Twelve countries on both sides of the Pacific recently signed in New Zealand Trans-Pacific Partnership (TPP), which is sought to liberalise trade among the participating countries and set common standards and cut barriers.
TPP, which is termed as a “Big Deal”, is a trade and investment agreement among Pacific Rim nations such as Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
TPP aims to deepen economic ties and foster a closer relationship on economic policies and regulation between these nations, slashing tariffs and fostering trade to boost growth.
The agreement could create a new single market something like that of the EU.
However, the deal, which is being touted as the biggest trade agreement the world has seen in two decades, will not come into place until it has been ratified by at least six of the 12 signatories representing 85% of their combined gross domestic product.
On some measures, this trade deal is said to be the “largest ever” outside of the World Trade Organisation (WTO) - it is believed to cover 40% of the global economy. It includes superpowers such as the US and Japan, the world’s largest and third largest economies.
While the monumental deal is aimed at liberalising commerce across the countries, not all of the industries and sectors involved will benefit as much as others.
Those in favour say this trade deal will unleash new economic growth among countries involved.
Those against - particularly some Americans - fear it could mean jobs will move from the US to developing countries. They also complain about lack of transparency in negotiations, alleging that the five-year talks were held largely in secret.
Most goods and services are involved, but not all tariffs - which are taxes on imports - are going to be removed and some will take longer than others. In all, some 18,000 tariffs are affected.
For example, the signatories have said they will either eliminate or reduce tariffs and other restrictive policies from agricultural products and industrial goods.
Tariffs on US manufactured goods and almost all US farm products will go almost immediately once the deal is ratified.
On trade in services, they have agreed that free trade would be quite a good thing, and in some areas, they are going to liberalise trade.
Interestingly, two major emerging economies – China and India, have been left out of the TPP trade negotiations with some experts already warning that the TPP might adversely affect them.
Opponents say the deal is more about consolidation of power than “fair trade.” They argue the economic benefits of the deal will go to big corporates, and not ordinary workers in any of the participating nations.
Clearly, the TPP still has many loops to jump, including legislative approval by all of its 12 signatories. Any TPP deal will have to be ratified by national parliaments and then implemented before it really starts having an impact. If the previous pacts are anything to go by, the changes may not happen overnight.