After five years of grueling negotiations, the U.S. and 11 other Pacific Rim countries reached a historic agreement on Oct. 5 on the Trans-Pacific Partnership (TPP), a trade accord covering some two-fifths of the world economy. Here’s what it is set to achieve:
EASE TRADE AND SET STANDARDS
The deal would eliminate 98% of tariffs on products including dairy, beef, wine, sugar, rice, resources and energy, which could mean cheaper food, medicine and goods for millions of people. It will set shared standards for everything from e-commerce to business practices: Singapore would have to set minimum wages, for example; Malaysia and Vietnam would need to raise labor standards. The U.S. says the TPP would also positively affect the environment, reducing the trafficking of endangered species and overfishing. Countries could be subject to sanctions for not meeting commitments.
BRING THE U.S. AND JAPAN CLOSER
The TPP is the first bilateral trade agreement between two of the world’s three largest economies. Japan, facing persistently slow economic growth, has much to gain as Prime Minister Shinzo Abe (pictured) has argued that the deal will boost trade flows. For the U.S., the deal is more important strategically, as a legacy-defining moment for President Barack Obama in his bid for a foreign policy pivot toward Asia.
CHALLENGE CHINA
China is not among the 12 signatories to the deal, and it has instead cut several rival trade agreements, including one with Australia signed in June. The U.S. hopes that Beijing will eventually have to adopt the standards set out by the TPP, with Obama saying, “We can’t let countries like China write the rules of the global economy.”
STIR UP DOMESTIC STRIFE
Though the full text of the TPP isn’t out yet, there’s already significant opposition from some politicians in Japan, Canada, Australia and New Zealand. Critics say it favors big corporations and dislike that the negotiations were conducted in secret. In the U.S. many Democrats–including former Secretary of State and presidential front runner Hillary Clinton–oppose the deal, saying it will take jobs away from the American workforce.
–NAINA BAJEKAL