Tomorrow, in Auckland, New Zealand, the United States and 11 other countries will sign the Trans-Pacific Partnership (TPP), a new free trade agreement that encompasses nearly 40 percent of the world's economy, and includes three of our four largest trading partners.
The United States, Canada, Mexico, Japan, Australia, New Zealand, Singapore, Malaysia, Vietnam, Brunei, Chile and Peru completed the treaty after many years of intensive negotiations that continued as the group grew in size.
After the U.S. Trade Representative and other trade ministers sign the treaty, the Obama Administration will submit to Congress the agreement, proposed legislation to implement the United States' obligations under the pact, and an assessment by the U.S. International Trade Commission of its economic impact. A simple-majority vote in each house of Congress would serve to approve both the agreement and its implementing legislation.
The Congress should approve and implement the TPP for many good reasons.
A free trade agreement (FTA) expands economic opportunity in foreign markets for American workers and businesses, while doing the same for their foreign counterparts in our market. The increased trade improves the overall economy of each country. But, in order to avoid unwanted side effects, modern FTAs do more.
A modern FTA allows the U.S. to deny our market to unsafe products, fraudulent services, and unfair trade practices. It ensures that American products, services and investment capital bound for foreign markets are not impeded, and our intellectual property is protected after arrival. A modern FTA also improves foreign labor and environmental practices both by setting minimum standards and by accelerating the development of its poorer members. And it has strong mechanisms that guarantee our partner countries will comply with these obligations, just as we do.
In the 22 years since NAFTA entered into force, the United States' free trade agreements have greatly improved with regard to both the quality and enforceability of their provisions. And, the TPP has the highest standards of any FTA we have concluded. But, this undertaking is also an extraordinary achievement for other reasons.
First, the Trans-Pacific Partnership will be the largest free trade area ever created outside a political or economic union. Although the terms of normal trade relations have already been negotiated into large multilateral treaties, the tougher and more complex terms of free trade relations have until now been negotiated by the U.S. into treaties that usually include only one or two other countries. That the U.S. has been able to lead all 12 TPP economies to agreement on the myriad of terms of a free trade agreement is a huge diplomatic achievement, and a testament to the United States' continuing leadership in the rules of international trade.
Second, this treaty will become a significant strategic asset. Its terms include a process by which new countries can join the partnership. Many significant economies, like Korea, Taiwan, Thailand, Philippines, and Indonesia, have publicly expressed interest. Others have done so only privately. For China and Russia, remaining outside the TPP will become increasingly difficult as its membership grows. When TPP membership inevitably becomes an economic imperative for those powers, the United States will have unprecedented leverage to force their compliance with their preexisting trade obligations to the U.S., and with the tougher terms of the TPP, both as conditions of TPP entry.
Third, as noted above, the TPP's protections will be far superior to those of NAFTA. Though the North American countries intend the two treaties to continue side-by-side for now, the guarantee of free trade among the three countries under the TPP will eventually make possible the U.S. withdrawal from NAFTA that has long been sought by that treaty's critics.
Fourth, the TPP offers a possible paradigm shift for the world's progress toward global free trade. Until now, the presumption has been that global free trade would eventually be achieved by continued liberalization of the global normal trade relations treaties that are managed at the World Trade Organization. However, with WTO talks bogged down for more than 14 years, the TPP offers a new paradigm. Rather than moving vertically to further liberalize the already-global WTO treaties that govern the normal trade relations, the world could move horizontally to expand participation in the already-free trade terms of the TPP to one day make them global.
A global TPP might seem far-fetched. But, the original 12 countries, alone, constitute nearly two-fifths of the global economy. Once China, Russia and most of the other countries touching the Pacific have acceded to the treaty, the European Union's accession would be just one more step after which accession of the world's remaining countries would be clean up. Admittedly, even the idea of the EU joining the TPP is a long way off. But, the U.S. is already negotiating with the EU a free trade agreement with standards not dissimilar to the TPP's, which would greatly simplify an EU accession to the TPP should the parties someday choose to explore that possibility.
Negotiating the TPP was a herculean task. The Congress should perfect that effort by voting to approve it and its implementing legislation, which will allow the Trans-Pacific Partnership to enter into force and stand as one of the great achievements in the history of American economic diplomacy.