Tensions on TPP Run High on US Presidential Campaign

As US’s presidential contest moves forward, tensions over the Trans-Pacific Partnership (TPP) continue running high. Questions like when and whether Washington lawmakers will ratify the deal even as the White House continues to make the case for its swift passage arose and renewed, and also the deliberations on the TPP are now underway in the legislature of Japan.

Trade has been taken as a high-profile role in the debate between the Republican and the Democratic because the candidates in both parties keep arguing over the past deals such as the North American Free Trade Agreement and the potential benefits or costs of passing the TPP.

Obama Administration officials think that TPP is feasible although the political climate is difficult. They think that the issue is about better explaining the issues in order to counter anti-globalization narratives.

The US commerce chief Pritzker even stressed the value of the trade pact in response to Hillary Clinton’s criticisms of the final TPP outcome. He thinks that the TPP is a gold standard which is the toughest trade agreement in the world. Clinton was previously the US Secretary of State from 2009 to 2013, during which she supported the TPP pact as a gold standard for trade agreements.shutterstock_328825151

New Zealand Prime Minister John Key also thinks that TPP is a very good deal in a challenging set of negotiations. And he also suggested that the trade deal could still get passed in Washington after the new US President is elected.

Trade Enforcement Report

The success of the Obama Administration in trade enforcement was also touted in this year’s National Trade Estimate report which was released late last week. The report highlights various WTO dispute rulings that have found partially or fully in favor of Washington, ranging from Chinese trade remedy actions on high-tech American steel to Argentina’s various import restrictions.

The Administration has brought more enforcement cases at the WTO than any other member, used pre-dispute engagement to push trading partners to live up to their obligations, and strengthened US government enforcement capacity, in response to barriers highlighted in previous NTE reports.

The US trade chief also pledged that Washington would continue its efforts to boost enforcement of international trade rules while highlighting the importance of reducing existing trade barriers through other avenues, such as the negotiation and implementation of trade agreements.

The 474-page report features repeated mentions of the TPP, outlining the areas where Washington envisions potential trade growth or other key benefits with respect to each of its TPP partners.

Japanese Legislature Kicks off TPP Debate

In the meantime, Japan started to ratify TPP this week, prompting the heated debates in the Japanese legislature.

Japan’s Democratic and Communist parties both are in the opposition of the trade pact while the ruling Liberal Democratic Party is in favor of the pact and holds solid majorities in both legislative chambers.

Japan was the last country to join in the negotiations. The trade pact has long been controversial in the Asian economy with the difficult domestic politics on areas such as agriculture and automobiles largely credited with delaying its earlier entry into the talks.

The threshold needed for TPP to enter into force is the ratification by all 12 signatories within a two-year window, or if that fails ratification by at least six countries with 85% of the group’s GDP. Ratification by both the US and Japan is essential for the pact to move forward.

Both Obama and Shinzo Abe have made the TPP a signature part of their respective policy agendas. Obama has touted the TPP’s potential for setting the “rules of the road” in the Asia-Pacific region, and Abe has included it as part of the structural reforms that make up the “third arrow” of his highly-scrutinized “Abenomics” economic plan. They believe that with US, Japan as well as other countries’ participating in the TPP, the members will achieve great profit and gain chances for growth.

Above all, whether the TPP will work effectively still depends. Economists have both positive and negative comments over the TPP. The TPP will not only affect the members but also other countries beyond the TPP. Countries that are not parties to the negotiation will likely be asked to accede to the TPP as a condition of bilateral trade agreements with the U.S. and other TPP members







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2 Responses to Tensions on TPP Run High on US Presidential Campaign

  1. Yujun Guo says:

    This is an informative article. It turns out that free trade is not popular in the presidential campaign as expected. Many candidates have expressed their opposition to TPP or at least reservations. As stated by the Stolper-Samuelson theorem, free trade benefits the abundant factor sector and hurts the scarce factor. In the US case, relatively low-income people are hurt and rich people gain. To win votes from the minority group, candidates have to defend the interest of low- and middle-income people. In addition, the TPP is estimated to reduce more than 18,000 tariffs that inhibit American products abroad. For example, both Japan and Malaysia increase their tariff on some US products. Also, the TPP brings several Asian countries into the United States’ sphere of influence. Patriotism is especially intense during this period, while TPP strengthens the economic ties between US and Asia, and the economic independence reduces the power of US military ambition.

  2. jeffcherkin says:

    The reason free trade is not as popular as expected is due to the target audience political candidates are targeting. In this case, candidates are targeting the middle class. One of the most important topics to the large number of middle class votes are jobs and increasing American jobs. This group of people, mostly working class, are upset by losing jobs to overseas workers. By restricting trade, these workers are able to gain there jobs back.

    The other side of the debate, supported by economic theory, is that free trade promotes efficiency. As a result, total welfare rises and prices fall. In this case though, the gains are not received by the mass of the middle class. As a result the middle class, which is the most important group for potential presidential candidates to attract, support restricting free trade and bringing back jobs to the US to support the middle class, even if total welfare declines.

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