The Trans-Pacific Partnership (TPP) Agreement Holds Strategic Underpinnings

Abstract

After prolonged negotiations since 20102, the Trans-Pacific Partnership (TPP) Agreement was broadly agreed upon in October 2015 among the twelve parties – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (US) and Vietnam. The agreement aims to eliminate barriers to trade and update rules that had been written under the World Trade Organisation (WTO) and the several free trade agreements (FTAs) signed by the Asia-Pacific nations. A recent study by Petri and Plummer (2016) estimated that the TPP will raise global annual income by US$492 billion and US annual income by US$131 billion by 2030. Large gains are to be expected for Japan, Malaysia and Vietnam. Some non-members such as Indonesia and the Philippines will suffer small losses while Thailand will face relatively significant setbacks. China will also experience a moderate loss of US$18 billion by not being part of TPP. This is mainly because of trade diversion from non-members to members and dilution of earlier preferences in TPP countries.