Friday, July 5, 2013
Brock R. Williams
Analyst in International Trade and Finance
The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) among 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. The negotiating partners have expressed an interest in allowing this proposed “living agreement” to cover new trade topics and to include new members that are willing to adopt the proposed agreement’s high standards. Japan is the most recent country to seek entry into the TPP. The Administration gave Congress notice of its intent to negotiate with Japan in the TPP on April 24, 2013.
The TPP negotiations have been of significant interest to Congress. Congressional involvement includes consultations with U.S. negotiators on and oversight of the details of the negotiations, and eventual consideration of legislation to implement the final trade agreement. In assessing the TPP negotiations, Members may be interested in understanding the potential economic impact and significance of TPP and the economic characteristics of the other TPP countries as they evaluate the potential impact of the proposed TPP on the U.S. economy and the commercial opportunities for expansion into TPP markets.
This report provides a comparative economic analysis of the TPP countries and their economic relations with the United States. It suggests that the TPP negotiating partners encompass great diversity in population, economic development, and trade and investment patterns with the United States. This economic diversity and inclusion of fast-growing emerging markets presents both opportunities and challenges for the United States in achieving a comprehensive and high standard regional FTA among TPP countries.
The proposed TPP and its potential expansion are important due to the economic significance of the Asia-Pacific region for both the United States and the world. The region is home to 40% of the world’s population, produces nearly 60% of global GDP, and includes some of the fastestgrowing economies in the world. Including Canada, Mexico, and Japan, TPP negotiating partners made up 40% of U.S. goods trade in 2012, and the Asia-Pacific economies as a whole made up over 62%. The TPP would be the largest U.S. FTA to date by trade value.
The United States is the largest TPP market in terms of both GDP and population. In 2012, non- U.S. TPP partners collectively had a GDP of $11.9 trillion, just over 75% of the U.S. level, and a population of 478 million, about 50% larger than the U.S. population. Japan’s entry (pop. 128 million and GDP $6 trillion) increases the significance of the agreement on both these metrics.
Unlike most previous U.S. FTA negotiations, the TPP involves countries with which the United States already has an FTA. The United States has FTAs in place with Australia, Canada, Chile, Mexico, Peru, and Singapore, which together account for over 80% of U.S. goods trade with TPP countries. Japan is by far the largest U.S. trade partner among TPP members without an existing U.S. FTA.
Date of Report: June 10, 2013
Number of Pages: 39
Order Number: R42344
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