J.D. Candidate, Columbia Law School, 2017
The Obama administration released the long awaited full text of the Trans-Pacific Partnership trade deal on November 5, 2015. The Trans-Pacific Partnership, or TPP, is a 12-nation deal that makes up 40% of world GDP. It has been heralded as the ‘gold standard’ of trade negotiations and the ‘docking station’ that will ultimately be open to all countries. The announcement marks the largest trade-liberalization pact in a generation. Specifically, the TPP agreement has been described as an “ambitious” and “challenging” negotiation that will set common international trade and investment standards and eliminate 98% of all tariffs between member countries.
Supporters contend that by cutting trade tariffs and setting common standards in trade for all the countries involved, the deal will make it easier for U.S. businesses to tap overseas markets. In particular, the countries participating in the negotiation assert that the goal of the TPP Agreement is to create a “high quality, inclusive agreement that lays the foundations for economic growth, the development and generation of employment in the member countries, and that in turn become the basis for the future Asia-Pacific Free Trade Agreement.” Although proponents have sung many praises for the agreement, it is worthwhile to take a step back and analyze its true value. This blog post will specifically focus on what the TPP agreement and news coverage can predict for the Transatlantic Trade and Investment Partnership (TTIP).
The TTIP is intended to be a comprehensive trade agreement that significantly expands trade and investment between the United States and the European Union. In comparison to the TPP, the TTIP negotiations began more recently (July 2013), “mostly at the urging of the Europeans, who were looking for new sources of economic growth.” The negotiations that resulted in a 12-nation TPP agreement signifies that future regional pacts (such as the TTIP) will go through an exhaustive debate on its merits. However, the success of such negotiations will ultimately depend on how the TPP agreement fairs.
The TPP should be regarded as one of the most aggressive experiments to a new model of trade agreement. International governments have been looking for alternative models that is loosely tied to regions, more precisely described as “strategic trade alliances.” The TPP could operate as a pivotal starting point for a more viable multilateral trade system that more readily responds to trade challenges today. Furthermore, the TPP may become the principal driver for trade liberalization going forward. The initial and most important determinant of whether the TPP can act as a future model is if an agreement can be reached. By simply achieving a deal, the TPP has gained international credibility. This credibility will surely work in favor of a TTIP agreement coming to fruition.
As a leader in formulating the TPP agreement, the United States may have signaled the end of future rounds of multilateral agreements, instead favoring regional pacts. If so, the TTIP may find itself with added support in the near future as negotiations continue. However, caution must be urged against overly optimistic expectations of a TTIP agreement, because if the TPP agreement does not bring about the results the rhetoric claims, there will unquestionably be backlash to the agreement and other regional pact initiatives. This of course is dependent on the Obama administration being able to pass the agreement in the House. Meanwhile, government officials are expressing signs of hesitation, as they hedge their positions in anticipation of the agreements true effects.
International governments are becoming increasingly skeptical of the TPP agreement. For example, Obama’s own party has largely denounced the agreement, and all three candidates to the Democratic presidential nomination—Hillary Clinton, Bernie Sanders, and Martin O’Malley—have also declared their opposition to the TPP. Throughout the campaign trail, these candidates have cited concerns about the lack of protection for American workers. As the United States is the leading driver of the TTP agreement and in a lesser capacity the TTIP, the TTIP will depend more on whether the two sides can push for a deal before President Obama leaves office in early 2017. The importance of finalizing an agreement before Obama leaves office is readily apparent as public perception has been shifting in opposition to regional pacts.
In October, thousands demonstrated in Berlin against the EU-US TTIP trade deal, fearing that citizens are giving away local power. This concern is also shared amongst the public all across Europe. Comparable to the TPP, where the biggest obstacle presently is gaining congressional support to pass the agreement through the House, the TTIP may find a similar obstacle. If a TTIP agreement is reached it will be up to its proponents to persuade EU citizens and representatives to ratify the initiative.
As mentioned earlier, there is no certainty as to whether major regional trade agreements will remain a main priority in the U.S. once a new administration takes office. After TTP, the U.S. may suffer from “trade liberalization fatigue.” Therefore, as negotiations surrounding the TTIP agreement move forward, special attention must be placed on whether the House passes the TTP initiative. If Congress fails to ratify the TTP agreement, trade liberalization fatigue may set in derailing the negotiation process and halting any chances of a TTIP agreement.