Is the U.S. Missing the TPP Train?

Issue 08-29-16   |   Reviewer:   Thomas Coe


There are two competing trade agreements for Asian and Pacific Rim countries currently in consideration, the U.S.-led Trans Pacific Partnership (TPP) and the Chinese-led Regional Comprehensive Economic Partnership (RCEP). The TPP is inspired by the NAFTA trade agreement between Canada, Mexico, and the United States. The political debate in the United States about the merits from NAFTA is leading to uncertainty of the passage of the TPP in the U.S. Congress. Governments in countries in Asia and the Pacific Rim have to consider waiting for the U.S. Congress to vote for or against the TPP or to participate in the RCEP. Or be left out. 

Both the U.S. presidential candidates are opposed to the TPP as it currently stands, as are many members of both parties in Congress. Non-passage of the TPP by the United States would almost certainly doom that agreement and push countries to the RCEP, effectively providing a shift in economic and political influence from the United States to China and, to a lesser extent, India. Since neither of these two countries are participants in the TPP, they would gain from the trade agreement, and the United States would have to continue with bilateral and lesser agreements with the RCEP and other regional economies.

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