Who will be the Winners and Losers in the World's Biggest Trade Deal: TPP

[VALKRYIE]

The countdown to the giant Trans-Pacific Partnership (TPP) has begun, with a July 31 deadline looming on the trade agreement that covers 12 countries and 40 per cent of the global economy.

Trade representatives kicked off talks in Hawaii on Tuesday and will work towards a-hopefully-successful conclusion at the end of this week. The deal has been five years in the making but contrary to previous talks, optimism is high for an agreement this time around.

"Sentiment is very positive. I've spoken to negotiators from the US and four other countries and people are excited, they really see the end in sight," Tami Overby, senior vice-president for Asia at the US Chamber of Commerce (USCC), told CNBC on Tuesday.

CNBC takes a look at the likely TPP winners and losers:

Winners

"The biggest winner will be Vietnam as foreign investors start to flood the country. Number two might be Malaysia and number three is Japan," Deborah Elms, executive director at Asia Trade Centre, told CNBC on Tuesday.

The Peterson Institute of International Economics (PIIE) echoed Elms in a recent report, citing tariff-free access to US markets for apparel and footwear, Vietnam's top exports, compared to the current 17-32 per cent tax range.

That's expected to boost exports to the U.S-already Vietnam's largest export market-and dramatically increase foreign direct investment inflows in a country with the lowest per capita income among TPP members.

PIIE also notes that Vietnam would see the largest percentage income gains and export increases out of all countries at 13.6 per cent and 31.7 per cent, respectively.

Malaysia does not yet have bilateral free-trade agreements (FTAs) in place with the US, Canada or Mexico, so it should be another key beneficiary of a TPP agreement.

"The TPP deal would provide Malaysian exporters with enhanced access to the entire North American market, and would also improve Malaysia's attractiveness as a hub for North American investment inflows," Rajiv Biswas, Asia Pacific chief economist at IHS, said in Tuesday note.

For Japan, the opening of services markets is a major advantage, explained Elms of Asia Trade Centre. A TPP deal would open the services markets of each member nation to one another, and because Japan's services sector is relatively uncompetitive, it has a lot of room to grow, she said.

"That means all kinds of services markets that have been problematic for foreign investors to penetrate should be open, including logistics, distribution and warehousing, as well as travel, tourism, and food and beverage."

Moreover, the combined impact of the TPP and a potential FTA with the European Union could substantially lift Japan's long-term growth rate, according to Biswas.

Losers

Non-TPP members are expected to bear the brunt of losses due to the impact of trade diversion, where countries prefer to export to their FTA partners rather than non-participating countries.

"The trade diversion effect of the TPP fall mainly on China," PIEE said, adding that exports would be 1.2 per cent lower in the case of a deal compared to without.

As Vietnam benefits from increased market access to the US, other Asian exporters of textiles and clothing may hurt.

"Bangladesh, Cambodia, Pakistan, and Sri Lanka are also expected to suffer negative impact effects from trade and investment diversion in the textiles and clothing industry towards TPP members, notably Vietnam," Biswas added.

India is also expected to suffer as Vietnam gains. "While New Delhi has a relatively well-diversified export sector, textiles and clothing industry still accounted for 13 per cent of total merchandise exports in the 2014-15 financial year," Biswas continued.

However, the European Union isn't expected to be impacted greatly: It already boasts a number of FTAs with Asian economies and is currently negotiating one with the United States, PIIE said. Why it's now or never

Previous TPP talks have been repeatedly stalled by sticky issues including generic drugs, agricultural subsidies and dairy exports, but experts say it's now or never for negotiators.

"This deadline is truly a real deadline [compared to previous ones] because the window is essentially shut," Elms said. "If no agreement is signed by this weekend, countries will have to wait until after the next US presidential election in 2017. By then, who knows what will have happened? I would not like the odds of success then. It's make-or-break now."

However, there's always the possibility of negotiators inking an in-principle deal and then working out the details later, Overby added.

Indeed, recent history indicates that there's nothing like the threat of the 11th hour to motivate politicians.

It took Greece and its European creditors six months to finally agree on a bailout deal, which coincided with the peak of Athens' financial desperation amid capital controls and a missed International Monetary Fund payment.

Meanwhile, Tehran and the group known as the PS5+1 went back-and-forth for 18 months before finally joining hands earlier this month.

- See more at: TPP: Winners and losers in the world's biggest trade deal, News, News, AsiaOne Business News

 

[大汉奸柳传志]

The countdown to the giant Trans-Pacific Partnership (TPP) has begun, with a July 31 deadline looming on the trade agreement that covers 12 countries and 40 per cent of the global economy.

