Negotiations started in March 2010. The original deal was finished in January 2016 with 12 parties. When the United States withdrew a year later, many people expected the agreement to die a quiet death. However, officials persevered and fought hard to maintain the high quality of the trading arrangements. For many, this meant accepting tough provisions originally negotiated as part of a comprehensive package with 12 members. The consequences of the final agreement are important for companies. Our brand-new booklet on 10 Benefits of the CPTPP can be downloaded here. The final agreement signed in Chile pared back the commitments by suspending 19 elements, amending one provision, and clarifying the terms for two others. (For more specific details, see our revised Policy Brief 17-11a.)
Fourth, other countries will start to use “national security” exceptions to block imports of all sorts. Here is the real danger of Trump’s policy. Once the major players in the system start to undermine the key norms of behavior, it opens the door for everyone to misbehave. Finally, by imposing such high tariffs on key items in the economy, Trump has successfully raised costs for products across the board inside the United States. This may appear to be a problem only for US consumers and firms. Given the tight integration of supply chains, however, Trump’s tariffs might actually affect global firms and citizens in completely unrelated places. Parts and components, for example, may become 25% more expensive with no quick or easy solution for replacement in the short run. Thus, what at first may seem to be a purely domestic issue—the imposition of tariffs on steel and aluminum against China inside the United States—is going to have global implications. The world should not view this threat lightly. The escalation of challenges to the global trade system appears to have begun.
The final version of the TPP was released this morning. After more than a year of renegotiation, the release seems like a bit of an anticlimax—the whole “text” is 9 pages. This does understate the issue, of course, since the entire original agreement is now incorporated by reference. The eleven country members are meeting in Chile on March 8 for signature. TPP11 is now on track to begin later this year. Firms should no longer delay. The benefits on offer are substantial. See our latest booklet on how to prepare. For regular readers of Talking Trade, I’m delighted to report that you already knew what the Comprehensive and Progressive Trans Pacific Partnership (CPTPP) contains.
Digital technologies have the potential to transform business in ASEAN. McKinsey Global Institute has estimated the total impact of technologies such as mobile internet, big data, cloud technology, and the Internet of Things, could unleash up to US$625 billion in annual economic impact in ASEAN by 2030. Micro, small and medium-sized enterprises (MSMEs) have the greatest potential to benefit from digital adoption given the ability of these technologies to overcome many of the typical barriers faced by MSMEs to exporting and growth, such as building a global business network and promoting their products overseas. However, a new report by the Asia Pacific MSME Trade Coalition (AMTC) warns that if certain key trade-related regulatory issues are not addressed, many MSMEs will not be able to capture this opportunity
These individual pressures have to be balanced with the needs of companies. To effectively scale, firms are increasingly interested in building infrastructure that does not always match geographic boundaries of countries. Citizen data and information of all sorts can be moved across borders and firms generally desire more movement rather than less. Businesses have strong reputational reasons for wanting to protect customer information. Governments, of course, are deeply concerned about protecting the rights of their own citizens and the security of their countries. Officials have to balance the sometimes competing demands of business and consumer privacy or business and national security issues. Toss into this volatile mix rapidly changing technology and a legal structure that moves on a much slower timescale and it becomes clear why rules on managing data flows in Asia has started to fragment.