Can the TPP Still Succeed? Not for Another Two Years, at Least

The situation with the ratification of the agreement on the Trans-Pacific Partnership (TTP) seems far from positive for a number reasons.

First, it is necessary to consider the general scheme of ratification. On February 4, 2016, the TPP agreement was signed by 12 countries. It must be ratified by at least 6 of the 12 countries, which accounted for not less than 85% of the total GDP of the 12 countries to come into force. The share of countries that have already signed the TTP, is about 40% of world GDP.

The Republican Congress and “lame duck” Obama

The Obama administration is making every effort to ensure the ratification of the TPP agreement before the end of his term. There are many complexities, which are due to several reasons. The first and most obvious: Barack Obama is unfortunately a "lame duck," an outgoing president, and there is no serious chance that the Republican majority Congress will rush to ratify the agreement. The Obama team has made every effort to make this happen, because in the end the year the administration has to leave with a list of accomplishments, where a TPP agreement could be the most significant.

Is there a chance that the Republican Congress will proceed to ratification under the new administration? Firstly, we must bear in mind that the ratification procedure in both houses of Congress is a very long and complicated process. Second, Hillary Clinton stated that she "does not like" this agreement. Observing the principle of party solidarity, she certainly could not say that she is ready to reject it out of hand, but she expressed support for the revision of the TPP agreement. Third, Donald Trump is even tougher, saying that "we need to get rid of the TTP," and this does not bode much promise for ratification.

In addition, in the US Congress there is one interesting feature. When the Congress ratifies certain international treaties which are signed by the US President, it sometimes adds something on its own, that is, to make changes in the content of agreements and contracts. It turns out that countries end up with a document that is different from what they had signed with the US President. Back in June 2015 Barack Obama made it sure to obtain from Congress a carte blanche to negotiate for the TPP. Congress has pledged not to change the content and promised to approve or not to approve the document as a whole.

Labor Unions and Multinationals

If we assume that the ratification procedure of the agreement in the US Congress begins immediately, the lobbying mechanisms join the process. In the United States, unions, which are an important lobbying force, are unhappy with the TPP.

The fact is that if the agreement comes into force, it could lead to a reduction in the number of jobs in America, as the workforce of other countries will enter the US markets. There is a possibility of reduced wages and lower employment.

The TPP agreement is being lobbied by representatives of big business, as it benefits them. Many influential economists (eg. Joseph Stiglitz, Nobel Prize in Economics laureate) say that the TTP will not bring benefits to the consumers, and that the agreement is beneficial not to them, but to transnational corporations.

The National Interests of the United States and China

The situation is also vague when it comes to the ratification of the agreement on the TTP in the parliaments of other countries that have signed it. If composition of the government or the national parliament in one of the signatory countries changes, everything will have to start from the beginning.

The agreement can be called controversial and questionable. For example, the situation with Vietnam: first, it stated that the ratification procedure has started, and then, at the last moment, said that the ratification process is postponed indefinitely. That is, Vietnam openly doubted the prospects of this document.

In addition, the Obama administration, in lobbying for the agreement, bounded it to US national interests. It stated that it has not only economic, but also a geopolitical value, as it is an important element of US pivot toward Asia and so on.

At the same time, the administration made it clear that one of the objectives of the TPP is to isolate economically one of the major players, China, which, of course, would react to such attempts accordingly. The East Asian countries are well aware of that, which reduces the chance of a speedy ratification.

Forecasts and Reality

According to estimates, in the best case scenario, the ratification can occur completely within two years, after which the TPP agreement will come into force.

However, taking into account all of the above, it would not be safe to say that it will be ratified in two years, it may take a much longer period. The international situation will also change, which also does not add any optimism.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.