Five years of negotiations have culminated in the signing of the Trans-Pacific Partnership (TPP) between the US, Japan and 10 other Pacific Rim countries.
The trade agreement, covering around 40% of the global economy, establishes a new economic bloc with reduced trade barriers between the 12 signatory nations. The other 10 countries joining the TPP are Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
US president Barack Obama said that the deal “reflects America’s values and gives our workers the fair shot at success they deserve.
“When more than 95% of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”
Japan’s prime minister, Shinzo Abe, described the TPP as “a major outcome not just for Japan but also for the future of the Asia-Pacific”.
China, the world’s second-largest economy, is not one of the TPP’s 12 signatories. Although proponents believe that the deal could limit the country’s power in global trade, many expect China and other major Pacific nations, such as South Korea, will eventually be included within the free trade zone.
“An agreement on the TPP is a huge step forward by policymakers at a time when the world economy needs a boost,” said Simon Cooper, chief executive officer (CEO) of global commercial banking for HSBC. “They have recognised the power trade has to create growth opportunities and this deal will enable more enterprises around the Pacific Rim to join the international economy.
“Businesses and consumers will benefit from greater choice and competition on price and quality.”
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Australia, Japan and other signatories to the proposed trade deal plan to move forward despite president Donald Trump’s decision to withdraw US membership.
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A global survey by The Economist Intelligence Unit and Standard Chartered finds that nearly half the firms participating believe they will be more efficient within five years, while one in three sees them becoming longer and more complex.