What is the Trans-Pacific Partnership?

History & Purpose

The Trans-Pacific Partnership(TPP) was negotiated by Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the U.S.A. between the years 2008 and 2016, with the trade agreement covering a staggering 40% of the world's economies. This was signed in 2016, but America, under the decision of President Trump, permanently withdrew from the agreement in 2017 under the claim that it would harm American workers and manufacturing. Though this agreement had not yet been ratified and Trump's decision was largely symbolic, it was a very important change in U.S. trade policy.

The goal of the TPP was to strengthen economic ties and boost the growth of economies, and the agreement included reducing tariffs and strengthening measures meant to enforce environmental and labor standards, copyrights/patents, and other legal policies. The TPP was intended to create a market likened to the European Union(EU).

Implications, Benefits, & Limitations

While the TPP would have been beneficial for the overall economy of certain countries to some extent, it was not without flaws. The TPP would have reduced trade barriers, encouraged foreign investment, and likely raised American wages, however, it would have likely ended in higher inequality between high-skill labor and low-skill labor, hence President Trump's withdrawing from the trade agreement under the argument of helping the American worker. Low-skill labor would likely be outsourced to other countries because tariffs are lower, and this would result in loss of wages or jobs particularly for those who work in manufacturing. This burden on manufacturing would also likely result in negative impacts on regional economies that rely on manufacturing. Besides impacts on regions and industries, this shift in manufacturing location could result in poor quality or concerns about it, which would impact consumer safety, as well as environmental damage due to labor being outsourced to countries with less environmental regulations. Also, it can be noted that trade liberalization also tends to cause increases in domestic prices.

Regarding the positives of the TPP, it would have likely increased product variety and lowered consumer prices. It would also have made it significantly easier for American businesses to sell internationally due to the lowered tariffs and trade barriers, increasing exports and growth. Also, at the time, it would have been a way to access the Asian-Pacific market, which China at the time had a growing influence in. Despite these positive attributes of the TPP, many people were against it, which is part of why it was not put into effect for America.

Conclusion

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References

BBC. "TPP: What Is It and Why Does It Matter?" BBC News, 23 Jan. 2017, www.bbc.com/news/business-32498715.

BBC News. "Trump Executive Order Pulls out of TPP Trade Deal." BBC News, 24 Jan. 2017, www.bbc.com/news/world-us-canada-38721056.

Office of the United States Trade Representative. "Overview of TPP | United States Trade Representative." Ustr.gov, 2024, ustr.gov/tpp/overview-of-the-TPP.

"Trans-Pacific Partnership: Summary of U.S. Objectives | United States Trade Representative." Ustr.gov, ustr.gov/tpp/Summary-of-US-objectives.