The mega trade bloc that the world was continuously talking on during the last few years – the Trans Pacific Partnership (TPP) is going to be materialized.
The New York Times has reported that the Obama administration and the partnering countries have reached consensus on TPP.
If implemented, the TPP will be the largest trade bloc in recent history, comprising 40 per cent of the world GDP in twelve countries, but remarkably excluding China. The TPP is a WTO plus trade alliance that aims to liberalise trade to advanced level between the US and eleven other members of the group.
Besides economics, the TPP bears considerable value as it is considered as an alliance between the US and its likeminded countries including Japan. The mega trade bloc is considered as an important part of the US attempt to restrict China.
The TPP will save faces of both Obama and Japanese PM Abe as the agreement will seriously put Pacific trade under the US and Japanese leadership. At the same time the TPP sidelines China from chartering the future of Pacific trade.. For Obama, the TPP is an important policy that contains China by refusing it a share in faster and more liberalized trade.
Pacific trade partnership is also a key component of PM Abe’s economic reforms, as it is termed as the ‘third arrow’.
In the last few months, members within the proposed trade bloc were in differences over many issues. The US itself has a hardened stand on IPRs. But discussions during the last few months were quick and two senior partners in the TPP- US and Japan made some compromises, according to trade analysts.