The United States is missing out on huge opportunities in the Pacific. In 2017, President Trump backed out of the biggest free trade deal the world had ever seen. This deal, the Trans-Pacific Partnership Agreement (TPPA) was arranged between several prominent Pacific nations, including the United States, Canada, Chile, and Australia, to name a few. Typically when purchased goods cross an international border, there is a tariff assessed. However, TPPA would allow for all countries involved to trade with each other with little to no tariffs. In order to remain competitive in today’s intense global economy, the U.S. must renegotiate back into TPPA.
The United States chose not to sign this agreement, due to the fact that it could potentially be exploited. With the help of TPPA, big American businesses with the proper resources could move their business to a country with lower wages and inferior working conditions and continue to transport and sell their products in the USA for a lower cost. The United States believed that TPPA would create unfairness and a loss of balance in businesses, resulting in job loss.
Since the United States suspended their involvement in the TPPA, the remaining 11 countries involved in the agreement have suspended or changed provisions that were once a priority for the United States. This new agreement is called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The biggest change in the CPTPP agreement has been centered on intellectual property. The United States was adamant that there be longer copyright terms, automatic patent extensions, and separate protections for new technologies, to protect people’s rights on intellectual property. Changes in investment were also made under the CPTPP, along with the length of patent protections being shortened under this new agreement.
United States renegotiating and joining the CPTPP would be greatly beneficial. However, in order for this to happen, the U.S. government should be renegotiating several key areas of the agreement. One of which is job loss, specifically, changes in wages would have to be made in order to reverse the offshoring of manufacturing jobs.
Another significant renegotiation must address stricter quotas. Similar to the new NAFTA deal, CPTPP would demand companies to meet certain quotas for how much of a product could actually be made in a participating country. Finally, a large reason why the U.S. retracted from the TPPA in the first place was because of intellectual property disputes. United States firms would greatly benefit from stronger intellectual property protection, specifically for pharmaceutical companies. If all of these issues could be identified and renegotiated in favor of the U.S., rejoining the new CPTPP agreement would be more of a possibility in the near future.
The economic benefits of rejoining this partnership agreement that the U.S. must capitalize on are lower tariffs and increased market access. This would reduce prices for American consumers as well as boost U.S. exports to other countries. This would help all the economies involved be more efficient, which would result in increased productivity and growth. This is a major argument as to why the United States government should start to renegotiate TPPA. The United States should want to take advantage of these free trade deals to help boost the economy, as well as increase its influence in a region where influence is dominated by its main competitor, China.
The agreement would also give the U.S. a strategic advantage because it would help to strengthen its alliances in the region. It would also help to ensure that the U.S. leads the way on global trade rules. U.S. trade with TPP countries currently accounts for approximately 40% of all U.S. trade amounting to more than $1.5 trillion dollars. While the United States has existing trade deals with many of the TPP countries such as Australia, Canada, and Mexico, they do not have an agreement with Japan, which is the world’s third-largest economy. Japan has a crucial role to play as a stabilizing force that is tasked with enhancing the appeal of multiparty free trade agreements. Needless to say, the United States is really missing out on some huge opportunities.
Throughout this article, we have laid out the aspects of TPPA and how they will affect the United States both in a positive and negative manner. The United States had been adamant that they not be taken advantage of with this agreement, but free trade is good not only for the United States but for the countries involved as well. Renegotiation is the best way to ensure that they reach an agreement that fits the criteria that they need while increasing the efficiency of their economy with the help of new countries to export their products too. This renegotiation should not be seen as a hindrance for the United States, but a possibility to enhance their influence across the globe while boosting their overall economy.