At this grocery store, you can get produce from all over the world like
this kiwi fruit from New Zealand
dragonfruit from Vietnam
and this avocado from Mexico.
Soon all these fruits will get cheaper, but only for consumers in 11 countries.
That’s because of the world’s biggest trade deal since NAFTA.
The TPP 11, or the CPTPP, is the world’s newest trade deal.
It was signed by 11 countries on March 8.
CPTPP stands for:
It’s a mouthful, but it sounds familiar, doesn’t it?
This trade deal was previously known as the Trans-Pacific Partnership and included the U.S.
The TPP deal had been signed in 2016, but American President Donald Trump
withdrew the U.S. on his third day in the job.
Great thing for the American worker.
Many experts thought that meant the end of the TPP.
Without the U.S., the TPP 11’s share of global GDP went from 38% to about 13.5%.
But the 11 countries, led by Japan, surprised experts and pushed through the deal.
It’s now the world’s third biggest trade bloc by GDP.
Many people are excited about the CPTPP because it's seen as a high-quality trade deal.
That’s because the CPTPP involves deep, fast tariff cuts - and a lot of them.
It also includes many areas not typically covered in trade agreements.
I think you’ll be pleased to know that avocados are part of the deal.
At the moment, countries like Japan, Mexico, Malaysia and Vietnam have avocado tariffs.
But with the TPP, avocado tariffs will fall in most countries, and for Vietnam
the slowest to implement cuts, it will fall to 0% in four years.
Avocados from TPP countries will likely be cheaper than those from non-TPP countries.
So, it seems like consumers are the biggest winners in this trade deal.
Are there other winners and losers?
All the TPP countries are expecting significant economic benefits.
New Zealand estimated a boost of between $880 million and $2.9 billion
while Canada will get a boost of $3.2 billion.
But Japan is a clear winner.
Other than economic benefits, it sees the CPTPP as a geopolitical strategy to counter
another trade pact in negotiations, the Regional Comprehensive Economic Partnership.
The RCEP is seen as a deal backed by China, and makes up nearly half of the global population.
Farmers and food exporting countries like Mexico, Australia and New Zealand are also
seen as big winners as agricultural produce is usually left out of trade deals.
Service sectors aren’t typically included either, but the TPP 11 does include them.
This means more firms, such as accounting, design and tourism services
benefit from market access across 11 countries.
However, there are many who see themselves as possible losers of the TPP 11.
For instance, the jury is still out in Canada about the benefits for companies there.
While it will enjoy access to new markets like Japan, some industries such as dairy
and automobile think that the concessions outweigh the benefits.
Workers in developed economies are likely to be fearful that firms will move production
to lower-wage countries. However, the TPP 11 has rules on labor rights, meaning less developed
countries will have to abide by international standards, including the minimum wage.
But how countries will implement this is still up in the air.
And some economists say it’s the United States that is losing out.
According to one think tank, the CPTPP would have raised U.S. wages, grown exports by 9.1%
and increased U.S. real incomes by $131 billion a year to 2030.
Delaying the launch of TPP was projected in 2016 to be a $77 billion loss to the U.S. economy.
But Nobel Prize-winning economist Joseph Stiglitz echoed the sentiments of many Americans
warning that the original TPP 12 helps only big corporations.
But even Donald Trump is becoming more open to the party he declined to join.
If we did a substantially better deal, I would be open to TPP.
The CPTPP is likely to come into force by the end of this year.
It’s a strong signal to the U.S. that despite growing calls for protectionism,
11 countries and many more are looking to throw in their lot with free trade.
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