Dear Readers,

The Trans Pacific Partnership (TPP) agreement has recently generated a lot of buzz and could be an important topic for your exam.

Since it involves twelve economically significant countries of the world, it is crucial to develop an understanding of the agreement. This article will look at the basic concept, impact and features of the TPP.

Background – What is TPP?

· The TPP began as a trade agreement between only four countries – Brunei, Chile, New Zealand and Singapore – in 2005. This deal eradicated tariffs on a majority of products traded between the countries, indicated to cut more and also to cooperate on larger issues like employment measures, intellectual property and competition strategies.

· Now, a total of twelve countries are involved – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, USA and Vietnam. This would be the biggest trade agreement since the North American Free Trade Agreement (NAFTA) of 1994.

· According to the Office of the United States Trade Representative, the TPP agreement is “a high-standard, ambitious, comprehensive, and balanced agreement that will promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections.”

· The agreement covers about 40 per cent of the world economy. It is expected to discontinue 18,000 taxes imposed by the participating countries on American exports – from autos and machinery to chemicals, consumer goods and agricultural products.

· The TPP is expected to create a new, single market for these countries like that in the European Union. The member countries also hope to develop a closer relationship on economic policies and regulations.

Objectives

· To strengthen economic ties between these countries, slash tariffs and stimulate trade to boost growth.

· To unify international trade between the member countries by creating a common set of regulations.

· To deal with disputable fields like market access, custom duties and trade barriers.

· To resolve issues pertaining to pharmaceuticals, agriculture and automotive sector.

Key Features

1. Extensive Market Access – Apart from reducing tariff barriers, it will also cover the complete domain of trade, inclusive of all goods and services, trade and investment. It will also consequently create new opportunities and benefits for the consumers and businesses of the member nations.

2. Geographical Approach – The TPP will help the progress of production and supply chains and integrated trade practices. It will also boost the efficiency, support the objective of creating and supporting jobs, elevate living standards, enabling cross-border integration and opening new, domestic markets.

3. Tackling New Trade Challenges – The TPP encourages productivity, innovation and competitiveness by identifying issues, like the evolution of the digital economy, and the significance of government enterprises in the world economy.

4. Inclusive Trade – The TPP will have new features that will try to ensure that economies at all levels and enterprises on all scales can get aid from trade. It will also help the small- and medium-sized enterprises grasp the benefits of the agreement and get their specific problems resolved. There are also some unique commitments in the areas of development and trade capacity building which will be important to ascertain that all the parties can meet these commitments in the TPP and benefit from them.

5. Regional Integration – the Trans Pacific Partnership is also meant to be a stage for regional integration and aimed to incorporate more economies from the Asia-Pacific Region.

Criticism of TPP

· Critics have argued that the Trans Pacific Partnership is an indiscreet tactic to keep China excluded out of the agreement.

· Some say that it will create ways for companies to press charges on governments that deflect from their policies on certain subjects – like health and education – to favour services provided by the state.

· There has been major criticism of the allegedly “secretive negotiations” by which the governments are apparently trying to bring in substantial changes without the knowledge of voters.

· Most of the benefits in income would go to employees making more than USD 88,000 per annum. Free trade agreements cause income inequality in high-wage countriesas they promote cheaper products from low-wage nations.

· Since it safeguards patents and copyrights, the higher-paid owners of the intellectual property would get the majority of the income gains.

· Once the rules regarding patents are implemented, cheaper generic products will become scarce and this will inflate the prices of drugs.

Opinion/views in favour of TPP

· TPP gives pharmaceutical firms, tobacco companies and other similar corporations quite less than what they had demanded, and offers environmentalists more privileges than they had asked for.

· TPP will help to strengthen competition between labour forces of different countries and also reduce tariffs by, for example, discontinuing the use of performance requirements.

· Import-export rules which are incompatible with those issued by the World Trade Organization will not be imposed anymore. This will include remanufactured products and it will thus, encourage recycling of parts into new goods.

· TPP will provide provisions for the fair and transparent international conciliation of investment debates, and will have strong methods to prevent abusive claims and ascertain the rights of the governments to issue in public interest.

· This will make easier for small enterprises to search, register and safeguard IP rights in these new markets. Members have also consented to facilitate the legal means to curb misuse of trade secrets and set up criminal procedures and punishments for theft of trade secrets.

· The parties will make companies remove forced labour, child labour and discrimination in employment. Laws pertaining to minimum wages, working hours and health and safety at workplace will also be drafted.

· Since a lot of importance will be given to upcoming businesses, ways will be employed to lessen paperwork, improve market access and facilitate better internet access to them. A Small- and Medium-Sized Enterprises Committee will also be set up so as to make it more convenient for newer ventures to establish business within the member countries.

These are the primary points in the Trans
Pacific Partnership. Understanding these will help you significantly in
attempting questions on this topic.

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