One of the potentially biggest economic initiatives for Obama’s second term is the Trans-Pacific Partnership (TPP). Started some seven years ago by four Pacific nations—Brunei Darussalam, Chile, New Zealand, and Singapore—to spur trade by eliminating tariffs, the agreement has now expanded to encompass twelve nations, including the United States, Australia, Canada, Japan, Malaysia, Mexico, Peru, and Vietnam. The block’s combined GDP reaches some $28 trillion, with member countries conducting roughly a third of all global trade.
The TPP aspires to move beyond the current free trade agreements between many of these nations. When working groups meet this weekend in Washington D.C. tariffs will be the main focus. But also on the docket are intellectual property rights, services, foreign investment, rules of origin, competition, labor, and environmental standards, and these and future discussions will touch on unprecedented topics such as regulatory coherence, e-commerce, small- and medium-sized businesses, and state owned enterprises.
Not only does the TPP cover an ambitious agenda, but its time-frame is impressive, as representatives hope to finish the discussions by the end of the year. Challenges abound though, given myriad issues and agendas. Even if a draft is agreed upon, it will then have to get through various congresses to be ratified. But if successful, it could be a global game changer. The agreement would tie together a combination of mature and developing economies, of Asian and Western Hemisphere nations, likely transforming trade flows, supply chains, foreign investment, and global trade regulations. There is the potential for igniting a new global dynamism after years of trade stagnation.
For Latin America, the TPP could mean developing and expanding economic ties and importantly supply chains from Chile up through Canada. Binding themselves to one another, these Western Hemisphere nations can strengthen their global position and influence.
Published in conjunction with Latin America’s Moment at the Council on Foreign Relations.