Trade representatives kicked off talks in Hawaii on Tuesday and will work towards a-hopefully-successful conclusion at the end of this week. The deal has been five years in the making but contrary to previous talks, optimism is high for an agreement this time around.

"Sentiment is very positive. I've spoken to negotiators from the US and four other countries and people are excited, they really see the end in sight," Tami Overby, senior vice-president for Asia at the US Chamber of Commerce (USCC), told CNBC on Tuesday.

CNBC takes a look at the likely TPP winners and losers:

Winners

"The biggest winner will be Vietnam as foreign investors start to flood the country. Number two might be Malaysia and number three is Japan," Deborah Elms, executive director at Asia Trade Centre, told CNBC on Tuesday.

The Peterson Institute of International Economics (PIIE) echoed Elms in a recent report, citing tariff-free access to US markets for apparel and footwear, Vietnam's top exports, compared to the current 17-32 per cent tax range.

That's expected to boost exports to the U.S-already Vietnam's largest export market-and dramatically increase foreign direct investment inflows in a country with the lowest per capita income among TPP members.

PIIE also notes that Vietnam would see the largest percentage income gains and export increases out of all countries at 13.6 per cent and 31.7 per cent, respectively.

Malaysia does not yet have bilateral free-trade agreements (FTAs) in place with the US, Canada or Mexico, so it should be another key beneficiary of a TPP agreement.

"The TPP deal would provide Malaysian exporters with enhanced access to the entire North American market, and would also improve Malaysia's attractiveness as a hub for North American investment inflows," Rajiv Biswas, Asia Pacific chief economist at IHS, said in Tuesday note.

For Japan, the opening of services markets is a major advantage, explained Elms of Asia Trade Centre. A TPP deal would open the services markets of each member nation to one another, and because Japan's services sector is relatively uncompetitive, it has a lot of room to grow, she said.

"That means all kinds of services markets that have been problematic for foreign investors to penetrate should be open, including logistics, distribution and warehousing, as well as travel, tourism, and food and beverage."

Moreover, the combined impact of the TPP and a potential FTA with the European Union could substantially lift Japan's long-term growth rate, according to Biswas.

Losers

Non-TPP members are expected to bear the brunt of losses due to the impact of trade diversion, where countries prefer to export to their FTA partners rather than non-participating countries.

"The trade diversion effect of the TPP fall mainly on China," PIEE said, adding that exports would be 1.2 per cent lower in the case of a deal compared to without.

As Vietnam benefits from increased market access to the US, other Asian exporters of textiles and clothing may hurt.

"Bangladesh, Cambodia, Pakistan, and Sri Lanka are also expected to suffer negative impact effects from trade and investment diversion in the textiles and clothing industry towards TPP members, notably Vietnam," Biswas added.

India is also expected to suffer as Vietnam gains. "While New Delhi has a relatively well-diversified export sector, textiles and clothing industry still accounted for 13 per cent of total merchandise exports in the 2014-15 financial year," Biswas continued.

However, the European Union isn't expected to be impacted greatly: It already boasts a number of FTAs with Asian economies and is currently negotiating one with the United States, PIIE said. Why it's now or never

Previous TPP talks have been repeatedly stalled by sticky issues including generic drugs, agricultural subsidies and dairy exports, but experts say it's now or never for negotiators.

"This deadline is truly a real deadline [compared to previous ones] because the window is essentially shut," Elms said. "If no agreement is signed by this weekend, countries will have to wait until after the next US presidential election in 2017. By then, who knows what will have happened? I would not like the odds of success then. It's make-or-break now."

However, there's always the possibility of negotiators inking an in-principle deal and then working out the details later, Overby added.

Indeed, recent history indicates that there's nothing like the threat of the 11th hour to motivate politicians.

It took Greece and its European creditors six months to finally agree on a bailout deal, which coincided with the peak of Athens' financial desperation amid capital controls and a missed International Monetary Fund payment.

Meanwhile, Tehran and the group known as the PS5+1 went back-and-forth for 18 months before finally joining hands earlier this month.

- See more at: TPP: Winners and losers in the world's biggest trade deal, News, News, AsiaOne Business News

I have heard Canada is probably getting excluded from TPP talks， know anything about that？

 

[Götterdämmerung]

I'm sure Monsanto will be very successful in Vietnam's agriculture as they have a lot of experience during the Vietnam War working there with the U.S. airforce. Vietnam still enjoys the Monsanto products even after so many years after the war.

 

[powastick]

Two days ago, Malaysia said it will not sign the agreement.
Malaysia will not sign Pacific trade pact in Hawaii, says minister - The Malaysian Insider

 

[macnurv]

"As the minister in charge of the TPPA talks, it is my responsibility to ensure that our constitution, sovereignty and core policies of the nation, including the interests of the Bumiputera community, are safeguarded and upheld. "Our objective at this meeting is to ensure that Malaysia's interests and concerns are addressed," he said.

