The US Abandoning The TPP Makes Life Difficult For Everyone
The Short Version
The 45th president of the United States signed an executive order instructing the US to pull out of the Trans-Pacific Partnership (TPP) agreement, a twelve-nation trade pact that lowered tariffs for imports and opened US-made goods to more markets. The remaining 11 nations have vowed to continue and some have raised the possibility of China stepping into the dominant role.
What’s Really Happening
Global trade pacts can get really confusing, so let me use a fictionalized example to see if we can explain it better.
Imagine that you and 11 of your best buds decide to throw a very large party. Everyone is participating bringing food and drinks. How much one is supposed to bring depends on the family income. The richest family brings the most, and everyone else participates according to their means. Everyone agrees that this method is fair and equitable for everyone and that the party is going to be the best ever. Period.
But then, the day before the party, the richest family backs out. They don’t want to attend the big party at all. Instead, they say they’d rather have 11 different little parties with just one friend at a time.
The 11 other friends are feeling totally bummed. Should they go on with the scheduled party or not?
Then, the really rich family from a couple of blocks over, who no one in the group really likes, offers to save the party by joining the group and bringing even more stuff than the previous rich family.
That’s pretty much the way the whole TPP situation stands at the moment. In case you’re having difficulty determining the players, the US would be the rich family. The other 11 would be Japan, Australia, New Zealand, Canada, Mexico, Chile, Peru, Vietnam, Malaysia, Singapore, and Brunei. China would be the family from a couple of blocks over that no one really likes.
NOW do you get it?
What’s important to realize is that the US was one of the originators of this party and did the lion’s share of organizing the whole thing. To back out at this point is to completely abdicate a leadership role in the trade policies of the region. Furthermore, the new president is making statements that has the other countries unsure they want to attend those private parties. Deals with individual countries would almost certainly set higher tariff rates than what is prescribed in the TPP. Almost all the countries listed depend heavily upon imports to the US as a major portion of their economy.
The party isn’t canceled by the US dropping out, though. Australian Prime Minister Malcolm Turnbull said earlier this morning that he has talked to the 11 other nations and they’re willing to go ahead with the trade pact without the US participating. He also raised the possibility of China joining the pact from which they are currently excluded. However, it is worth noting that should China take the place of the US, several key components of the agreement would have to be re-written, with any favor toward the US being eliminated entirely.
So, be exiting the TPP, not only does the US not get to go to the party, we’re stuck with shitty little side parties and we lose some of our friends entirely.
You might want to contact your members of Congress now. There’s no way this ends well for the US.