The Trans-Pacific Partnership

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FTAs are prevalent throughout the TPP region which account for some of the most significant trading relationships in the region. Nearly 100 new FTAs have been signed since 2000 in the Asian region alone (Plummer, 2016). This may partially explain the willingness of those TPP partners to focus on complex macro issues in a more comprehensive, high standard agreement, such as those negotiated in the proposed TPP, because much of their trade was already covered under existing bilateral trade agreements.

As an example, during a 10 year snapshot between 2000-2011, trade among TPP countries grew with data supporting that TPP countries traded less with Japan and the United States and more among each other, other APEC economies, especially China, and the rest of the world (Williams, 2013, p. 28).

China viewed the pact with concern, seeing a potential threat as the US maneuvered to tighten its relationship with Asian trading partners. China’s rise as a trading partner with TPP countries has been rapid and reflects China’s trade patterns with the rest of the world. During the same time period, the share of U.S. imports coming from China increased from 8% to 19%, some of which may be the result of a shift in lower-cost production to China from other Asia-Pacific countries. Concurrent to TPP negotiations, China had been active in negotiating bilateral trade agreements with TPP countries, such as the Silk Road initiative in Central Asia (Granville, 2017), and thus most likely influenced the detailed negotiations of the TPP through proxy of those economic partners (U.S. International Services, 2011).

TPP and the Obama Administration

The TPP was the first FTA negotiated from the ground up by the Obama Administration and represented an ambitious, next-generation, Asia-Pacific partnership. Through this agreement the Administration sought to boost the U.S. economy, by increasing exports to a region that includes some of the world’s most robust economies. However, those large and growing markets in Asia-Pacific were already key destinations for U.S. manufactured goods, agricultural products, and services suppliers. The TPP aimed to further deepen this trade and investment relationship. The Obama Administration, in collaboration with Congress and a wide range of nearly 600 corporate stakeholders, negotiated to the TPP agreement with focus on addressing the issues that U.S. businesses and workers faced in the 21st century global marketplace (Office of the United States Trade Representatives, 2011).

The Obama administration identified five defining features that made the TPP a landmark trade agreement (Analysis, 2013). These are:

- Comprehensive market access - to eliminate tariffs and other barriers to goods and services trade and investment;

- Fully regional agreement - to facilitate the development of production and supply chains among TPP members;

- Cross-cutting trade issues - to build on concurrent negotiations within APEC and other trade markets by incorporating four new, cross-cutting issues:

Regulatory coherence

Competitiveness and business facilitation

Small-and medium-sized enterprises, and,

Overall development

- New trade challenges - to promote trade and investment in innovative products and services;

- Living agreement – “open architecture” document written to ease adoption by additional Asian nations to enable the updating of the agreement as appropriate to address trade issues that emerge in the future (Granville, 2017).

The Obama administration pushed hard for Congressional ratification on all fronts. During her October 14th, 2011 speech to the Economic Club of New York, then U.S. Secretary of State Hillary Clinton heralded the United States’ so-called pivot toward Asia, announcing, “The world’s strategic and economic center of gravity is shifting east” (Gordon, 2011). While the TPP received some bipartisan support in Congress, the sentiment within public opinion in the United States was not as widely accepted and quickly emerged as a hot topic during the 2016 Presidential Election.

Both party candidates - Democrats Hillary Clinton and Bernie Sanders opposed the agreement, as did Republicans Donald J. Trump and Ted Cruz (Calmes, 2017). Donald Trump during his campaign referred to the TPP as a symbol of failed globalism and the loss of U.S. jobs overseas (Granville, 2017) and more often, as a “job killer and a continuing rape of our country” (Hellman, 2016). Of nearly 2000 registered voters surveyed one week prior to the 2016 election, among the Democrats, 43 percent said they either somewhat support or strongly support the deal (TPP). The same survey reported, only 30 percent of Republicans and independents favored the TPP (Hellman, 2016).

In an attempt to control the TPP narrative, during the August 2nd, 2016 White House Press conference, then President Obama stated the “Trans-Pacific Partnership knocks out 18,000 tariffs that other countries place on American products and goods” (Graves, 2016). However, a deeper dive into the source of those numbers reveals a different outcome. J. Bradford Delong, a professor of economics and Chief Economist at the Blum Center for Developing Economies, University of California-Berkeley, noted the number was likely correct. However, “that most of those tariffs being eliminated were small to begin with” and would benefit more to those smaller developing economies than the U.S. (Delong, 2015). Additionally, Section 2-D of the TPP agreement provides for the gradual elimination of tariffs. Each country has a tariff elimination schedule with some tariffs removed immediately and others phased out over as many as 30 years (Delong, 2015). Delong also noted that within the White House’s calculations of 98% of the 18,000 tariffs being removed were “credits” taken for countries already subject to pre-existing FTAs, leaving only Brunei, Japan, Malaysia, New Zealand and Vietnam, serving to diminish the actual benefit the U.S. would realize. The U.S., as the largest and richest nation of the Pacific group, would benefit in absolute terms, but “the agreement would generate substantial gains for Japan, Malaysia, and Vietnam as well, and solid benefits for other members” (Calmes, 2017).

Analysis

Although often referred to as a free trade agreement, the TPP is not really about free trade. Like many so-called free trade agreements, the