October 11, 2015

United States, Canada, 10 Other Nations Finish Negotiations On Trans-Pacific Partnership

The 12 nations involved in negotiations over the Trans-Pacific Partnership (TPP) trade deal announced early last week that they’d arrived at a final agreement. According to Politico, “The deal would eliminate all tariffs on U.S. manufacturing exports to TPP countries, and most on U.S. agricultural exports—everything from plastics to poultry, seafood to steel, chemicals to cotton, apples to aircraft parts.” 

While those developments are certainly welcome, MSCI is disappointed that the deal does not include any efforts to address currency manipulation by the nations that are part of the pact. According to Politico’s “Morning Trade,” while negotiators are still working out a side deal, that would address currency issues that deal “would not do what lawmakers have repeatedly requested: directly punish currency manipulators by withdrawing their benefits under the trade deal.” Instead the deal would only “require governments to seek common ground on exchange rate policies” and “require countries to meet on what is likely to be a yearly basis and develop a transparent system for reporting monetary policy decisions.” 

The Metals Service Center Institute supports free trade agreements in general, but will not decide whether or not to support the agreement until the White House reveals the full text. (MSCI would also like to see Congress pass a final customs reauthorization bill with strong currency enforcement provisions before it considers the TPP.) 

Under the Trade Promotion Authority bill released earlier this year, the White House must release the text of the deal within 30 days of the president announcing that he will sign it. Late last week, U.S. Trade Representative Michael Froman said he hoped the United States will be able to release the full text of the deal within the next 30 days. In a letter to the White House late last week, Sen. Sherrod Brown (D-OH) asked the Obama administration to release the text of the deal before President Obama announces he will sign it. 

 Once the text is released and he has announced he intends to sign it, the president has 60 days to actually ink his signature. After the president signs the deal, Congress must decide whether to ratify it. While full text of the deal is not yet available, the Office of the U.S. Trade Representative did release a summary in which it highlighted five features of the deal. The office said the deal provides:

  • Comprehensive Market Access. The TPP eliminates or reduces tariff and non-tariff barriers across substantially all trade in goods and services and covers the full spectrum of trade, including goods and services trade and investment, so as to create new opportunities and benefits for our businesses, workers, and consumers.
  • A Regional Approach To Commitments. The TPP facilitates the development of production and supply chains, and seamless trade, enhancing efficiency and supporting our goal of creating and supporting jobs, raising living standards, enhancing conservation efforts, and facilitating cross-border integration, as well as opening domestic markets.
  • Addresses New Trade Challenges. The TPP promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy, and the role of state-owned enterprises in the global economy.
  • Provides For “Inclusive Trade.” The TPP includes new elements that seek to ensure that economies at all levels of development and businesses of all sizes can benefit from trade. It includes commitments to help small- and medium-sized businesses understand the Agreement, take advantage of its opportunities, and bring their unique challenges to the attention of the TPP governments. It also includes specific commitments on development and trade capacity building, to ensure that all Parties are able to meet the commitments in the Agreement and take full advantage of its benefits.
  • Provides A Platform For Regional Integration. The TPP is intended as a platform for regional economic integration and designed to include additional economies across the Asia-Pacific region.

Click here to read the administration’s full summary of the Trans-Pacific Partnership trade agreement. 

Canadian Prime Minister Stephen Harper praised the deal, arguing, “This is a once-in-a-lifetime agreement, and a once-in-a-lifetime moment of decision. You are either in or out. We choose to be in because there’s too much for gain.”