The United States, Japan and 10 other countries on October 5 completed negotiations on the Trans-Pacific Partnership (TPP) Trade Agreement.

According to Financial Times, this is the largest trade agreement ever in the past two decades and is considered an extremely important political victory for US President Barack Obama and Japanese Prime Minister Shinzo Abe.

Trade Ministers of countries participating in the TPP negotiations pose for a group photo. Photo: Reuters

US - Japan achieve strategic goals

The TPP is expected to cover up to 40% of the global economy and will create a new Pacific economic area with the aim of reducing trade barriers related to all goods as well as setting new standards and regulations on investment, business environment and labor in the region.

In addition, the TPP is also considered the economic "backbone" of the Obama administration's "Eastward" policy and an American response to the rise and increasing influence of China in the region and globally.

The TPP is also considered a key element in the “third arrow” of economic reform that Japanese Prime Minister Shinzo Abe has been aiming for since taking office in 2012.

After 5 years and many rounds of negotiations, with the final round lasting continuously for the past 6 days in Atlanta (USA), negotiators have reached agreement on the final key points of the TPP Agreement.

Key points include how long pharmaceutical companies will have exclusivity on next-generation biologics, what markets dairy products from countries like Japan and Canada can access, and what incentives the US might offer New Zealand exporters.

The TPP Agreement approved by the Trade Ministers of 12 countries will still be officially signed by the leaders of the countries and ratified by the National Assembly of the countries.

In the US, President Obama is expected to have to go through a tough battle in Congress in 2016, especially when Republican presidential candidates like Donald Trump have publicly opposed the passage of the TPP.

Expectations for global trade

However, if passed, the TPP will be the largest trade agreement since 1994, when the Uruguay Round of negotiations was completed, creating the World Trade Organization (WTO).

While many rounds of negotiations, especially in the final stages, have focused mainly on traditional trade issues as well as the transit of goods such as avocados and auto parts within member countries, the TPP is also expected to open a new playing field with new regulations on global trade in the 21st century.

The TPP will include labor standards that member countries must adhere to as well as environmental regulations, with countries that do not take decisive action against the trafficking of endangered species facing trade penalties.

The TPP also includes rules on the activities of state-owned enterprises and prohibits interference with the free flow of information across borders. However, the TPP does not end the practice of banks being forced to store transactions and customer information in the country where they live.

One of the most controversial provisions of the TPP is the Investor-State Dispute Settlement Mechanism, which allows investors to sue member countries' governments in arbitration courts.

Analysts fear that this will enable multinational corporations to weaken the ability of governments in those countries to impose regulations on them.

On the global front, the completion of the TPP negotiations will create new pressure on the European Union (EU) to complete the Transatlantic Free Trade Agreement with the US before President Obama leaves office in the next 15 months.

This also prompts countries like China and India to move quickly to pass regional trade agreements.

The TPP is also expected to signal a new era of free trade globally.

With the Doha Round of global trade negotiations stalled, economies like the US and EU are eyeing “regional agreements” like the TPP and TTIP as alternatives, hoping that one day these agreements will become global trade agreements.

New Zealand Trade Minister Tim Groser, one of the “architects” of the TPP’s success, emphasized: “The strategic significance of the TPP for global trade is enormous.”

“However, this has been overshadowed by the petty squabbles over butter and milk [during the negotiations]. Many will surely laugh at the conservativeness at some points in the negotiations to liberalize products that are considered extremely important to some TPP member countries. This has proven to be a completely wrong approach because the most important thing is to move this Agreement in the right direction,” Mr. Groser said./.

According to Vov.vn