Published
Aug 8, 2015
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Trans-Pacific Partnership agreement: final negotiations fail in Hawaii

Published
Aug 8, 2015

The trade ministers of the 12 Pacific Rim countries, which account for 40% of world’s GDP, attempted to seal the TPP trade deal last week in Hawaii. Although negotiators failed to reach an agreement, US Secretary of State John Kerry praised the progress achieved by the round of talks.

Trade Ministers of the TPP at the beginning of the negotiation process in 2010


The current Trans-Pacific Partnership agreement (TPP) is based on the 2005 “Trans-Pacific Strategic Economic Partnership” deal between New Zealand, Chile, Singapore and Brunei. In 2010, Australia, Malaysia, Peru, Vietnam and the United States joined the P4 trade bloc, and a few years after Canada, Mexico and Japan entered the TPP negotiations.

The TTP agreement would create the world’s largest free-trade zone and would have a profound impact on China’s economic reforms, a country that is notably not involved in the negotiations. Implementation of the TPP would damage China’s price advantage in exports of manufactured products by creating better export opportunities for the countries involved. In 2013, the US Department of Commerce valued the US exports of textile and apparel to TPP countries at $10 billion dollars, and these transactions faced tariffs that account for 20% of their value.

The US, meanwhile, wants to become less dependent on Mexico. Under the existing regional trade agreements, half of the American fabrics are sent to Mexico, where they are manufactured into clothing and then sent back to the US, a rotation free of trade tariffs. Against this scenario, some industry workers believe that the TPP will be counter-intuitive. The American apparel industry employs over 1.5 million people and accounts for $57 billion dollars in turnover.

The Peterson Institute, which forecasts an additional 46% increase in exports by 2015 if the deal is reached, said that the deal will negatively hit China and Mexico. Meanwhile, Vietnam could become the lucky winner, boosting one of the country’s signature export products, sports shoes.

According to Footwear Distributors and Retailers of America, virtually all footwear sold in the US has been manufactured abroad. International companies exporting to the US have to face trade tariffs from 25% to 35%.

Footwear manufactured within the TTP area accounted for $400 million dollars on duties in 2014, but forecasts see a rapid growth of these figures if the TTP is reached.

The same could happen with investments. Vietnam saw a 9.6% growth in investments this year from the same period in 2014.

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