WASHINGTON, D.C., U.S. — The Trans-Pacific Partnership (TPP) negotiations ended on Oct. 5, 2015, and it is intended to improve productivity and give producers and consumers access to more goods at lower prices to member countries.
In 2014, TPP’s member countries had a combined gross domestic product (GDP) of $28 trillion, or 36% of the world’s GDP, and accounted for $5.3 trillion in exports, or 23% of the world total, according to a report released in January, by the Peterson Institute for International Economics (PIIE).
The report describes the projected global figures from 2015-30 and approximately what TPP members and non-members will gain or compromise when the agreement comes into effect.
“The TPP will eliminate three-quarters of nonzero tariffs immediately on entry into force, and 99% when fully implemented,” the report said.
By 2030, the TPP will also generate an annual income gain of $492 billion for the world.
“Percentage gains are especially large for Vietnam and Malaysia, where the agreement should also stimulate domestic reforms and provide access to protected foreign markets,” the report said. “Other significant percentage gains are projected for the smaller economies of Brunei, Peru, Singapore and New Zealand.”
The TPP can negatively affect non-members, because the agreement may “divert trade from nonmembers to members.”
“Losses are tangible for China, India and Thailand, which compete with TPP members for TPP markets, and for Korea, because the TPP will erode that country’s advantage in U.S. markets under Korea-U.S. free trade agreement (KORUS),” the report said. “But except for Thailand, these losses are small compared with GDPs. Some nonmembers, including the E.U. and Hong Kong, experience net gains, in part because of the assumption that TPP provisions liberalize some trade with nonmembers.”
The TPP will increase trade, foreign direct investment and annual exports by 2030.
“Annual exports for the U.S. increase by $357 billion or 9.1%, and for all TPP countries together by $1.025 trillion or 11.5%,” the report said. “The pattern of export increases is similar to that of income increases; in dollar values the U.S., Japan, Vietnam and Malaysia lead the list — Japanese, Vietnamese and Malaysian exports each expand by 20% or more. Effects on nonmembers are mixed. Some register export gains and others losses. Because import effects are similar to export effects under the normal trade balance assumption, they are not reported.”
One of the biggest contributions the TPP makes is the liberalization of goods on nontariff barriers (NTB).
“Goods liberalization is especially important for Japan, Malaysia, Mexico and Vietnam,” the report said. “For some advanced economies the liberalization of service NTBs and foreign direct investment (FDI) is also important, accounting for more than half of the gains in Australia, Canada, Singapore and the U.S., and nearly half for Japan.”
It is probable that TPP will promote “additional integration in the Asia-Pacific region and beyond, with larger attendant gains.”
“It is potentially a pathway to the Free Trade Area of the Asia-Pacific (FTAAP), which could include all APEC members,” the report said. “The Transatlantic Trade and Investment Partnership, in negotiation since 2013, would also have large effects. And broader global negotiations may pick up steam. These and other initiatives would benefit from competitive pressure from the TPP.”