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There is a large trade agreement under negotiation involving major economies around the Pacific. The Trans-Pacific Partnership will include the major economies of Japan and the United States, while also including the following ten countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. These twelve countries account for forty percent of global gross domestic product. It has been noted that China has been left out of this partnership because it has been criticized for not following trade rules. In the future, China will be able to join the partnership pending compliance to the Trans-Pacific Partnership’s standards.
The goal of the Trans-Pacific Partnership is to reduce or get rid of tariffs, quotas, and other obstacles that disrupt the transfer of goods between these nations. While the United States maintains trade agreements with many of the countries in the Trans-Pacific Partnership, Japan is not one of them. The United States is looking to gain access to Japan’s restricted agricultural markets, while Japan will appreciate lower taxes on United States automobiles and automobile parts. It is expected that it will not have a substantial effect on the United States economy, with estimates of increased gross domestic product being 0.4% by the Peterson Institute for International Economics.
President Obama has pressured this deal to get passed by other countries so he is able to get it approved by Congress. There are still a number of unions and corporations that are very upset and negatively influenced by the partnership. Detroit, as a whole, is against the partnership due to the decrease in tariffs on cars and car parts that are imported from Japan, along with the fear of a currency war that will give Japan a trade advantage. It is also believed that this partnership will lead to jobs and production being moved to other countries.
The Trans-Pacific Partnership has many pros for the economies involved, but with the fast paced attitude that Obama is using in pressing this matter, a lot of uncertainties remain. Do you think the partnership will have a positive economic outcome? Will all of the countries involved benefit?
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