Trans-Pacific Partnership: Meaning, Overview, Alternatives

What Is the Trans-Pacific Partnership?

The Trans-Pacific Partnership (TPP) was a proposed free trade agreement among 12 Pacific Rim economies. The United States was initially included. In 2015, Congress granted President Barack Obama fast-track authority to negotiate and vote on the deal without amendments. All 12 nations signed the agreement in February 2016. However, an up-or-down vote on the deal did not take place before President Obama left office, as Senate Majority Leader Mitch McConnell stated in August 2016.

Both major-party nominees, Donald Trump and Hillary Clinton, opposed the TPP, leading to its demise. President Trump signed a memo on January 23, 2017, instructing the U.S. trade representative to withdraw the U.S. as a signatory to the deal.

Key Takeaways

• The TPP was a proposed free trade agreement among 12 Pacific Rim economies.
• The agreement aimed to lower tariffs and trade barriers among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
• Congress granted President Barack Obama fast-track authority to negotiate the deal and sign it in February 2016.
• President Donald Trump withdrew the U.S. from the agreement by signing a memo on January 23, 2017.
• However, the remaining 11 nations reached a somewhat revised deal that some countries have ratified.

Understanding the TPP

The TPP aimed to lower tariffs and trade barriers among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. In the United States, the deal was considered part of the Obama administration’s "pivot" toward East Asia, detailed by then-Secretary of State Hillary Clinton in Foreign Policy magazine in October 2011.

In 2012, Clinton praised the deal as setting the "gold standard in trade agreements," likely in response to Senator Bernie Sanders’ criticism during their primary challenge. However, Clinton later opposed the deal. Donald Trump, Clinton’s opponent in the 2016 presidential campaign, also opposed the TPP along with NAFTA, which President Bill Clinton signed into law in 1993.

Debate Over the Trade Deal

Opponents of the TPP had various concerns. They criticized the secrecy surrounding the negotiations and claimed that trade agreements contributed to the loss of U.S. manufacturing jobs due to foreign competition. Some were also worried about the "investor-state dispute settlement" (ISDS) clause, which allowed corporations to sue governments for violating trade agreements.

Supporters argued that trade agreements open new markets and create jobs, contributing to economic growth. They accused critics of partisan politics.

Alternatives to the TPP

After President Trump’s withdrawal, the remaining signatory countries explored alternatives. One option was implementing the deal without the United States. Australian Prime Minister Malcolm Turnbull discussed this with the leaders of Japan, New Zealand, and Singapore, but Japan decided not to pursue it.

The withdrawal of the United States, the largest economy involved, made the trade-offs unattractive for other nations without access to the U.S. market. Nevertheless, the eleven remaining nations agreed on a somewhat revised deal, which some have ratified.

China also pursued its own multilateral trade deal, the Regional Comprehensive Economic Partnership (RCEP), connecting 15 Asia-Pacific nations including China, Australia, Japan, South Korea, and New Zealand. The agreement was signed on November 15, 2020.

President Obama stressed the need to finalize the TPP during his presidency, arguing against letting countries like China write the rules of the global economy and advocating for writing those rules ourselves.