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Mar 31, 2014 03:00 am | Samuel Rines
The
Trans-Pacific Partnership (TPP), the proposed trade deal linking the US
with eleven other countries ranging from Brunei to Australia and Chile,
will be an economically transformative agreement—but not for the US.
Estimates by Petri, Plummer and Zhai (used throughout) place US GDP
gains at only 0.13 percent, $27 [billion, by 2025. At about 57 percent
of TPP participant GDP and 40 percent of the population, the US is too
big to benefit from the deal, and many of the other nations involved are
already tied together by agreements. If the entirety of the $210
billion annual benefit to 2025 global GDP from TPP were to accrue to the
US, it would only add about 1 percent to GDP.But realizing an immediate economic benefit is not the American goal. It’s more about engaging with emerging Asia and being present while the rules of trade are set. Exports and privileged access to the US market benefit emerging Asia, as the terms of trade will favor them over trading partners not at the table. The US and Japan could also act an economic counterbalance to China in the region—helping the smaller, less-developed countries compete for export growth.
While China has said it would like to be part of the discussions, it has yet to sit at the table. China would stand to lose about 1.2 percent in exports, but only about 0.3 percent GDP—translating to only $57 billion in export losses and $47 billion lower GDP. These losses are easily surmountable, and China does not lose enough to be convinced to participate in discussions surrounding state-owned enterprises (SOEs) and governmental participation in the economy.
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