To counter China’s influence and pivot itself as the dominant power in the region, the United States, reached a far from perfect final agreement - in October 2015 - with Japan and 10 other Pacific-Ring countries (Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) on the largest regional trade accord in history, in-turn also teeing up for what could be the toughest fight President Obama will face in his final year in office: securing approval from Congress. Now that Hillary Clinton (a leading candidate for democrats’ presidential nominee) is also opposing this Trans Pacific Partnership (TPP) the deal faces months of scrutiny in Congress, where some bipartisan opposition has been instantaneous. The debate in the coming days will unfurl against the backdrop of a presidential campaign in which populist anti-trade talk against the deal, as we see, is already becoming prominent.
Still, for Mr. Obama the accord could be a legacy-making achievement, drawing together countries representing two-fifths of the global economy, from Canada and Chile to Japan and Australia, into a web of common rules governing trans-Pacific commerce. It is the capstone both of his economic agenda to expand exports and of his foreign policy “rebalance” toward closer relations with fast-growing Eastern Asia, after years of American preoccupation with the Middle East and North Africa. Also, as per the increasing trend these days in global trade, Mr. Obama’s defense to TPP conclusion tends to be more political in nature than economic. In a post-deal statement he opined: “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.” This argument - that the Pacific pact would be a bulwark against China’s power and a standard-setter for global commerce - may incidentally also be central to the president’s hard sell ahead to US Congress.
In any case, no deal is perfect and neither is the TPP. Concerns within the TPP are quite evident and perhaps this is the reason that it took more than six years for these twelve nations to reach some sort of a consensus draft. For example, Australia has its reservations that it did not get as much access to the US market for sugar as it wanted; the US pharmaceutical and biotechnology industries are unhappy with the mere 5 years drug protection right or market exclusivity, as they wanted a minimum of 12 years. Other smaller members like Vietnam, Brunei, Chile and Peru wanted an invitation extended to China as well, since in their opinion TPP’s future remains insecure without China being a part of it, etc. However, politics and weaknesses aside, the fact remains that just by its sheer magnitude alone it can be bracketed as a very high standard deal. For the United States, it eliminates 18,000 taxes on its exports while raising labor and environmental standards across the globe. Already environmentalists from around the world are praising the revised legislations on environment protection and on improved monitoring standards, the new innovative enforcement methods and the fresh focus on specific concerns like, for example, the inclusion of wildlife protection; placing new limits on wildlife trafficking; and curtailment of illegal fishing, etc.
Strictly from the US perspective, it will have an enhanced access to the 95 percent global consumers living outside the United States – and some of these are the fastest growing and largest economies in the world. Asia, the Asia-Pacific region, will have three billion middle class consumers in the next 15 years and for any country to be successful and to keep its domestic manufacturing businesses running effectively, it will need to access these markets; and economically the U.S. is precisely trying to achieve this in putting together the TPP. By being able to export more in the long run, not only does the US stand to create more jobs at home but also better paying ones – export-related jobs on average pay up to 18% higher wages.
Well, good luck to Mr. Obama as he strives to convince his friends and foes in the US Congress that the TPP is indeed in the real long-term interest of the American people and that amidst a growing Chinese economic dominance how it can serve as the much needed tonic of the day to re-bolster American influence on global trade, here at home this new treaty poses fresh challenges for Mr. Nawaz Sharif and his government. As these new trading blocs emerge, Pakistan’s competition stiffens further. For example, as the TPP becomes a reality Vietnam will be able to export footwear and textiles duty free to the US and make inroads into the present US market share of Pakistan in these items – Sadly, enhanced trade and market access talks were missing from the centre of the plate during Prime Minister’s current trip to the US. To counter the negative fall outs of the TPP on Pakistan, it must also strive to innovate and unearth new synergies in order to optimise its trade potential and form new trading alliances both regionally and with countries where it feels it has natural economic linkages, but have largely remained untapped. However, given the dismal performance of this government thus far in the sphere of Commerce and Trade, it seems a rather difficult ask!