Will we see animals getting married as a result of the Trans-Pacific Partnership?
As graphically illustrated in a recent Guardian Article the secrecies and myths of the Trans-Pacific Partnership were one of the big concerns from protesters, as 12 nations agreed one of the biggest trade deals of the 21st century yesterday. At Trade Finance Global, we explore the details of the partnership, what it is (in Lehman’s terms) and the implications it could have on trade finance.
What is the Trans-Pacific Partnership?
The Trans-Pacific Partnership is a trade deal which has taken nearly a decade to agree. Yesterday, 12 countries reached a trade deal: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
This is definitely one of the biggest deals of the decade – the group represent some 40% of global annual GDP ($28tn USD). The deal could foster trade relationships similar to that of single markets like Europe, boosting employment, accelerating growth in some countries and removing restrictive policies.
What are the objectives of the Trans-Pacific Partnership?
From agricultural chemicals to zinc metals, the deal was set out with the following objectives:
- Slashing tariffs and barriers which slow down or inhibit trade and investment for goods and services in participating countries
- Create a free-trade zone around the Pacific Rim
- Ensure that all participating countries impose rigorous labour and environmental regulations on trading partners
- Not allowing data transfers over the internet to be blocked
“The shared desire was to create a comprehensive, forward-looking trade agreement that set high-quality benchmarks on trade rules, and would help to promote trade liberalisation and facilitate trade within the APEC region.”
— Ministry of Foreign Affairs and Trade, New Zealand 2005
What are the implications of the Trans-Pacific Partnership for Trade Financiers?
We spoke to Roman Itskovich, VP of Financial Products at Ebury, who said:
“The Trans-Pacific Partnership (TPP) agreement aim is to promote trade between the United States and Pacific region countries. While some of the chapters, namely the Intellectual Property framework, might be controversial because it enforces higher standards for IP protection in some countries, on balance it is very good news for SMEs, particularly in the US.
“The TPP, is set to increase global trade between Australia, Canada, Japan, Malaysia, Mexico, Peru, the US, Vietnam, Chile, Brunei, Singapore and New Zealand.
“Among it’s many chapters, the TPP will make it easier and smoother for SMEs to trade between these countries by removing different taxes and levies in the process, leveling the playing field through Worker protection, enhancing IP right that will improve services exports.
“All these will make it easier for SMEs from developed countries to compete globally and for SMEs in developing countries to export.
On balance, a very positive move forward.”
— Roman Itskovich, VP of Financial Products at Ebury
Why are people against the Trans-Pacific Partnership?
Countries in the partnership could potentially devalue their currencies through Quantitative Easing to boost exports which is beneficial for trade and could aid economic growth in their countries. In this instance, economists worry that Asian countries could devalue their currency to boost exports at the expense of manufacturing companies in the U.S. and Europe.
China is also the elephant in the room, well, it was not involved in these negotiations. China did not express interest in joining conversations, although more recently, officials showed some signs of being more open to discussing TPP.
Protesters also worry about the secrecy of the TPP talks, recently, First Dog on the Moon, a cartoonist, recently published the following illustration mocking the agreement and its implications!