Economists, policymakers and market participants are divided about the recently announced Trans-Pacific Partnership (TPP), which is a proposed trade agreement between 12 Pacific Rim nations covering a wide spectrum of economic policies, including intellectual property, labour relations, environmental law and investor-state dispute settlement. While the negotiators of the agreement have heralded the TPP as a victory for free trade, economic development and collaboration, its detractors warn it’s just another ploy by major corporations to expand their power and influence over the world.
The TPP Signatories
A total of 12 nations are involved in the Trans-Pacific Partnership agreement. They are: Australia, Canada, Japan, Malaysia, Mexico, Peru, United States, Vietnam, Chile, Brunei, Singapore and New Zealand. At least six other countries have also expressed interest in joining the framework.
Before this far-reaching agreement can take effect, the TPP must be ratified by each member country.
TPP Fine print
That the TPP was primarily driven by the United States has caused many to recoil at the prospect of greater monopoly powers for US multinationals. Under the TPP, goods and services would be allowed to flow to and from member countries with reduced tariff protection. This will impact industries like dairy, agriculture, beef and poultry. Countries like the United States, Japan and Canada also agreed to open up their automotive industries, which will reduce the price of cars and trucks at the expense of local jobs.
Perhaps the most concerning aspect of the TPP is the investor-state dispute settlement mechanism, which grants foreign companies (i.e. US multinationals) more power to sue the government. This provision has been widely regarded as a major win for US negotiators, mostly due to the number of US-based multinationals operating in various TPP nations. In exchange for the provision, the US agreed to implement restrictions on the tobacco trade.
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