Academic journal article Asian Development Review

Trade Implications of the Trans-Pacific Partnership for ASEAN and Other Asian Countries

Academic journal article Asian Development Review

Trade Implications of the Trans-Pacific Partnership for ASEAN and Other Asian Countries

Article excerpt

I. Introduction

Negotiations have been underway for several years towards the formation of the Trans-Pacific Partnership (TPP), which aims to be a "next generation" or "21st century" trade agreement linking countries on both sides of the Pacific. Originating as the Pacific 4, or P-4 agreement among New Zealand, Singapore, Brunei Darussalam, and Chile, which began in 2006, the TPP negotiations now include the 12 countries indicated in Table 1, with Japan the most recent to join, in 2013. My purpose in this paper is to explore the potential implications of the TPP for its members and for other economies of Asia, especially those who are members of ASEAN and the ASEAN FTA (AFTA). Table 1 lists the economies I will consider, including their membership in AFTA as well as their potential membership in the TPP.1

The TPP is of interest in part because it is large, mainly due to the presence of the United States (US) and Japan. It is of interest also, however, for two other reasons. First, as a free trade agreement (FTA), it will overlap numerous other FTAs, so that its economic effects are not just the effects that have long been studied for trade agreements that are freestanding, without such overlaps. The economic effects therefore go beyond the simple trade creation and trade diversion introduced by Viner (1950).

The TPP is also of interest because of its ambition to extend well beyond the limits of trade and trade policy, including a host of other issues. Some of these, such as trade in services, technical barriers to trade, and intellectual property, have been included previously both in the World Trade Organization and in other regional agreements such as the North American Free Trade Agreement (NAFTA), but the TPP intends to go further in these directions than ever before. At the same time, the TPP negotiators are addressing new issues that have never, or hardly ever, been part of trade agreements, such as competition policy, regulatory coherence, and standards for labor and environment. All of these issues will take most of the included Asian countries well beyond what they have included previously in their existing trade agreements.2

One might object that the TPP is not the most important trade agreement on the horizon that will matter for Asian economies. In 2013, negotiations began between the US and the European Union (EU) on a Transatlantic Trade and Investment Partnership, or TTIP. Although TTIP includes only two partners, the US and the EU, it will encompass a larger part of the world economy than currently envisioned for the TPP. Therefore, while the TTIP will not include any economies of Asia, it will surely matter a great deal for them. That, however, is a topic for another paper. And in some ways, the TPP's overlap with both Asian economies and various existing Asian trade agreements makes it a more interesting case.

I will divide this discussion into three parts. First, in section II, I will provide some description of the TPP itself, including a list of the many issues that are being discussed in addition to tariffs and that may become part of an agreement if and when it is reached. Since my focus in the rest of the paper will be only on the trade effects of the TPP, and since these are influenced by the presence of trade agreements that already exist, I will then, in section III, provide a picture of the relevant agreements involving ASEAN and other Asian economies. Finally, in Section iy I will use this information together with data on the bilateral patterns of trade to discuss how the TPP might be expected to benefit or harm the countries of the TPP, of ASEAN, and other selected Asian economies.

II. TPP, AFTA, and Other Asia3

Both the TPP and AFTA are, or propose to be, FTAs-that is, the member countries reduce to zero all tariffs on imports from other member countries of all, or almost all, products. Their agreements do not involve any commitments about external tariffs-that is, the tariffs on imports from economies outside the FTA. …

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