U.S. withdrawal from the Trans-Pacific Partnership

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Amrutha Bhamidimukkula, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

Trans Pacific Partnership(TPP) is an agreement negotiated by 12 countries: the United States, Canada, Mexico, Peru, and Chile in the Americas, and Japan, Australia, Vietnam, Malaysia, Singapore, Brunei, and New Zealand in the Asia-Pacific. Together, they comprise almost 40 percent of the world’s gross domestic product. The pact aimed to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth. Members had also hoped to foster a closer relationship on economic policies and regulation.  Not only does TPP slash tariffs, it contains anti-corruption measures, intellectual property obligations, human rights, child labor conditions and environmental commitments.

The agreement was designed so that it could eventually create a new single market, something like that of the EU.

Former President Barack Obama treated trade deals as a priority during his tenure, and this particular deal would have bolstered America’s position in the Asia-Pacific region, where China is growing in influence.

But Donald Trump exploited a misconception that TPP would lead to a loss of U.S. jobs. The rationale Trump has given for withdrawing from TPP is that it disadvantaged American industry and intensified competition between the member countries’ labor forces. He believes that dealing directly with individual countries on a one to one basis in negotiating future trade deals would me more beneficial for the United States of America.

This is not entirely convincing. According to a study, TPP would have led to only a 0.1% increase in U.S. labor market churn and added 9% to U.S. exports by 2030.

It is hard to see who exactly benefits from the United States’ withdrawal from TPP. Certainly, the U.S. industry and other TPP members will be disappointed. Trump’s decision has already been criticized by some American political leaders, including fellow members of the Republican Party. Trump will gain credibility with some of his base by actually fulfilling one of his more contentious campaign promises, but that base is weak to begin with, and unless there are tangible gains in manufacturing jobs, the electoral impact is likely to be negligible.


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