The successful agreement over the 12-nation Trans-Pacific Partnership (TPP) trade bloc is a major breakthrough for the cause of free trade, which is the world’s largest creator of wealth and economic progress. The deal took five years of intensive negotiations, which were controversial because of their secrecy, but the end means that tariffs will be cut and common standards established for trade for the 12 Pacific rim countries, including the United States and Japan.
The biggest omission from the deal is China, who refused to take part, but participants in the TPP discussions expect that China will probably have to work with the standards established by the TPP, as a very large part of its trade will be with TPP members who will be observing them.
For US President Barack Obama, the trade deal is a major victory and helps institutionalise his foreign policy pivot to Asia, which would have looked ridiculous without this deal. After the agreement he enthused that the “partnership levels the playing field for our farmers, ranchers and manufacturers by eliminating more than 18,000 taxes that various countries put on our products”.
A counter view was put forward by Senator Bernie Sanders, a left-wing US Democratic presidential candidate, who said that Wall Street and other big corporations had won again. His protectionist view will be supported by US pharmaceutical companies who lost their rights to keep monopolies on new drugs for 12 years, in the face of demands from Australia and New Zealand to reduce it to five years. Obama will face his usual challenges in the Congress to get this deal approved, which will weaken his international authority as no one knows if the deal will stick.
The cause of increasing global free trade agreements has largely collapsed as the World Trade Organisation has failed to get any traction on its next round, which should have included more services and intellectual property. But regional or bilateral deals such as the TPP and others keep the world economy moving in the right direction.