Japan, Vietnam and Malaysia are set to get a big economic boost from a sweeping Pacific trade agreement concluded in October, while the US and other North American countries would see much smaller gains from the Trans-Pacific Partnership, according to the first detailed study of the pact.
Officials from 12 countries agreed to eliminate most tariffs over time and also to remove other barriers to trade, as well as to set unified commercial rules for everything from drug patents to labour and environmental standards. The countries finished the TPP negotiations last year, but the trade agreement can’t take effect without approval from a deeply divided US congress and other parliaments in the bloc.
If the Pacific agreement is enacted, Vietnam would get the biggest percentage boost to its economy — about 10 per cent by 2030 — as its textiles and apparel industry gets new preferential access to the US and other major markets. Japan would see extra growth of 2.7 per cent by 2030 while the US could expect additional growth of 0.4 per cent by 2030, according to the study, released by the World Bank.
Malaysia’s economy would swell by 8 per cent as its exporters get an advantage over regional competitors that aren’t part of the bloc, including Thailand, The Philippines and Indonesia.
The US, Canada and Mexico would see relatively smaller economic benefits coming from the TPP because they already opened their borders two decades ago to huge volumes of trade through the North American Free Trade Agreement, or NAFTA.
The US stands to benefit from the lifting of barriers to services and electronic commerce exports to Japan and other countries, according to the study, which builds on a simulation published by the Peterson Institute for International Economics. Overall, TPP countries would get an economic increase of up to 1.1 per cent.
“The tariff reductions that we are seeing from the actual agreement are bigger than people, including us, had anticipated,” said Peter Petri, professor of international finance at Brandeis University and a co-author of the study. The economic study released yesterday — and another expected in May from the US International Trade Commission — will likely serve as ammunition for business groups and the farm lobby in the US as they press congress to vote on the trade accord as early as this spring. The US Chamber of Commerce yesterday became the third major business group to endorse the TPP.
The Business Roundtable, which includes chief executives of some of the biggest US companies, on Tuesday endorsed the TPP, saying its provisions to lower trade barriers and set rules of the road would help US companies that already have to compete globally. “There aren’t walls tall enough and moats deep enough to keep the competition away,” said John Engler, the former Michigan governor who leads the Business Roundtable.
Labor groups and some economists who oppose the TPP say any benefits the US gained through additional exports would be offset by increased imports that would cut some US manufacturing jobs.
Countries that don’t join the bloc could suffer, the report says. Thailand could see a 0.9 per cent hit to GDP by 2030 if it doesn’t join the bloc. South Korea, which has an FTA with the US that is the model for the TPP, would also see a small economic hit, since it would lose the advantages its firms have enjoyed in the US relative to Japan’s. Seoul has also expressed interest in joining the TPP. China has too, but economists say it probably won’t join soon as Beijing appears unwilling to open its borders to competition in many sensitive industries.
Source: www.theaustralian.com.au
Key words: Trans-Pacific Partnership, benefits, stack up, Vietnam, Japan, Malaysia
