After expressing their wish to join the Trans-Pacific Partnership (TPP) in November last year, Canada, Japan and Mexico conducted extensive behind-the-scenes lobbying for the favored invitations to be included in the current negotiations for this expanding Asia-Pacific free-trade pact.

The TPP is a regional agreement aimed at achieving liberalizing trade relations between pact members, as well as agreement on other common regulatory issues.

At the recent June G20 summit in Los Cabos, Mexico, US President Barack Obama — on behalf of all nine current TPP members — extended invitations to Mexico and Canada to join the 13th round of TPP talks to take place in San Diego, California, the following month.

Having given the invitations, Obama notified the US Congress as it has a statutory 90-day period to review any prospective international trade agreements. After the US and all the other TPP members have reviewed these new members, Canada and Mexico will join the 14th round of TPP negotiations in September this year.

Japan’s request to join the TPP pact appears to still be under consideration. However, there are reports of considerable domestic opposition from various economic sectors — such as agriculture including beef, fisheries, cars, insurance and others — that would be affected by the removal of protective regulations.

The Trans-Pacific Partnership began as an economic agreement for freer trade and to harmonize regulatory regimes between four members of APEC forum — namely New Zealand, Brunei, Chile and Singapore — in 2005. This so-called P4 agreement was expanded to nine members with the inclusion of the US, Australia, Peru, Malaysia and Vietnam three years later, and renamed.

Designed to accept new partners and to enhance free trade throughout the Asia-Pacific region, the TPP membership is open to any APEC member country prepared to liberalize its trading and regulatory policies.

As a growing regional free trade zone, the TPP would help regulate members’ access into other members’ markets and ensure fewer obstacles to global supply chains for components necessary for manufacture and export of automobiles, electronics, IT components, and many others.

Many observers around the Pacific Rim see the TPP as a gateway to greater economic opportunities for the regional countries and their business communities within a projected 11-country trade market of 685 million people, with a gross domestic product of over US$20 trillion, and which conducts nearly 30 percent of the world’s trade.

This 11-member TPP grouping would be a substantially larger trading group than the 27-nation EU.

And, with the possible inclusion of Japan in 2013 and South Korea some time after that, the TPP could become the most significant FTA area in the world – as well as both an economic compliment and counter-weight to mainland China’s dynamic economic powerhouse. South Korea recently signed a bilateral free trade agreement with the US.

The Canadian and Mexican economies are already integrated into the US economy through the 1994 North American Free Trade Agreement that increased the various production supply chain links between the three countries. This has led to the US being the number 1 export market for both Canada and Mexico.

However, as Canadian Prime Minister Steven Harper recently stated, acquiring TPP membership was the crucial next step towards “opening new markets and creating new business opportunities leading to jobs, growth and long-term prosperity.”

Even so, there have been various concerns about Canadian involvement in the TPP from US, Australian and New Zealand economic sectors, particularly regarding its provincial dairy and poultry supply-management systems to control milk, butter, eggs and pork prices — while maintaining subsidy programs or setting tariffs on imports.

One domestic Canadian concern about joining is that the impact on local people and businesses on a daily basis is unknown at this time.

Another is that much of the TPP pact has already been negotiated and that “Canada is not going to have a choice but either to accept or reject it,” in the words of former Canadian prime minister Paul Martin.

With Mexico being the 2nd largest Latin American economy and the US’ third largest export market, Mexican President Felipe Calderon had strongly pursued entry into the partnership for his country as it is already a part of numerous global supply chains for assembling electronic and IT components and other manufacturing for onward export into the US marketplace.

While Calderon will leave office in December following the recent Mexican election win by Enrique Pena Nieto, it is felt that the new president-elect will continue to push for active Mexican participation in future rounds of TPP negotiations next year.

However, like Canada, Mexico will have to accept all the conditions previously agreed to by the current TPP members — unless those members agree to reopen for talks on earlier agreed terms.

According to media reporting from leaks on the secret TPP talks, only two of its 26 chapters actually have anything to do with trade. Rather the current negotiations deal with ensuring new enforceable corporate rights, protection of intellectual property, and increased constraints on government regulatory regimes.

While China and Taiwan are both APEC member states and eligible for TPP membership, it is unlikely that either will be extended an invitation to join the TPP agreement for a number of years.

In addition to being members of the World Trade Organization (WTO) since 2002, China and Taiwan signed a historic 2010 Economic Cooperation Framework Agreement (ECFA) to improve trade across the Taiwan Straits by reducing tariffs and commercial barriers.

For China, it would require considerable liberalization of its domestic market — even though it is already a dominant world economy and a major part of the global supply chains and regional production networks.

In addition, recent writings in the mainland media have begun painting the TPP as an “economic tactic” by the US to strategically constrain China’s rise to great power status.

President Ma Ying-jeou has stated that the global economic center of gravity has shifted to the Asia-Pacific region, where Taiwan is centrally located. And that it is vitally important for Taiwan to join the TPP agreement to avoid “economic marginalization” as most of Taiwan’s exports are immediate-stage goods rather than end products.

Increasingly, Taiwan’s export economy—with its established research and development sector — is being economically integrated with the Chinese Mainland’s manufacturing export economy. And following the cross-strait rapprochement including the ECFA, more countries have been willing to strengthen their economic ties with Taiwan.

Taiwan has already entered into talks on bilateral economic cooperation agreements with New Zealand and Singapore — both TPP members — which President Ma has noted is a way “to catch up fast … and can help [Taiwan] adjust our economic makeup ” as he hopes that Taiwan could be invited to join the TPP within a decade.

In addition, Singapore is a signatory to the 2010 ASEAN-China Free Trade Area (ACFTA) — making a bilateral trade agreement between that country and Taiwan more acceptable to Beijing, and along with the possibility for trade agreements with other ASEAN countries in the future.

July 29, 2012

Source: Taipei Times

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