The odds must be very long on the chance that the U.S. presidential candidates have had time to read the 6,400 pages that make up the proposed Trans-Pacific Strategic Economic Partnership Agreement.
Even Fukunari Kimura, dean of the Graduate School of Economics at Keio University, one of Japan’s leading research universities, said during a seminar at Kennesaw State University on Feb. 10 that he had difficulty making out what was said in all of its pages.
But unlike candidates Donald Trump, Hillary Clinton and Bernie Sanders, who have all mentioned their opposition to the agreement, Dr. Kimura said he is for it as are many of Japan’s top officials.
Additionally, he thinks that both the United States and Japan must support it, if it is to be adopted. But before it is adopted, the 12 signatories must complete their own domestic ratification procedures within the next two years.
It’s not essential that they all do, however, despite the five years of negotiations in which they all have participated. Should any of the countries oppose it, the agreement still can come into being if at least six countries, which between them represent at least 85 percent of the gross domestic product of the original 12, are for it.
Since the U.S. and Japan together represent just under 80 percent of the total GDP, it’s clear that both have to support it. Even if the U.S. and all states but Japan ratify, the eleven would stand at only 83 percent.
According to Dr. Kimura, Japan’s Prime Minister Shinzo Abe likes it with the “third arrow” of “Abenomics,” his program to revitalize the country’s economy, aimed at economic liberalization, an important component of the agreement.
The seriousness with which Japan has supported the agreement has been underscored by many observers that his five-plus years of negotiations were responsible for turning Japan Economic and Fiscal Policy Minister Akira Amari‘s hair completely grey.
The TPP’s origins, pre-dating Mr. Amari’s involvement, go back to a 2006 trade agreement among only Singapore, New Zealand, Chile, and Brunei. The United States, Australia, Peru, and Vietnam quickly became interested with the prospect of a rules-based international order in Asia and joined the talks in March 2010, leading the way for the expansion of participants to include 12 countries.
Dr. Kimura said that he was pleased with the negotiations because they clearly showed a renewed interest by the U.S. in Asia, but acknowledged that on particular issues what he termed “dirty deals,” or politically motivated compromises, did add to the agreement’s complexity.
President Obama’s hosting of eight leaders and two senior alternates from the 10-country Association of Southeast Asian (ASEAN) in California this week, Feb. 15-16, is further proof of re-engagement. Final signatures were completed earlier this month, but the agreement was primarily reached in Atlanta in October of last year.
But whatever momentum there is for TPP on its own, the political context is playing an ever more important role than perhaps even the agreement itself.
The ASEAN countries and Japan are increasingly nervous about China’s assertive efforts to solidify its claim to nearly 90 percent of the South China Sea. Meanwhile, China has been negotiating its own free trade agreement, named the Regional Comprehensive Economic Partnership (RCEP).
Should the TPP agreement be passed by the participating countries, according to Dr. Kimura, reformers to China’s government policies might even benefit, he said, with the possibility of kindling future prospects of China joining.
He added that another favorable impact of the agreement could be a “domino effect” on some of the countries with smaller GNPs such as Malaysia and Vietnam that have ambitions to join “high income level countries.”
“They must have the right environment,” he said to the attendees that included Takashi Shinozuka, the recently arrived consul general of Japan for the Southeast, as well as faculty members and officials of Kennesaw State and students, local attorneys and representatives of Georgia-based companies.
Such an environment would be essential to keep the business and service talent in their countries including aspects of what he called “the good life” such as strong educational institutions, hospitality services, speedy urban transport and safe living quarters.
The agreement attempts to advance standards regarding environmental projection, labor rights, intellectual property, government procurement, and state-owned enterprises.
Candidates Mrs. Clinton and Mr. Sanders oppose the deal for insufficiently protecting American jobs and wages and favoring global corporations. Mr. Trump says that he would negotiate a better deal.
Many observers have concluded that the agreement is highly complex, with some saying that its broad reach allows for the give-and-take of successful negotiations, while others are concerned about negative effects on certain industries and economic sectors.
According to the U.S. Trade Representative, TPP addresses the following issues:
— “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.
— 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.
— Addressing 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.
— 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.
— 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.
Despite the many issues that already have been reviewed at length, a number of issues remain to be settled. According to the website GlobalRisk Insights these are:
— How the negotiators decide to change the status of State Owned Industries and favored firms to prevent unfair trade practices against private firms;
— The development of multilateral agreements to handle environmental disputes;
— If the negotiators adhere to the dispute mechanism drawn from other U.S. FTAs that begin with disputant consultation but can escalate to a more formal but neutral dispute panel.
— The handling of non-tariff barriers like misused health and safety regulations;
— The development of the financial services agreement;
— Whether China would be admitted if it agreed to the basic principles of the organization.