig the rules - on everything from patent protection to food safety standards - all to benefit themselves. The first clue about who the TPP helps is who wrote it. Twenty-eight trade advisory committees were formed to whisper in the ear of our trade negotiators-to urge them to move this way or that in the negotiations. Who are the special, privileged whisperers? Eighty-five percent are senior corporate executives or industry lobbyists. Many of the committees - including those on chemicals and pharmaceuticals, aerospace equipment, textiles and clothing, and financial services - are one hundred percent industry representatives. The second clue about what's going on is that it all happened behind closed doors... A rigged process produces a rigged outcome. When the people whispering in the ears of our negotiators are mostly top executives and lobbyists for the biggest corporations - and when the public is shut out of the negotiating process -the final deal tilts in favor of corporate interests.[13] | ” |
| —Sen. Elizabeth Warren’s remarks on the Senate floor on February 2, 2016[19] | ||
See also
- The Trans-Pacific Partnership trade deal: Legislation
- The Trans-Pacific Partnership trade deal: Public opinion on TPP and T-TIP
- The Trans-Pacific Partnership trade deal: Summary of the TPP
- The Trans-Pacific Partnership trade deal: Human trafficking concerns
- 2016 presidential candidates on the Trans-Pacific Partnership trade deal
- The Trans-Pacific Partnership trade deal: Opposition
- The Trans-Pacific Partnership trade deal: Understanding trade terminology
- The Transatlantic Trade and Investment Partnership
- Trade promotion authority (TPA)
- Trade adjustment assistance (TAA)
- North American Free Trade Agreement (NAFTA)
- Investor-State Dispute Settlement (ISDS)
- Michael Froman
External links
- Office of the United States Trade Representative, "Transatlantic Trade and Investment Partnership (T-TIP)"
- Office of the United States Trade Representative, "Outlines of TPP"
Footnotes
- ↑ The Guardian, "Trump to withdraw from Trans-Pacific Partnership on first day in office," accessed November 22, 2016
- ↑ 2.0 2.1 WhiteHouse.gov, "Presidential Memorandum Regarding Withdrawal of the United States from the Trans-Pacific Partnership Negotiations and Agreement," accessed February 9, 2017
- ↑ Office of the United States Trade Representative, "Trans-Pacific Partnership Ministers’ Statement," accessed February 3, 2016
- ↑ Politico, "Morning Trade," accessed February 3, 2016
- ↑ The Hill, "US will sign Pacific trade deal on Feb. 4," accessed February 3, 2016
- ↑ Office of the United States Trade Representative, "The Trans-Pacific Partnership," accessed February 3, 2016
- ↑ Medium.com, "The Trans-Pacific Partnership: Preamble," accessed February 3, 2016
- ↑ Office of the United States Trade Representative, "Summary of the Trans-Pacific Partnership Agreement," accessed February 21, 2016
- ↑ Peterson Institute for International Economics, "The Economic Effects of the Trans-Pacific Partnership: New Estimates," accessed August 3, 2016
- ↑ Global Development And Environment Institute Tufts University, "Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement," accessed July 11, 2016
- ↑ U.S. International Trade Commission, "Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors," accessed August 3, 2016
- ↑ The Wall Street Journal, "Study Projects TPP Will Provide Modest Gains for U.S. Economy," accessed August 3, 2016
- ↑ 13.0 13.1 13.2 13.3 13.4 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
- ↑ The Washington Post, "President Obama: The TPP would let America, not China, lead the way on global trade," accessed August 3, 2016
- ↑ Office of the United States Trade Representative, "Remarks by Ambassador Michael Froman at the Woodrow Wilson International Center for Scholars," accessed February 5, 2016
- ↑ The Huffington Post, "Democrats Must Fight To Defeat The Trans-Pacific Partnership," accessed July 11, 2016
- ↑ Politico, "Orrin Hatch holds cards on trade deal," accessed February 5, 2016
- ↑ Hatch.Senate.gov, "As Trade Agreement Advances, Hatch Warns that Congress Won't be a Rubber Stamp," accessed February 5, 2016
- ↑ Warren.Senate.gov, "Senator Warren Urges Congress to Reject TPP Agreement," accessed February 5, 2016
