The Trans-Pacific Partnership, the largest regional trade accord in history, would have set new terms for trade and business investment among the United States and 11 other Pacific Rim nations — a far-flung group with an annual gross domestic product of nearly $28 trillion that represents roughly 40 percent of global G.D.P. and one-third of world trade.
But the agreement, a hallmark of the Obama administration, became a flashpoint in the United States presidential campaign, where it was opposed by the nominees of both major parties as a symbol of failed globalism and the loss of United States jobs overseas.
The election of Donald J. Trump all but ensured that the deal would not go through. On Monday, his first full workday in office, Mr. Trump delivered on a campaign promise and signed a statement formally abandoning the Pacific trade deal.
Mr. Trump’s press secretary, Sean Spicer, later said the administration would push for bilateral trade agreements in the future. Aides have suggested that Mr. Trump may move quickly to reopen the North American Free Trade Agreement with Mexico and Canada.
The Trans-Pacific Partnership was the product of years of negotiations that culminated in late 2015 with the endorsement of the 12 nations’ trade chiefs. It was a hallmark achievement for President Obama , who had pushed for a United States foreign policy “pivot” to the Pacific rim. The goal was to bind Pacific nations closer through lower tariffs while also serving as a buttress against China’s growing regional influence. An independent study said that it would raise incomes and exports in the United States, but not jobs over all.
But the proposal, which was never put to a vote in Congress, ran into an election year when the benefits of international trade agreements were roundly questioned. United States lawmakers predicted the deal would lead to a loss of jobs and competitive wages. O pposition to the pact became a popular rallying cry in stump speeches by Mr. Trump.
Why Was TPP So Divisive?Supporters said that it would have been a boon for all the nations involved — it would “unlock opportunities” and “address vital 21st-century issues within the global economy” — and argued that it was written in a way to encourage more countries, possibly even China, to sign on. Opponents in the United States saw the pact as mostly a giveaway to business , encouraging further export of manufacturing jobs to low-wage nations while limiting competition and encouraging higher prices for pharmaceuticals and other high-value products by spreading American standards for patent protections to other countries.
The pact had been seen as a means of addressing a number of festering issues that have become stumbling blocks as global trade has soared, including e-commerce, financial services and cross-border internet communications. There were also traditional trade issues involved. Under President Obama, the United States had been eager to establish formal trade agreements with five of the nations involved — Japan, Malaysia, Brunei, New Zealand and Vietnam — and to strengthen Nafta, its current agreement with Canada and Mexico. Moreover, as efforts at global trade deals have faltered (such as the World Trade Organization’s Doha round), the Trans-Pacific Partnership was billed as an “open architecture” document written to ease adoption by additional Asian nations, and to provide a potential template to other initiatives underway, like the Transatlantic Trade and Investment Partnership.
Tariffs and Quotas Long used to protect domestic industries from cheaper goods from overseas, tariffs on imports were once a standard, robust feature of trade policy, and generated much of the revenue for the United States Treasury in the 19th century. After the Depression and World War II, the United States led a movement toward freer trade. Today, the United States and most developed countries have few tariffs, but some remain. The United States, for example, protects the domestic sugar market from lower-priced global suppliers and imposes tariffs on imported shoes, while Japan has steep surcharges on agricultural products including rice, beef and dairy. The pact was an effort to create a Pacific Rim free-trade zone.
Environmental, Labor and Intellectual Property Standards United States negotiators stressed that the Pacific agreement sought to level the playing field by imposing rigorous labor and environmental standards on trading partners, and supervision of intellectual property rights. Data TRANSFERS The Pacific trade pact aimed to address a number of issues that had arisen since previous agreements were negotiated. One was for countries to agree not to block transfers of data online across borders, and not require that servers be located in the countries where internet business is being conducted. This proposal drew concern from some countries — Australia among them — that it could conflict with privacy laws and regulations against personal data stored offshore. Services A big aim of the Pacific pact was to enhance opportunities for service industries, which account for most of the private jobs in the American economy. The United States has a competitive advantage in a range of services, including finance, engineering, software, education, legal and information technology. Although services are not subject to tariffs, nationality requirements and restrictions on investing are used by many developing countries to protect local businesses.
State- Operated Businesses United States negotiators discussed the need to address favoritism often granted to state-owned business — those directly or indirectly owned by the government. Although Vietnam and Malaysia have many such corporations, the United States has some too. Think of the Postal Service or Fannie Mae.
Why Wasn’t China In on the Talks?China viewed the pact with concern, seeing a potential threat as the United States tried to tighten its relationship with Asian trading partners. At the same time, the deal provided China some cover as it pursues its own trade agreements in the region, such as the Silk Road initiative in Central Asia.
Nafta, signed by President Bill Clinton in 1993, helped lead to a boom in trade among the United States, Mexico and Canada. All three countries exported more goods and services to the other two, cross-border investments grew, and the United States economy has added millions of jobs since then. But of course not all those trends were attributable to Nafta, and the benefits were not equal: The United States had a small trade surplus with Mexico when the pact was signed, but that quickly became a trade deficit that has widened to more than $50 billion a year. Critics of Nafta also point out that job growth in the United States does not account for the loss of jobs to Mexico or Canada; the A.F.L.-C.I.O. contends about 700,000 United States jobs have been lost or displaced because of Nafta. Nafta was a significant victory for President Clinton after a difficult congressional battle, where he won support from just enough fellow Democrats to ensure passage. The votes were 234 to 200 in the House, and 61 to 38 in the Senate. In the case of the Trans-Pacific Partnership, President Obama worked with Republican leadership in the House and Senate to gain final approval for trade promotion authority, a critical step that allowed the White House to present the trade package to Congress for a straight up-or-down vote, without amendments. But the tortuous legislative process further soured relations with many fellow Democrats, as well as unions and progressive groups, who vehemently opposed the Trans-Pacific Partnership.
