Big Picture
Pulling the United States out of the Trans-Pacific Partnership and not rejoining the new Comprehensive Plan for Trans-Pacific Partnership has allowed for significant trade and income losses. To regain the lost funds, America must either rejoin the free trade agreement or formulate a new one.
Graphic From: Petri, Peter A., and Michael G. Plummer. “The Economic Effects of the Trans-Pacific Partnership: New Estimates | PIIE.” Peterson Institute for International Economics, 13 Mar. 2016, www.piie.com/publications/working-papers/economic-effects-trans-pacific-partnership-new-estimates?ResearchID=2906. 29 Sept. 2022.
This figure illustrates the expected effect of the Trans-Pacific Partnership on the United States once ratified and in full effect. As shown, it would have resulted in increased incomes and exports, resulting in significant economic growth for the United States.
Operative Definitions
Trans-Pacific Partnership (TPP): A free trade agreement signed by 12 countries: Singapore, Brunei, New Zealand, Chile, Australia, Peru, Vietnam, Malaysia, Mexico, Canada, Japan and the United States. The agreement comprised lowering trade barriers by removing tariffs on an extensive range of products, including automotive, agricultural and textile items. It was also slated to streamline customs procedures, promote e-commerce, increase protection for intellectual property, and maintain a commitment to meet environmental and labor standards.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): When the U.S. left the TPP, specific sub-clauses that the U.S. pushed for were suspended. The subsequent agreement was then termed the CPTPP.
The Indo-Pacific Economic Framework: A recently introduced economic framework between the U.S. and 12 countries across the Pacific. It is not a free trade agreement and does not lower any tariffs or trade barriers.
Important Facts and Statistics
Former President Barack Obama signed the TPP in 2016.
Former President Donald Trump pulled the U.S. out of the TPP in 2017, thus preventing it from ratification in Congress.
Since his presidency, President Joe Biden has not indicated that he would like to reverse former President Trump’s decision and has instead recently announced the Indo-Pacific Economic Framework.
Three-Point Plan
(1) Indicate interest in the CPTPP.
Announce that the United States is interested in re-signing the CPTPP. This will show the signatories that the U.S. is serious about signing the agreement and will not pull out.
(2) Re-negotiate the CPTPP.
Many critics of the original TPP cited environmental and labor concerns. Renegotiating the CPTPP to include the originally suspended subclauses and adding clauses addressing criticisms will increase national approval ratings for the agreement across party lines as well as hold countries across the Pacific to a commitment to improving environmental and labor standards.
(3) Re-join the CPTPP.
This will increase GDP, lower consumer prices, create jobs, increase annual incomes, improve diplomatic relations across the Pacific, and ultimately prove economically and diplomatically advantageous to the U.S.
Why this Initiative is Important
Free trade agreements are essential for improving diplomatic relations and providing Americans with a wider variety of cheaper goods. With current conflicts, supply chain issues, and inflation causing a 13.1% increase in the price of goods since July 2021, it is now more important than ever to rejoin the CPTPP. A comprehensive and expansive free trade agreement will–when fully ratified into law–be able to import cheaper foreign goods as well as provide cheaper American-produced goods; imported materials will be inexpensive, thus providing more affordable products overall. Although President Biden is moving in a similar direction with the Indo-Pacific Economic Framework, it is not a free trade agreement and will not provide any economic benefits at this time. The CPTPP can provide some much-needed economic relief to American consumers and has the capacity to greatly increase American exports across the Pacific.
The opinions expressed in this article are those of the individual author.
Sources
CBSLA Staff. “Grocery Prices up 13.1% over Last 12 Months; Eating out up 7.6%.” Www.cbsnews.com, Aug. 2022, www.cbsnews.com/losangeles/news/grocery-prices-up-13-1-over-last-12-months-eating-out-up-7-6/#:~:text=According%20to%20the%20U.S.%20Bureau. Accessed 30 Sept. 2022.
Chatzky, Andrew, et al. “What’s next for the Trans-Pacific Partnership (TPP)?” Council on Foreign Relations, 2021, www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp#chapter-title-0-3.
Petri, Peter A., and Michael G. Plummer. “The Economic Effects of the Trans-Pacific Partnership: New Estimates | PIIE.” Peterson Institute for International Economics, 13 Mar. 2016, www.piie.com/publications/working-papers/economic-effects-trans-pacific-partnership-new-estimates?ResearchID=2906. Accessed 29 Sept. 2022.
Scott, Robert E., and Jeffrey J. Schott. “Are Trade Agreements Good for Americans? - Room for Debate - NYTimes.com.” Nytimes.com, 2016, www.nytimes.com/roomfordebate/2016/03/17/are-trade-agreements-good-for-americans.
Tan, Su-Lin. “The Indo-Pacific Economic Framework: What It Is — and Why It Matters.” CNBC, 26 May 2022, www.cnbc.com/2022/05/26/ipef-what-is-the-indo-pacific-framework-whos-in-it-why-it-matters.html.