2013: The Year of the TPP?

As 2012 draws to a close, international economics observers are watching the Trans-Pacific Partnership negotiations that are expected to be completed in 2013.

The Peterson Institute, which has just released two new policy papers analyzing the TPP, calls the negotiations “the largest and most important trade talks taking place anywhere in the world”.

The latest round of TPP talks occurred earlier December in Auckland, New Zealand. Radio New Zealand quoted that country’s lead negotiator David Walker, who signalled progress in negotiations, but sticking points remaining in the fields of copyright and patent protection, and tariffs on agricultural goods.

“We have been working to resolve a number of the more technical issues involved in those areas, and to more clearly frame up some of the substantive differences on more challenging issues that will need to be resolved as we look to bring negotiations to a conclusion,” Walker is quoted as saying.

According to Michael Froman, U.S. deputy national security adviser, President Obama wants the TPP deal to conclude by year end 2013, and come into effect in 2015.

The Peterson Institute projects that U.S. income gains under the TPP would reach $59 billion per year by 2020 and grow to $75 billion by 2025.

In Understanding the Trans-Pacific Partnership, authors Jeffrey J. Schott, Barbara, Kotschwar, and Julia Muir, estimate that the U.S. and Japan would receive the largest absolute income gains from the deal and the largest absolute export increases.

The deal would also spark change in industry within the different countries’ economies, and manufacturing – which accounts for three quarters of the world’s trade, according to Peterson – would have the largest increases in exports. However the manufacturing trend is expected to settle down and services to gain the most in the long term.

The TPP negotiations include 11 members: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Singapore, the United States and Vietnam. Japan, under a new prime minister,appears to be considering joining the talks.

The Peterson study investigates the benefits or damage of Japan joining the group, along with Korea. If it does, it would ratchet the combined world GDP of the group to 40 percent, compared to 30.

It concludes with the questioning of the likelihood the talks would indeed finish by next year’s end, advising negotiators to “winnow the long list of sticking points and get political OK to change existing policies”, with direct mention of the necessity for U.S. negotiators to have new and quick authority to act.

December 31, 2012

Source: ideaslaboratory.com