US pulling out of Trans Pacific Partnership {TPP}

Taken from our blog,”Brinks of economic thoughts”

US pulling out of Trans Pacific Partnership {TPP}

 

{US has been witnessing many efforts to make changes in policies adopted during the time of Obama’s president ship. Obama had come up with Obamacare, an affordable health care act, which was intended to benefit nearly 25 million Americans. On Friday although Donald Trump did not succeed in removal, but he has been trying to alter the previous regimes policies. I am in this article trying to make a short note about USA’ s pulling from Trans Pacific Partnership}
US president Donald Trump had signed executive orders to pull out formally from negotiations for the process of Trans-Pacific Partnership. Had USA not pulled out of TPP trade deal, it would have been the world’s largest such deal in history. Protectionism can be argued. In a world which is now interrelated due to complex ties at economic and political level. Any of major or even minute steps do have their sets of repercussions. Globally we are seeing rise in sentiments, about ensuring that none of new steps must affect the benefits of local population.UK surprise exit from EURO union, or even Trump electoral win are an indication of rising dissatisfaction among the masses as of neo liberal policies which they seem to have affected their interest.

 

TPP was one among the major international trade initiatives taken by earlier US president Barrack Obama, so as to set new rules for trade in 21st century and bind the allies together to curtail the growing Chinese regional economic dominance.

It took nearly 5 years of series of thorough negotiations and discussions after which, TPP was signed by trade representatives in Feb 2016.But it had to be ratified by all of the individual countries.

TPP was conceived as an effective trade pact among the 12 pacific RIM nations,US,Japan,Malaysia,Vietnam,Singapore,Brunei,Australia,New Zealand,Canada,Mexico,Chile, and Peru. It was historically one among the most trend changing possible trade deals which could have been arrived at.

It intended to clearly slash the tariffs on most goods traded between countries which were participating in the deal. One of the interesting figures was that these nations are home for nearly 800 mn peoples, and also accounting for nearly 40 % of world’s trade. Ideally it could have created one unified market like EU.

While during the election campaign for US president ship in 2016, Trump had repeatedly referred to TPP as a “job killer” and a potential disaster” for the country. He had pointed it in one of his videos of US pulling out the moment he enters into the office. Trump had been contesting election on grounds of benefitting the nation’s economy, bringing jobs to USA.Many critics of the deal pointed to it “seeking fairer negotiations”.

 

It would have set new terms for trade and business investments among the nations, whose annual GDP stood as high as nearly 30 tn $.It also aimed to curtail the growing influence of China in the entire region. One of the independent studies conducted by a research think tank concluded that, Brack Obama wished to establish the “gold standard” of rules of the 21st Century. But it also had one shortcoming, as would have definitely resulted into increased US exports and imports, but not enhancements in US job figures.

China was also reluctant and very cautious of the development taking place. Had the deal come into practise, it would have straightway removed tariffs in full range of cases.Eg Japanese carmakers like Toyota, Nissan and Honda would have got cheaper access to US, one of their biggest export markets. Same way US vehicle exports would have found new markets if tariffs of close up to 70 % were slashed in countries like Vietnam and Malaysia, US farmers and poultry firms stood all chances to benefit, so did Vietnamese textiles goods.

There was immense discontent back in Trumps own constituency, TPP was looked as a reason for further job losses or stagnant wages, with many people already having discontent due to globalisation and trade agreements .

China looked up to TPP as a very suspicious move. It viewed it as a ploy by US to tighten its control over the region. Chinese media had sharply criticised the deal as “economic arm of US‘s geopolitical strategy to make sure that Washington rules supreme in the region”.

Many nations although still insist that they will move ahead even in absence of USA.

Same way we had seen Trump making comments about the H1B Visa program, which was used widely to hire cheap technology workers, who was widely believed to be taking jobs from US work force.

Any case, despite after USA pulling, the TPP cannot still be written off as nations still are willing to participate in it.

 

Harsh Vardhan Pathak

 

 

 

 

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