So just when I thought actually the Malaysian government had shown some farsightedness, he had to talk about protecting the Bumi interests. UMNO lead government is not ready to let go off its grip on crony capitalism which had made these people rich beyond imagination.
TPPA is an abomination, and it is not good for the public of any of the countries involved, the biggest winners will be the drug companies. Expect the price of medicines to be increased and there is jack $hit any country would be able to do.

 

[sicsheep]

I'm sure Monsanto will be very successful in Vietnam's agriculture as they have a lot of experience during the Vietnam War working there with the U.S. airforce. Vietnam still enjoys the Monsanto products even after so many years after the war.

Weren't they the one making agent orange? LOL

 

[opruh]

I thought TPP is a big partnership, then I checked the members and Vietnam is one of them, I therefore conclude that this trade deal is reserved for the losers.

 

[powastick]

"As the minister in charge of the TPPA talks, it is my responsibility to ensure that our constitution, sovereignty and core policies of the nation, including the interests of the Bumiputera community, are safeguarded and upheld. "Our objective at this meeting is to ensure that Malaysia's interests and concerns are addressed," he said.

So just when I thought actually the Malaysian government had shown some farsightedness, he had to talk about protecting the Bumi interests. UMNO lead government is not ready to let go off its grip on crony capitalism which had made these people rich beyond imagination.
TPPA is an abomination, and it is not good for the public of any of the countries involved, the biggest winners will be the drug companies. Expect the price of medicines to be increased and there is jack $hit any country would be able to do.

This went viral lately.
The 10 reasons:
1. Displaces local entrepreneur
2. A threat to national food security
3. Abolish Halal certificate.
4. Threat to the nation sovereign
5. Malay reserve land sold to foreigners
6. P.o.r.n cannot be blocked.
7. Drug price increase as much as 80%
8. Oppress Local workers.
9. Jew-American cooperation conspiracy.
10. Why is it a secret?

 

[Beidou2020]

Weren't they the one making agent orange? LOL

Yup, Vietnam's favourite

 

[macnurv]

This went viral lately.
The 10 reasons:
1. Displaces local entrepreneur
2. A threat to national food security
3. Abolish Halal certificate.
4. Threat to the nation sovereign
5. Malay reserve land sold to foreigners
6. P.o.r.n cannot be blocked.
7. Drug price increase as much as 80%
8. Oppress Local workers.
9. Jew-American cooperation conspiracy.
10. Why is it a secret?

2, 4, 7 & 10 are correct. But its ISMA so they must include Jewish conspiracy shit in it lol

 

[Rechoice]

Weren't they the one making agent orange? LOL

We exported rice from where and to China too.

Yup, Vietnam's favourite

 

[dichoi]

Weren't they the one making agent orange? LOL

North East Asia ( China,Korea, Japan ) FTA, where Japan can produce again what Unit 731 did.

 

[Aepsilons]

North East Asia ( China,Korea, Japan ) FTA, where Japan can produce again what Unit 731 did.

Please my friend, let's not mention that.

 

[sicsheep]

North East Asia ( China,Korea, Japan ) FTA, where Japan can produce again what Unit 731 did.

its better than arms growing out of your forehead, honestly. LOL

 

[JSCh]

I have heard Canada is probably getting excluded from TPP talks， know anything about that？

Down to the wire on the Trans-Pacific Partnership | East Asia Forum
27 July 2015
Author: Peter Drysdale, East Asia Forum

Officials and ministers from around the Pacific are descending on Hawaii this week for what should be the final round in the negotiation of the terms of the Trans-Pacific Partnership (TPP). The big two in the arrangement — Japan and the United States — appear to have settled, and this bilateral between the two largest parties to the negotiation will be by far its most significant outcome. But there is still uncertainty about whether the agreement will be put to bed within the week and what its shape will finally be.

The rush to the wire is important. It is ordered around the legislative imperatives that President Obama faces in trying to stitch this part of his pivot toward Asia together before his term expires.

If the TPP deal is not concluded within the first two weeks of August, as Rick Katz of the Oriental Economist points out, it will be legally impossible to bring the TPP to a Congressional ratification vote during the 2015 calendar year and that means it would likely spin out into the next US presidency. If the agreement cannot be done by the end of the month, there will be a sense of failure and loss of momentum. The Japanese know, for example, that the United States needs to ratify the TPP during 2015; otherwise, it will be hard to get it ratified until the next presidential term and that could spill over into 2018, not 2017, and possibly not be done at all. If the agreement is to be signed at all it has to be signed very soon otherwise governmental energy in the region will ebb away. This way thinking about where things are at has clearly helped persuade Japanese negotiators to get over the line.

