By Robert Thomas
The failure of negotiators to conclude talks on the Trans-Pacific Partnership trade deal may significantly delay its eventual passage. This risks slowing down other regional trade talks and diluting U.S. influence on regional trade relationships and economic standards.
The latest round of trade talks to negotiate the planned Trans-Pacific Partnership during the last week of July ended without a final agreement. Although the resulting joint statement emphasized progress in the negotiations, the delay may push final ratification of the TPP by the United States well into the first term of the next president. Intellectual property protections for the U.S. pharmaceutical industry are among the numerous points of disagreement that have yet to be resolved. If successfully concluded, the TPP is projected to provide a $295 billion boost to the global economy by 2025. It is considered an essential part of both America's strategic "pivot" to Asia as well as Japan's economic reform agenda.
Prospects for the TPP improved after the U.S. Congress approved Trade Promotion Authority in June, giving the executive branch more freedom to negotiate the deal. It remains a top strategic and economic priority for many of participants as different as the United States and Vietnam. However, the latest delays increase the risk that the TPP will face additional domestic political hurdles within major participants, including contention in upcoming American and Canadian elections. Election seasons often delay legislative business and promote short term political priorities over long term strategy. This subjects the TPP negotiations to greater political scrutiny within some of its major participants. It also reduces the likelihood that the deal will obtain final approval until the next U.S. presidential administration has settled into office.
Political pressures are likely to further delay completion of the Trans-Pacific Partnership. A collapse of the talks is still possible, but unlikely given the benefits it is expected to provide to participating countries. Further delays in the TPP negotiations may reduce momentum for other regional trade agreements and limit future economic growth. If other regional trade negotiations continue without further movement on the TPP, the China-favored Regional Comprehensive Economic Partnership (RCEP) will become the most important potential trade deal for the near future. If progress on the RCEP deal moves faster than on the TPP, Chinese leaders will have a chance to begin further shaping regional trade rules and relationships in their interests before U.S. officials can do the same. Greater Chinese influence on regional trade negotiations will interfere with its neighbors’ attempts to reduce their economic dependence on China. It will also reduce the leverage that U.S. officials have to promote shared standards on issues like labor rights and intellectual property.
Robert is the Editor of Parabellum Asia.