The
Trans-Pacific Partnership: Strategic Implications
Brock
R. Williams, Coordinator, Analyst in International Trade and Finance
Ben
Dolven, Coordinator, Specialist in Asian Affairs
Ian
F. Fergusson, Specialist in International Trade and Finance
Mark
E. Manyin, Specialist in Asian Affairs
Michael
F. Martin, Specialist in Asian Affairs
Wayne
M. Morrison, Specialist in Asian Trade and Finance
Congressional
Research Service
February
3, 2016
7-5700
R44361
Summary
On
October 5, 2015, Ministers of the 12 Trans Pacific Partnership (TPP) countries announced
conclusion of their free trade agreement (FTA) negotiations.
The
agreement is one of the Obama Administration’s signature trade policy
initiatives, an effort to reduce and eliminate trade and investment barriers
and establish new rules and disciplines to govern trade and investment among
the 12 countries.
TPP
proponents, including Administration officials, argue that the proposed TPP would
have substantial strategic benefits for the United States in addition to its
direct economic impact.
They
argue that the agreement would enhance overall U.S. influence in the
economically dynamic Asia-Pacific region and advance U.S. leadership in setting
and modernizing the rules of commerce in the region and potentially in the
multilateral trading system under the World Trade Organization (WTO).
Congress
plays a key role in the TPP. Through U.S. trade negotiating objectives
established in Trade Promotion Authority (TPA) legislation and informal
consultations and oversight, Congress has guided the Administration’s
negotiations.
Ultimately,
Congress would need to pass implementing legislation if the concluded agreement
is to take effect in the United States.
The
geo-political arguments surrounding TPP are widely debated, as are the
arguments about its potential economic impact. To some, the TPP is an important
|litmus test of U.S. credibility in the Asia-Pacific region.
As
the leading economic component of the Administration’s “strategic rebalancing”
to the region, the TPP, proponents argue, would allow the United States to
reaffirm existing alliances, expand U.S. soft power, spur countries to adopt a
more U.S.-friendly foreign policy outlook, and enhance broader diplomatic and
security relations.
Many
Asian policymakers – correctly or not – could interpret a failure of TPP in the
United States as a symbol of the United States’ declining interest in the
region and inability to assert leadership.
Some
critics argue that TPP backers often do not identify specific, concrete ways
that a successful deal would invigorate U.S. security partnerships in the
region, and that an agreement should be considered solely for its economic
impact.
They
maintain that past trade pacts have had a limited impact on broad foreign
policy dynamics and that U.S. bilateral relations are based on each country’s
broader national interests.
The
Administration is also pursuing strategic economic goals in the TPP. Through
the agreement, proponents argue, the United States can play a leading role in
“writing the rules” for commerce with key trading partners, addressing gaps in
current multilateral trade rules, and setting a precedent for future regional
and bilateral FTA negotiations or multilateral trade talks at the World Trade
Organization (WTO).
The
core of this argument is the assertion that the TPP’s potential components – including
tariff and non-tariff liberalization, strong intellectual property rights and
investment protections, and labor and environmental provisions – would build
upon the U.S.- led economic system that has expanded world trade and investment
enormously
since
the end of World War II.
Although
most U.S. observers agree it is in the U.S. interest to lead in establishing
global and regional trade rules, less consensus exists on what those rules
should be, yielding some criticism on the strength and breadth of various TPP
provisions.
In
addition, some argue that crafting new rules through “mega-regional” agreements
rather than the WTO could undermine the multilateral trading system, create
competing trading blocs, lead to trade diversion, and marginalize the countries
not participating in regional initiatives. China is not a TPP member, but
features prominently in discussion of the agreement’s potential strategic
effects.
Some
argue that China is attempting to create a regional order that seeks to
minimize U.S. presence and power. In this line of reasoning, the TPP serves as
a counter to growing Chinese economic and political influence, implying that failure
to conclude TPP could, in effect, allow China to shape regional rules of
commerce and diplomacy through its own trade and investment initiatives.
Others,
however, argue that TPP is complementary to other FTAs and trade agreements
throughout the region, including those championed by China, and that new
members –possibly including China –will be critical for the TPP to influence
regional norms.
Trade
agreements occur at the intersection of foreign and domestic policy, which can
create tensions in balancing competing policy priorities. Key issues Congress
faces as it continues its role regarding TPP include: (1) how strongly to weigh
geo-political implications of TPP; (2) the potential impact of the TPP on the
multilateral trading system and other trade and economic institutions; and (3) the
possible expansion of the agreement to include additional members.
