After years of negotiations, trade ministers from the U.S., Japan and 10 other countries around the Pacific reached a landmark deal on Monday to make trade of goods and services easier and less costly for two-fifths of the world’s economy.
Assuming legislative approvals, the Trans Pacific Partnership (TPP) will be the largest trading bloc linking the Americas to Asia. A deal of this magnitude, representing a combined GDP of $27.8 trillion with a market of 800 million people, allows leaders to leave an important legacy, a powerhouse economic and geo-political alliance that has far-reaching consequences.
Trade negotiations often have a tendency to outlast leaders, and the TPP is no exception. Tony Abbott of Australia recently lost the prime ministership, while a number of others are nearing the end of their mandate. U.S. President Barack Obama is approaching his last year in office and Canadian Prime Minister Stephen Harper is in a close three-way election race. Peru’s President Ollanta Humala and Vietnam’s Prime Minister Nguyen Tan Dung are both serving their final terms. Meanwhile, leaders from Malaysia to Mexico are facing plummeting approval ratings.
Leaders determined that achieving an ideal agreement might not be feasible on their watch. Accordingly, necessary compromises were made in sectors in which thorny trade issues remained: autos, dairy and pharmaceuticals. Prime Minister John Key of New Zealand reflected the growing realization that a ‘perfect’ deal is never possible in such a complex multi-country negotiation when he said, “at least it will be the very best we can do.”
So what type of legacy are the various leaders leaving?
Although positioned first and foremost as a trade deal, the TPP is as much a geo-political alliance that reinvigorates America’s position in the region as a power to be reckoned with. For President Obama, the deal would mark a key success in his strategic pivot to Asia, and a reinforcement of America’s role as a global trade power. The TPP also comes on the heels of other major policy wins for the president, such as the Iran Nuclear Deal. What’s more, the TPP comes as 10 rounds of negotiations have been completed with the European Union on the Trans-Atlantic Trade and Investment Partnership (TTIP). Both sides hope to finalize the deal before the end of President Obama’s term, now that the U.S. has “fast track” rules in place.
Japan Prime Minister Shinzo Abe, through a majority in both houses, has been able to successfully negotiate sensitive parts of the TPP, despite pressure from various powerful interest groups such as the agricultural lobby. He also forged a stronger relationship with the U.S., both economically and strategically, confirming its standing as America’s key ally in the Asia Pacific.
For Prime Minister Harper of Canada, finalization of the deal provides a platform to highlight his economic record leading into the final weeks of the election. In the TPP, he sees an opportunity to push to a win, a thin majority at best. If he loses his re-election bid later this month, it will mean leaving a legacy on trade, building on the completion of the Canada-EU Comprehensive Economic and Trade Agreement, thus achieving agreements with two of the world’s largest trading blocs. One of the key opposition parties, the NDP, has already indicated that they don’t consider themselves bound by any agreement. But for Canada and Mexico, it is imperative that they be part of the agreement, not only to take advantage of expanded trade, but also to protect defensive interests, especially due to Japan’s participation, one of the world’s leading auto suppliers to the U.S.
The legacy left by Vietnam’s leaders is interesting in that only forty years after the end of the Vietnam war, sworn enemies from that time have come together to form a key strategic and trade alliance.
For a number of the other countries ranging from Australia to Chile and Peru, the TPP provides a capstone to a blistering record of recent trade agreements. Australia’s Tony Abbott, despite fashioning a raft of trade deals with China, Japan and Korea during his tenure, lost the prime-ministership to Malcolm Turnbull in September 2015. Meanwhile, other leaders are at risk of being pushed out during the next election. Malaysia’s embattled Prime Minister Najib Razak is facing corruption allegations, and Presidents Humala of Peru and Michelle Bachelet of Chile are facing scandals of their own. President Enrique Peña Nieto of Mexico has seen his popularity plummet with only 30% of Mexicans saying they approve of the way he is handling the economy.
While the TPP may offer a glimmer of hope to some, it is unlikely to turn around re-election prospects for most. With the prospects of changing leadership in a number of countries, TPP partners came together to finalize the agreement and leave behind a legacy in the Asia-Pacific, one that links economic and strategic interests for a number of like-minded nations.
Shom Sen was the 2014 Jack Wadsworth Fellow at the Asia Society. He previously served as Assistant Deputy Minister at the Ministry of International Trade in the Province of British Columbia, Canada. The views expressed are his own.