For the first time, the initiative of the Trans-Pacific Partnership (TPP) was put forward by New Zealand, Singapore and Chile in 2003. In 2011, after the accession of the US the concept of the agreement was essentially changed. Since 2011, nine countries were conducting negotiations on accession to the Trans-Pacific Partnership: USA, Australia, New Zealand, Malaysia, Singapore, Vietnam, Brunei, Chile, and Peru. Canada and Mexico joined the negotiations later, and in 2013, Japan joined them. Currently, these countries make up the basic structure of the partnership. There is a possibility that the Republic of Korea, as well as Taiwan, Thailand, the Philippines, will join the Trans-Pacific Partnership, but these countries have not yet acceded to the negotiating process. The Trans-Pacific Partnership plans to unite the countries of the three regional areas - Asia and the Pacific, North and South America. The union includes significantly different economic players. The states are different at the scale of the economy, the level of industrial development, management practices, and global trade involvement. The Agreement on Trans-Pacific Partnership is an important element of restarting the global economy and is the most competitive trading and investment platform of the 21st century. Negotiations on the partnership ended October 5, 2015, in Atlanta (USA) and the signing of the agreement took place February 3, 2016, in Auckland (New Zealand).
The impact of the agreement on the Member States
The countries of the Trans-Pacific Partnership have large economic potential. The agreement on TPP provides significant benefits to its members, the most important of which is the vast opportunities in matters of services and investments. The agreement provides a full opening of the services markets, except for the list of those services that was established by each of member countries for itself. Moreover, the agreement opens access to foreign direct investment, except for the sectors that were reserved for the partner countries. According to the estimates of the World Bank, the macroeconomic effects of the agreement will allow by 2030 to increase the GDP of the Member States by 1.1%, and the volume of trade 11%. The greatest benefit will receive such states as Vietnam and Malaysia (10% and 8% of GDP, respectively) due to the reduction of tariff and non-tariff protection of large markets such as the USA, Canada, and Australia (“Global Economic Prospects”, 229).
For Mexico, this agreement will strengthen its production relations with the United States and Canada within the scope of regional cooperation, as well as deepen trade relations with Japan, Peru, and Chile. It is expected, that in the future participation in the agreement will cause a positive impact on the economy of the country, namely by attracting foreign direct investments and the possibility of export diversification. For Mexican companies, the Trans-Pacific Partnership opens an additional opportunity to enter six new markets in Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam, with which Mexico had no free trade agreements. However, according to the estimates of the World Bank, the benefits of Mexico among all member countries will be the smallest. The expected GDP growth during the period from 2014 to 2030 will be total about 1.4% while exports will grow only by 4.7% (“Global Economic Prospects”, 227).
The participation of Japan in the TPP will lead to the liberalization of its agricultural market, and will reduce prices for imported foodstuffs. Unfortunately, this can cause a drop in domestic production of basic food products as the Japanese agriculture is completely dependent on government support and is not prepared to the open competition. It is possible to assume that the Japanese producers of rice will not sustain the competition from Vietnam cheap market. The main benefits of joining the Trans-Pacific Partnership will receive Japanese exporters of cars, electronics and other manufactured products (Wolferen).
The TPP member countries undertake a number of obligations and restrictions. In addition to the opening of their markets for goods, services and investments based on non-discriminatory standards, they need to facilitate customs procedures and fight against smuggling. The agreement obliges the governments of the member countries to observe the labor legislation based on the principles of the International Labour Organisation. In addition, states should adopt similar legislation on the environment, a transparent and anti-corruption struggle. The TPP also includes measures to ensure the competitiveness of the products of the participating countries, the fight against corruption, new measures to regulate foreign trade, investment cooperation, financial services, telecommunications, regulation of e-commerce and intellectual property rights (“Update on”).
The agreement could have a positive effect on the development of the competitiveness of international roaming and e-commerce services, and encourage the development of small and medium-sized enterprises. For a number of developing countries the implementation of such TPP requirements as an elimination of piracy and intellectual property protection, the elimination of child labor, the fight against labor discrimination, unemployment, and poverty reduction, would be quite difficult. In a number of the developing countries, the agreement can cause higher unemployment rate. Thus, Mexico could lose a significant number of working places in the textile industry, in favor of Vietnam. As well, as supplies of dairy products from Australia and New Zealand represents a considerable threat to Mexican agriculture.
Consequences of the Trans-Pacific Partnership for the Global Economy
In terms of total potential demand and production capacity, the TPP is the largest free trade zone. The member countries of the agreement represent 11% of the world's population, 37.4% of world GDP, 25% of international trade, and 28% of foreign direct investments (“Key Indicators Database”). Naturally, such a significant agreement will have an impact on non-member economies and in the global economy in general. Quantitative risks for the global economy will be determined by the impact of Trans-Pacific Partnership weakening of China's trade and investment relations. In recent decades, the stability of the world economy and its growth mostly were provided by the intensification of trade and investment cooperation between China - US. In the context of slowing global economic growth, the emergence such a union without the participation of China can become a risk for the economy of this country. Moreover, without restoration of growth rates of the Chinese economy low indicators of development of the world economy can gain chronic character. In recent decades, China has played a key role in stabilizing the world economy - in a period of crisis in 1997, and during the global financial crisis in 2007-2008. China largely forms the current trends in the global economy, commodity prices dynamics and the stability of global financial markets.
The greatest losses of non-participation in TPP will have Thailand and South Korea that are already in a hurry to join this agreement. There are no principle or formal barriers for accession to the agreement for these countries, China or Russia. However, there are barriers connected with the observance of some articles of this agreement, which will be very difficult to overcome for the countries whose economy is under strong state influence. Today, the beginning of the rapid construction of all types of enterprises in Vietnam, Peru, Chile, and Malaysia is expected. A mighty capital inflow is expected to strengthen the economies of those countries with relatively cheap labor.
Despite the fact that, according to the World Bank's view, the effect from the emergence of TPP for Russia is close to zero, the fact in its non-participation in this agreement will limit Russia’s competitive opportunities of trade and investment cooperation with the participating countries. An adverse indirect impact from the negative effects of TPP to China's economic growth, which is the largest trading partner of Russia, is quite probable. The fall of China's economic growth may have an influence on commodity prices, which may delicately affect the Russian exports. The negative consequences from the creation of TPP for Russia can be multiply increased after the launch of Transatlantic Trade and Investment Partnership (TTIP), in which the effects of the reorientation of trade and investment flows are likely to be more significant. It can have an impact on the global economy, lead to a shift in the multilateral regulation of international trade and investment.
The peculiarity of TPP is in its content, aimed not so much on the formation of new free trade environment but on the creation of a precedent for the adoption of common institutional rules for member states, the administration of which, perhaps, will be the prototype of the regional administration.
References
Global Economic Prospects; Spillovers amid Weak Growth (2016). The World Bank Group.
Retrieved from: http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2016a/Global-Economic-Prospects-January-2016-Spillovers-amid-weak-growth.pdf
Key Indicators Database (n.d.). Asia-Pacific Economic Cooperation’s Statistics. Retrieved
Overall U.S. Benefits; the Trans-Pacific Partnership (n.d.). The Office of the United States
Trade Representative (USTR). Retrieved from: https://ustr.gov/sites/default/files/TPP-Overall-US-Benefits-Fact-Sheet.pdf
Update on the Trans-Pacific Partnership Negotiations (2015). The Office of the United States
Trade Representative (USTR). Retrieved from: https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2015/update-trans-pacific-partnership
Van Wolferen, Karel (2016). “The predators behind the TPP”. The Japan Times. Retrieved
