Benefits from the Trans Atlantic Partnership to its members and potential members

The Trans-Pacific Partnership is a trade agreement signed in 2005 by Chile, Brunei, New Zealand, and Singapore. This trade agreement has been in the new lately because of countries like Canada, USA, Australia and Japan are negotiating their potential addition to this partnership. I want to explore how their founder signatories have benefited from this trade agreement, thus how new member could benefit as well. Another are to explore is how new members could be affected in case they join the partnership

To analyze potential benefits from this pact I proceeded to analyze trade among them. Singapore has shown an increasing growth of its bilateral trade volume with Brunei, almost every year after the trade agreement was ratified in 2006. In 2011 its bilateral volume yearly growth was 68% (Exhibit A). Singapore’s and Chile’s trade volume show the same pattern, and grew 93% in 2011 (Exhibit B). Trade volume between Brunei, Chile and New Zealand also show remarkable growth. In 2006 trade volume between Brunei and New Zealand expanded 300 %( Exhibit C). This growth has slowed down over the years, but it shows a clear pattern, and in 2012 bilateral trade volume was at 100% growth. Trade volume between New Zealand and Chile has also been growing. It did not show any big changes in the first 3 years of the treaty, but in 2011 it expanded 88% (Exhibit D).

From the previous information we can see that there is an obvious positive economic benefit from this treaty represented in trade, but maybe there are some downsides. For example US have shown concerns for what they call the lack of property right protection in the treaty. US is the only country that has shown this concern among the members, and negotiating countries. It’s hard to tell how much this subject would be harmful for the partnership members, but people familiar with the negotiations say that this is a point being discussed by negotiators. There are some concerns when it comes to resolving settlements. All the countries signatories of the TPP and the currently negotiating countries but Australia have agreed to use the Investor-state dispute settlement provision. They claim that there are other effective ways of settling disputes, and they refer to the Phillip Morris case, where even though Phillip Morris, a tobacco producer, lost its legal cases in Australian courts. Phillip Morris decided to sue Australia’s government using the Investor-State dispute settlement mechanism. Australia has an investment treaty with Hong Kong, and the company also has operations in Hong Kong decided to use this mechanism listed in the treaty. This is a potential problem as the partnership needs a dispute settlement mechanism that would have enforcing power, and that all their members agree to be liable to. Another important potential problem is pollution. US, and Australia are against expanding the current provision on pollution listed in the treaty. Other members have agreed to impose more regulation to control pollution. This is a delicate matter because as trade potentially will increase, there should be a way to control pollution created by this new output being produced. One problem that might affect founding members is that potential bigger new members have industries that operate with economies of scale. This could affect founding members local markets, as bigger economies could export cheaper products than the ones produced at home The last key potential problem is agricultural export subsidies.. All the countries negotiating to become part of the partnership have agreed to stop giving subsidies when it comes to agricultural exports. US is the only country that has been opposed to this point.

It seems like this trade agreement has been of great benefits for its members, and has decided to offer it to more and bigger nations. This means that they will have duty free access to bigger markets, but it also means that they might have to agree to some reforms to their original treaty, in order to satisfy the negotiating countries concerns and demands. This is an important step as US, and Japan are markets that most countries on earth want to have access to because of their purchasing power. Based on my previous findings, it seems like having more members for this treaty would translate into more well-being and welfare for the partnership members and prosperity in the long run.

Exhibits A and B(IMF Data)


Exhibits C and D (IMF Data)



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