Published:
The Trans-Pacific Partnership (TPP) is a major trade deal meant to strengthen economic ties among its twelve member nations (United States, Japan, Vietnam, Malaysia, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Peru, and Chile). If the TPP were to pass in every country involved in the trade deal, it would give the countries with smaller economies the opportunity to grow at a rapid pace. This trade deal would eliminate tariffs between the member nations. Countries with cheap manufacturing labor like Malaysia and Vietnam would benefit immensely from being able to export to the massive consumer markets in the United States and Canada without any tariffs being imposed. Many of the smaller countries are looking to see if the United States will ratify the TPP. Singapore’s Prime Minister has said that America must ratify the Trans-Pacific Partnership to show it is serious about doing business in the Asian-Pacific market. Currently, it seems unlikely that the TPP will be ratified by the US Congress during Barack Obama’s presidency and both of the major US presidential candidates oppose the TPP in its current form.
If the TPP never gains approval by the United States Congress, it is very possible that the countries seeking a major consumer base to export their products to would look to China. China has the worlds largest population and the highest number imports of goods and services as a percentage of its gross domestic product. These two factors, combined with China being so close to many of the countries in the TPP, make it the most logical choice to replace the United States in a similar trade deal.
Vietnam is a great example of a nation in the TPP which would stand to benefit greatly from a trade deal with China. Vietnam had a trade deficit with China surpassing $24 billion in 2015, while only being at a deficit of $4 billion with the United States. A large part of this comes from Vietnam’s dependence on China for material used in many Vietnamese industries. For example the garment industry imports about 80% of its raw materials from China. Vietnam’s garment industry accounts for a huge portion of its exports to major countries. With no cheaper options in the region to import raw materials from Vietnam could benefit greatly from a trade deal similar to the TPP with China.
Many experts believe that this deal is already in the works. It is called the Regional Comprehensive Economic Partnership (RCEP), and it includes sixteen member nations all located in East Asia, South Asia, or Oceania. Many experts say that these two trade deals offer many similar things, but that overall they have two different versions of how the global economy should be run. The TPP would allow a more open economy and allow member nations not part of the original pact to join at a later date. Gordon Chang, author and regular contributor on CNN and Fox News programs, has said that the RCEP trade deal would close off much of the trade in East Asia from countries that are not a part of RCEP. With the United States’ recent negative stances on the TPP seemingly killing the deal in America, now might be the most likely time for China to seek to finalize the RCEP trade deal.
File under
Share this article
