12 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam) are currently negotiating the Trans-Pacific Partnership (TPP). The point of this pact would be to establish the rules for international trade, investment and foreign investment during the coming decade and beyond. Because of the size of this trade would be the largest free trade agreement in history with the total gross domestic product of the TPP parties being approximately $27.7 trillion, comprising 40 percent of global GDP and one-third of world trade, these numbers illustrate the pact’s immense size and impact.
In order for this agreement to be worth it, the countries involved must experience some benefit. Income gains are projected to be over $110 billion per year when the TPP is finalized. Looking at the effects globally, the benefits to the rest of the world are an estimated $295 billion annually. Although the effects will not benefit everyone it seems, for example non-participating parts of Asia –in particular, China—may experience negative effects. China’s income is expected to be reduced by about $35 billion each year after the TPP is officially implemented. China won’t just wait the day that they lose all of this income, because right now another partnership is being negotiated. The Regional Comprehensive Economic Partnership (RCEP) is being formed and discussed among ASEAN, China, Japan, Korea, Australia, New Zealand, and India. If and when this agreement is finalized, it is estimated that it will produce gains of approximately $300 billion each year for the countries involved.
The TPP has created a lot of political issues among the general public, as well as between the Democratic and the Republican parties. It is hard to predict the future and as a result there are many questions regarding its impact, including how the TPP would affect the US economy, questions on the competitiveness of U.S. multinationals in the years ahead, and questions about job growth. As VizQuest is launched in Japan (check out our new Japanese site), and currently helping others companies launch into Japan, we are particularly curious to see how Japan would be affected. The TPP would be the first free-trade pact between the US and Japan; therefore, this improvement has become one of the positive outcomes of the TPP that is being focused on by supporters. Japan currently has the 3rd largest economy in the world (measured by nominal GDP), so this new agreement would strength ties between two powerhouses for the first time, so it would seem to be beneficial. The only thing we can do right now is wait and see how this all pans out, but in the meantime feel free to exploit the 3rd largest economy’s market in the world by expanding your company to Japan. Contact VizQuest today for help and how to get started!