Trans-Pacific Partnership: America’s Writing the Rulebook

Caitlin MayoCaitlin Mayo is a freshman nursing major.

On October 5th, twelve nations that border the Pacific Rim reached a final agreement after ten years of negotiations. This agreement, known as the Trans-Pacific Partnership (TPP), is the largest regional accord in history, even larger than the North American Free Trade Agreement (NAFTA). The twelve member nations represent 40% of the global economy. The TPP strives to bring the Pacific Rim region closer under a common set of regulations and standards that would make doing business in the region much easier, removing barriers that had made trade too costly to be profitable.

On the surface, the TPP sounds like a good deal. This agreement would open opportunities for businesses of all sizes, as the TPP provides businesses from abroad the ability to compete with domestic businesses by removing tariffs that increase large price difference between foreign goods and domestic goods. Among the tariffs that will be eliminated, as stated by the Office of the United States Trade Representative, are import taxes as high as 70% on U.S. automotive products, 74% duties on American beef in Japan, and 20% import taxes on American poultry in Vietnam.

The TPP also holds member nations accountable to adhere to a set of standard regulations on labor, environmental protection, digital freedom, corruption, and development. Such regulations would greatly simplify international law and standardize business law on the Pacific Rim by holding nations liable to a common rulebook, removing legal discrepancies and preventing abuses by multinational companies that would opt to move operations abroad to exploit legal system differences.

The TPP makes sense in an economy that is only becoming more and more globalized and interconnected. With the rise of the digital age, it is inevitable that people across borders would face dispute over setting up regulations for web usage. The Internet is an unprecedented economic development that has revolutionized the way in which businesses could get their products to the largest target markets across the globe. Because of how recently the Internet has become a part of the economic equation, many laws do not match up between countries. One such discrepancy is the practice of forced localization, which requires certain off-shore businesses to place their data, services, research facilities, and other necessities into the host country in order to operate in their market. Naturally, this can be quite costly, and so in the past, many small businesses simply could not enter those markets.

However, you can’t have a silver lining without a cloud. And certainly, the Trans Pacific Partnership has a large cloud looming over it. The TPP has to be approved by every nation involved in the partnership, including the United States. The TPP has been met with much opposition from Democrats and labor unions, who claim that this agreement gives more power to businesses. The TPP includes a provision that allows multinational corporations to challenge regulations, which are against the interests of worker protection. Multinational corporations would have be given more power through this, even with the established standard regulations.

If we were to look at the NAFTA, we could see that this agreement had mostly benefited the U.S., multiplying the beneficial effects of its trade surplus with Mexico. However, this was detrimental to the other members of NAFTA, as it caused a trade deficit that, according to New York Times, has grown to more than $50 billion a year.

The Office of the United States Trade Representative’s official website for the TPP even states “If we don’t pass this agreement and write those rules, competitors will set weak rules for the road, threatening American jobs and workers while undermining U.S. leadership in Asia.” With this language, it seems that the TPP was written to mainly benefit American business. China, the second largest economy on the Pacific Rim after the U.S., hasn’t even involved itself in TPP negotiations, and has taken the TPP as an American threat to Chinese economic influence.

The TPP is the future of business in the Pacific Rim, but truly, it will need work to keep it from becoming another NAFTA. It has the potential to benefit the Pacific Rim. We can only hope that China will eventually involve itself in negotiations to counterbalance American-centric terms in the Trans-Pacific Partnership and to create a fair, free trade zone that would transform the region.

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