The TPP is the most important free-trade agreement to be negotiated in many years. If completed, it will cover a larger part of world trade than any such preferential deal before it, with its members accounting for nearly 40 per cent of the world economy. Its aim is to set a new standard for what trade agreements should cover. So far there have been five years of negotiations among the twelve partners, over the 29 chapters of dense rules and tariff details that will comprise the arrangement.

One problem remains the TPP’s complexity. Even in respect of commodity trade, it will incorporate a morass of regulations, such as content rules specifying how much of a product must be made from local inputs and inputs from partner countries to qualify for entry to partner markets. Moreover, these ‘rules of origin’ have been negotiated bilaterally so when the deal is done, it is likely to have some of the characteristics of a series of bilateral arrangements rather than a genuinely common set of regional rules. This is far from ideal or platinum-standard in terms of economic efficiency since it will protect suppliers within the arrangement against lower cost suppliers outside it, such as China, Indonesia or Europe for instance, diverting trade away from them rather than creating it within the TPP.

Yet, after failure to seal a big global WTO deal, the TPP offers the chance of some success. The Japan–US component of the TPP should deliver substantial agricultural trade liberalisation, although not, it seems, the zero option that would have completely opened up Japanese agricultural markets to international competition and symbolised real progress with the Abe government’s structural reform agenda. The prospect of dairy market liberalisation in North America would also bring substantial trade and income gains although political resistance to liberalisation of dairy in the middle of a Canadian election cycle is threatening to scuttle that, with uncertain consequences.

Canada has still apparently to put an offer on the table for dairy and poultry, prompting talk in Washington late last week that the TPP might go ahead this time without the participation of Canada, New Zealand and Malaysia (for unrelated human rights violation reasons). Leaving Canada out, or getting it to agree that it will have to join late, could have repercussions for New Zealand’s participation. The US dairy industry has argued that the United States should not open its dairy market to New Zealand and others unless it was counterbalanced by Japanese and Canadian dairy market opening. Remarkable though that turn of events might seem, the final straight up and down vote on TPP in the US Congress might depend on negotiators’ taking the threat seriously. Canada’s trade minister, Ed Fast, dismissed the threat as ‘another tactic to negotiate through the media’ and declared that Canada would ‘negotiate at the negotiating table’, and would not ‘be bullied into negotiating this through the media’. So there’s still a way to go.

Excluding dairy would be a sorry outcome for the value of the agreement. Dairy accounts for one-third of New Zealand’s total exports; New Zealand alone produces one-third of total global exports of dairy products. If Canada does not deliver, New Zealand — one of the original members of TPP when it was called the Pacific-4 — might not be able to sign on. As Katz reports an Asian analyst remarking: ‘What kind of agreement is it that keeps out the most efficient dairy producer in the world? So much for a “21st-century, high-quality” agreement that is the “gold standard” for future agreements’!

In this week’s lead, Shiro Armstrong scrutinises other aspects of the TPP likely to occupy a lot on negotiating time later this week. He argues that these issues, though vexed and still difficult to resolve, are trivial compared to the ability to get a straight up-or-down vote in the US Congress — now secured through TPA or fast-track authority, without which the deal would be a non-starter. The remaining issues, he says, can be easily horse-traded at the political level and compromises can be made in order to complete the deal.

Armstrong identifies the principal flaws in the TPP that may well overwhelm the positives in any agreement. ‘The first is that the core of the new rules involves aspects that further private (read: large multinationals) interests at the expense of general welfare in member countries. The most egregious of these is stronger intellectual property (IP) rights protections, which are anti-development and simply transfer wealth to US pharmaceutical companies and Hollywood’. Twelve-year or even seven-year data protection for biologics is, as one Asian negotiator has put it, ‘outrageous’. Other issues are the exclusion of China, India and Indonesia from membership any time soon, with hurdles to entry that are unreasonably high; the investor -state dispute settlement provision; and the trade diversionary structure of trade rules.

‘The temptation’, writes Armstrong, ‘will be strong to rush across the finish line for what will be a major political trophy — but the risk is that the TPP will be an agreement that does more harm than good for economic and political relations in the Asia Pacific’.

An agreement on the TPP this week is not the final destination. If it’s to be more than a surrogate bilateral agreement between Japan and the United States it will need to expand its membership, to include China and the rest of Asia. And if it’s not mainly about commodity trade liberalisation but about setting new rules for global commerce, the rules that are proposed had better be thoroughly scrutinised by all partners to the agreement before they finally sign on, not just by the US Congress.

Peter Drysdale is Editor of the East Asia Forum.