Trans-Pacific Partnership

The Trans-Pacific Partnership (TPP), or Trans-Pacific Partnership Agreement (TPPA), was a proposed trade agreement between 12 Pacific Rim countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States. In the US, the proposal was signed on February 4, 2016 but not ratified as a result of significant domestic political opposition; both Hillary Clinton and Donald Trump opposed the agreement during their 2016 presidential campaigns, however Hillary Clinton was originally in support. After taking office, President Trump formally withdrew the United States from the TPP in January 2017, ensuring it could not be ratified as required and did not enter into force. The remaining countries negotiated a new trade agreement called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which incorporated most of the provisions of its successor and entered into force on 30 December 2018.

The TPP began as an expansion of the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4), signed by Brunei, Chile, New Zealand and Singapore in 2005. Beginning in 2008, eight additional countries joined negotiations to broaden the agreement, eventually forming the 12-member TPP. Following the US's withdrawal, the remaining countries decided in May 2017 to revive the TPP, reaching a revised agreement, the CPTPP, in January 2018 and signing it in March 2018. The new agreement came into effect for those countries in December that year after ratification by six of them (Australia, Canada, Japan, Mexico, New Zealand and Singapore).

The original TPP contained measures to lower both non-tariff and tariff barriers to trade, and establish an investor-state dispute settlement (ISDS) mechanism. The U.S. International Trade Commission, the Peterson Institute for International Economics, the World Bank and the Office of the Chief Economist at Global Affairs Canada stated that the final agreement, if ratified, would have led to net positive economic outcomes for all signatories. Many observers at the time said the trade deal would also have served a geopolitical purpose, reducing the signatories' dependence on Chinese trade and bring them closer to the United States.

Membership

Twelve countries participated in negotiations for the TPP: the four parties to the 2005 Trans-Pacific Strategic Economic Partnership Agreement and eight additional countries. All twelve signed the TPP on 4 February 2016. The agreement would have entered into force after ratification by all signatories, if this had occurred within two years. If the agreement had not been ratified by all before 4 February 2018, it would have entered into force after ratification by at least 6 states which together have a GDP of more than 85% of the GDP of all signatories. The withdrawal of the United States from the agreement in January 2017 effectively ended any prospect of the agreement entering into force. In response, the remaining parties successfully negotiated a new version of the agreement without the 85% GDP threshold, the CPTPP, which entered into force in December 2018.

Withdrawn member

On 23 January 2017, US President Donald Trump signed a presidential memorandum to withdraw the United States' signature from the agreement, making its ratification as it was in February 2016 virtually impossible.

On 13 April 2018, Trump said the United States may rejoin the Trans-Pacific Partnership.

Comparison of initial signatories to the agreement

Potential members

APEC members would have been able to accede to the TPP, as would any other jurisdiction to which existing TPP members would have agreed. After an application for membership is received, a commission of parties to the treaty would negotiate conditions for accession.

South Korea did not participate in the 2006 agreement, but showed interest in entering the TPP, and was invited to the TPP negotiating rounds in December 2010 by the U.S. after the successful conclusion of its Free trade agreement between the United States of America and the Republic of Korea. South Korea already had bilateral trade agreements with some TPP members, but areas such as vehicle manufacturing and agriculture still needed to be agreed upon, making further multilateral TPP negotiations somewhat complicated.

Other countries that were interested in TPP membership include Taiwan, the Philippines, Colombia, and Hong Kong as of 2010; Thailand as of 2012; and Indonesia, Bangladesh, and India as of 2013. According to law professor Edmund Sim in 2013, many of these countries would need to change their protectionist trade policies in order to join the TPP.

The largest economy in the Pacific Rim not involved in the negotiations was China. According to the Brookings Institution in 2013, the most fundamental challenge for the TPP project regarding China was that "it may not constitute a powerful enough enticement to propel China to sign on to these new standards on trade and investment. China reacted by accelerating its own trade initiatives in Asia." In 2013, it was thought China might still be interested in joining the TPP eventually. An academic analysis has shown that while the TPP would be more successful if China participated in it, the benefits to China are intangible.

In October 2015, Indonesian President Joko Widodo declared Indonesia's intention to join the TPP.

As of 2016, Sri Lanka announced its interest in joining the TPP and studied its feasibility.

Likewise, as of 2016 Cambodia announced its interest in joining the TPP and is studied its feasibility.

In February 2021, the United Kingdom applied for membership of the CPTPP, the successor to the TPP.

In September 2021, China applied for membership of the CPTPP. Japan, the 2021 chair of the CPTPP, said that it would consult with member countries to respond to China's request.

In July 2023, as CPTPP members formally accepted the United Kingdom as the 12th member, Australia indicated that China has no hope of being accepted in the near term.

History

Trans-Pacific Strategic Economic Partnership Agreement

Brunei, Chile, Singapore and New Zealand are parties to the Trans-Pacific Strategic Economic Partnership Agreement (TPSEP), which was signed in 2005, and entered into force in 2006. The original TPSEP agreement contains an accession clause and affirms the members' "commitment to encourage the accession to this Agreement by other economies". It is a comprehensive agreement, affecting trade in goods, rules of origin, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, trade in services, intellectual property, government procurement and competition policy. Among other things, it called for a 90-percent reduction of all tariffs between member countries by 1 January 2006, and reduction of all trade tariffs to zero by the year 2015.

Although original and negotiating parties are members of the Asia-Pacific Economic Cooperation (APEC), TPSEP is not an APEC initiative. However, the TPP is considered to be a pathfinder for the proposed Free Trade Area of the Asia Pacific (FTAAP), an APEC initiative.

Original negotiations

In January 2008, the U.S. entered talks with the Pacific 4 (P4) members regarding trade liberalisation in financial services. This led to 19 formal negotiation rounds and a subsequent series of additional meetings, such as Chief Negotiators Meetings and Ministers Meetings, and resulted in the agreement announced on 5 October 2015.

Ratification of the original agreement

Japan and New Zealand ratified the original agreement.

Japan and its main competitor in the region, China, hold polar views on how South-East Asia's economy should develop. Prior to TPP, Japan tried to achieve dominance by proposing in September 1997 an Asian Monetary Fund (AMF), which never eventuated in the face of U.S. opposition. By 2011 Japan managed to establish a cooperative agreement with China and Korea called the "PRC–Japan–Republic of Korea Free trade agreement", also known as the CJK FTA, which did not include the U.S. By this means Japan intended to use the People's Republic of China card in order to shift TPP negotiations away from China towards Japan's agendas with support of the United States. Ratification of the TPP in Japan required political reforms that shifted some authority from the agriculture ministry to the prime minister. On 9 December 2016 Japan's House of Councillors made a resolution of participation. Japan notified completion of domestic procedures for ratification to the depositary of the TPP treaty (New Zealand) as the first ratified country on 20 January 2017.

New Zealand ratified the TPP on 11 May 2017. New Zealand Prime Minister Jacinda Ardern (in office from October 2017) planned to renegotiate the Trans-Pacific Partnership (TPP) agreement in Vietnam in November 2017 in time to allow the New Zealand government to ban foreign speculators from buying existing New Zealand homes. She said: "Our view is that it will be possible to balance our desire to make sure that we provide housing that's affordable, by easing demand and banning foreign speculators from buying existing homes, while meeting our trade goals."