Trans-Pacific Partnership Summary, Pros and Cons

Trans-Pacific Partnership Summary, Pros and Cons

The United States and 11 other nations that border the Pacific Ocean came to an agreement on free trade known as the Trans-Pacific Partnership (TPP). These countries include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The countries engaged were responsible for producing forty percent of the total gross domestic product of the globe, which was 107.500 quadrillion dollars. They were responsible for supplying 793 million of the world's consumers with 26 percent of the world's total trade. On October 4, 2015, the negotiations came to a successful and satisfactory conclusion. The agreement was signed on February 4, 2016, by a total of three officials from each nation. Nevertheless, prior to the agreement's entry into force, it was subject to ratification by the legislative bodies of each nation. An executive order to withdraw the United States from the pact was signed by President Donald Trump on January 23, 2017, before that could occur. 

The TPP Will Continue Even Without the United States

Following President Trump's decision to withdraw the United States from the agreement on March 8, 2018, the other 11 countries in the TPP signed a revised accord. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) went into effect on the 30th of December, 2018. The economic bloc is comprised of 500 million consumers and accounts for 13.5 percent of the world's GDP.  To this point, the agreement has been ratified by seven of the countries. Brunei, Chile, Malaysia, and Peru are the only countries left that have not yet ratified the treaty.

What are the contents of the CPTPP?

As was the case with the original TPP, the CPTPP eliminates 99 percent of tariffs imposed on various commodities and services. It also imposes reciprocal trade quotas. Because of these measures, exporting goods from the United States, particularly agricultural goods, will be more challenging for firms. Because of tariffs, the price of exports from the United States will be higher than the price of exports from signatories like Canada. In contrast to most other accords, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) eliminates obstacles to trade that are not related to tariffs. In addition to this, it brings together statutes and regulations. These characteristics are also shared by the Transatlantic Trade and Investment Partnership. The CPTPP encompasses a wide variety of different goods and services. These include the standards for financial services and telecommunications, as well as those for food safety. In this way, it has an effect not only on laws within countries but also on international policy. For instance, it advises that nations establish organizations such as the United States Office of Information and Regulatory Affairs (OIRA), which is tasked with analyzing the costs and advantages of newly enacted regulations.  Every nation came to an agreement to reduce the amount of wildlife being traded. The greatest benefit is conferred upon elephants, rhinoceroses, and certain marine creatures. It prohibits environmental abuses such as logging and fishing practices that are not sustainable. Those nations that do not comply will be subject to trade sanctions. 

China and the CPTPP 

All parties have made it clear that they are open to new members joining them in the future. As of right now, there have been expressions of interest from Taiwan, Thailand, and Indonesia.  China has indicated that it is interested in joining the CPTPP. Analysts projected that the economic benefits of the deal would be increased by a factor of four if China, which has one of the greatest economies in the world, became a member. It would also drastically alter the distribution of power in international business transactions. There is a significant amount of uncertainty regarding whether or not China will utilize the CPTPP to get around the tariffs that have been imposed as a result of Trump's trade war. It's possible that China will ship raw materials to other CPTPP members, such as Vietnam. In order to avoid paying the tariff, local factories would ship their finished goods to the United States.

The Good and Bad of the TPP

The advantages

  •  Led to an increase in U.S. exports and growth.
  • The elimination of tariffs
  • Added billions of dollars in revenue to workers in the United States.
  • Bigger than NAFTA
  • Reduce the influence that China's economy has.


  • High-income workers reaped the greatest benefits from this policy.
  • Less generic options are being made available.
  • Lessening of the incentives to preserve the natural world
  • Rules regarding finances that are now obsolete

The Positives Explained

Boosted U.S. exports and growth:  The initial version of the TPP would have been beneficial to both the growth of the economy and the exports of the United States. This would have resulted in the creation of additional jobs and increased wealth for the participating countries. It would have resulted in an increase in exports amounting to $305 billion per year by year 2025. There would be a $123.5 billion rise in the United States' exports. It would be to the advantage of the agricultural, automotive, and plastics industries, among others. Removed tariffs It would have increased exports by abolishing the 18,000 tariffs that were placed on products that were exported from the United States to other countries. Out of these, the United States had previously removed taxes on eighty percent of these imports before they were allowed into the country. The Trans-Pacific Partnership (TPP) was supposed to level the playing field. Increased workers' incomes by the billions in the United States: Workers in all of the countries involved would have seen an increase in their annual incomes of $223 billion as a result of the agreement, with the United States seeing an increase of $77 billion. Larger than NAFTA:  The TPP trade area would have been larger than the North American Free Trade Agreement (now known as the United States-Mexico-Canada Agreement), which is the largest free trade agreement in the world at the present time. Offset the economic might of China:  However, China was not included in the TPP. That was a conscious decision. Its purpose was to prevent China and India from gaining an unfair advantage in the region's commercial sphere. The Trans-Pacific Partnership (TPP) would have provided the United States with a pretext for intervening in trade disputes in the South China Sea, which is rich in oil. China has been increasing the size and capability of its military in order to better support its incursions in that region.

Defining the Drawbacks

High-income workers benefited the most: Early analysis of the deal suggested that the income gains would have gone to workers making more than $87,000 a year. Free trade agreements contribute to income inequality in high-wage countries. They advertise low-wage countries as sources of inexpensive goods. Because it safeguarded patents as well as copyrights, the TPP would have been an ideal vehicle for achieving this goal. Owners of intellectual property who were already well compensated would have gotten a greater proportion of the revenue gains. Reduced availability of generics:  The agreement respecting patents would have resulted in a reduction in the number of generic drugs that were readily available at lower prices. Because of this, the price of numerous medications may have increased. Reduced incentives to protect the environment  While certain aspects of the TPP were designed to protect the environment, the increasingly competitive business pressures that resulted from increased international trade could have reduced or outweighed the incentives to protect the environment in some countries. Superseded financial regulations:  The trade deal has the potential to supplant existing financial rules, which brings us to our last and certainly not least point.

The United States' Bargaining Team Worked Very Hard to Acquire a Favorable Agreement

The agreement could not be reached because of these five stumbling blocks.

Less Extended Patents

In particular, for biological pharmaceuticals, the United States has consented to patent terms that are shorter. It would have been possible for pharmaceutical corporations to keep their formulations a secret for anywhere between five and eight years. 16 This is a shorter period of exclusivity than the typical one of twelve years. 

Companies That Are Owned By the State

Every state-owned company has made the commitment to comply with global trade norms that are designed to safeguard its employees as well as the environment. It was necessary for the United States to overcome objections raised by other nations that did not wish to permit labor unions.

Agricultural Tariffs

The United States, Japan, and Canada came to an agreement to reduce the amount of tariff protection afforded to producers of dairy products, cattle, and poultry. This was the most contentious issue, and the fact that farmers were willing to give up their tariff protection was a huge victory for those who were attempting to negotiate a deal.

Automotive Sector

These nations have also come to an agreement to liberalize their automotive sectors. This could result in job losses in the local area while simultaneously reducing the cost of automobiles and trucks.


Regarding the Investor-State Dispute Settlement Mechanism, the United States of America emerged victorious. This expands the legal options available to multinational corporations when suing host governments. 


In exchange, the United States promised to impose limits on the flow of tobacco in international commerce. In the past, cigarette corporations based in the United States have utilized arbitration panels to file lawsuits against countries that restrict cigarette promotion through taxation or other means.

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