The term 'Trans Pacific Partnership (TPP)' is included in the Economics edition of the Financial Dictionary. Get your copy on Amazon in Kindle, Paperback or Audio edition. Check for lowest price here...
The Trans Pacific Partnership TPP represents a trade agreement that has been put together by twelve countries with borders on the Pacific Rim. Participants signed the final version of the deal in Auckland, New Zealand on February 4, 2016. This signing culminated the end of seven long years of negotiating the treaty. In order to enter into effect, the treaty must be ratified by the member states’ legislatures. This includes the U.S. Congress, where opposition to the treaty has been intense and bipartisan from many members of both parties.
There are 30 different chapters to the Trans Pacific Partnership. Their goal is to encourage job creation and retention, economic growth, innovation, higher living standards, competitiveness and productivity, poverty reduction, better government and transparency, and better protection of the environment and labor. This TPP is made up of agreements that reduce tariff and non tariff barriers to trade. It also creates a means of resolving disputes through investor state settlement.
Originally the Trans Pacific Partnership was born from the Trans Pacific Strategic Economic Partnership Agreement that Singapore, New Zealand, Chile, and Brunei signed back in 2005. Starting in 2008, other nations on the Pacific Rim began to discuss a wider arrangement. This included The United States, Vietnam, Peru, Mexico, Malaysia, Japan, Canada, and Australia. This increased the nations who were a part of the trade negotiations to 12 countries.
Previously in force trade agreements of the countries participating will be amended to not conflict with the TPP. Deals that offer better free trade will still be in effect. The Obama administration looks at the TPP as a pair of treaties. Its twin is the still under discussion TTIP Transatlantic Trade and Investment Partnership between the European Union and the United States. The two deals are generally similar.
The original goal of the talks was to conclude negotiations in the year 2012. The final deal stretched on for another three years because of conflicts over difficult issues like intellectual property, agriculture, investments, and services. The 12 nations at last came to an agreement on October 5, 2015. The U.S. Obama administration has made implementing this TPP one of its principle goals for trade. On November 5, 2015, President Obama announced to Congress he would sign the deal and released a public version of the treaty for any interested American individuals and organizations to review. The U.S. President along with the other 11 leaders all signed the TPP February 4, 2016.
In order for the Trans Pacific Partnership to take effect, all of the signors have to ratify it within two years. In case it is not completely ratified by all parties in advance of the February 4, 2018 deadline, there is an alternative arrangement. It will become effective after minimally 6 signing countries with a combined GDP of greater than 85% of all the signing countries ratify it. This means that the U.S. must ratify if for it to ever take effect.
Other countries may be able to join the trade block in the future. Countries that have shown an interest in joining include South Korea, India, Bangladesh, Cambodia, Indonesia, Laos, Thailand, Colombia, the Philippines, and Taiwan. South Korea did not get involved with the original 2006 agreement. The U.S. invited it to join after South Korea and America concluded their own free trade agreements. South Korea is likely to be the first country to join in a next wave expansion of the group. First it will have to work through TPP treaty issues in agriculture and vehicle manufacturing.