Tax & Accounting Blog

Rise of the Mega-FTA – The Trans-Pacific Partnership (TPP)

Blog, Global Trade, ONESOURCE October 23, 2015


The Trans-Pacific Partnership (TPP) pact was successfully concluded in Atlanta, Georgia on the 5th of October 2015 after five and a half years of negotiations.[i]

The pact involving twelve Pacific Rim countries– Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam – accounts for 40 percent of the world’s economy and could reshape industries, changing the cost of products from cheese to cancer treatments and having repercussions for drug companies and automakers.[ii]

Origins of TPP

The TPP was historically known as an expansion from the original Trans-Pacific Strategic Economic Partnership (TPSEP (P4)) agreement signed between Brunei Darussalam, Chile, New Zealand and Singapore on the 3rd of June 2005. The Trans-Pacific SEP was noted to be an ambitious and high-standard FTA intending to complement the World Trade Organization (WTO) and accelerate progress towards global trade liberalization.[iii] Members of the P4 agreed to begin negotiating on outstanding matters such as financial services and investment within two years of its entry into force, which were not covered by the original agreement.[iv]

On the 5th of February 2008, the United States informed the four TPSEP countries that it would be joining in the negotiations on the outstanding topics, pending a decision on whether to participate in a comprehensive negotiation for an expanded TPP agreement.[v] It was not until September 2008 that the United States announced that it would participate fully in the negotiations with Australia, Peru and Vietnam soon to follow.[vi]

Malaysia joined the negotiations during the 3rd round of the TPP negotiations in October 2010[vii] followed by Canada and Mexico in June 2012 and Japan in July 2013.

 Importance of TPP

  1. Pathfinder for Free Trade Area of the Asia Pacific (FTAAP)

Although all original and negotiating parties are members of the Asia-Pacific Economic Cooperation (APEC), the TPSEP and TPP are not APEC initiatives.[viii] The TPP is considered by APEC to be a pathfinder for its proposed FTAAP[ix], a strategic study on issues related to the realization of a Free Trade Area of the Asia-Pacific.[x] Since not all the 21 APEC members are taking part in the TPP negotiations, it would be difficult to include the negotiation rounds in the APEC summits as APEC members that are either not prepared, or have not shown interest in being part of these initiatives.[xi]Independently, the TPP negotiations are often held on the sidelines of the APEC summit.[xii]

  1. Collapse of (World Trade Organization) WTO Doha Round

In the last decade, the negotiations of the Regional and Free Trade Agreements (RTA/FTA) within APEC members were intended to use the negotiations as a platform to achieve the Bogor goals.[1]. The negotiations intensified, in part due to the slowdown and eventual collapse of the WTO Doha Round of multilateral negotiations and the underlying intent to negotiate liberalization concessions and reciprocal treatment from other APEC partners.[xiii]

The WTO Doha Round negotiations collapsed without an agreement on the 29th of July 2008 due to the sharp division between the U.S., India and China about access to agricultural markets in the developing world. These disagreements could not be reconciled despite the efforts to broker a compromise by the ex WTO Director-General, Mr. Pascal Lamy.[xiv]

  1. The Relevance of WTO

With the collapse of the WTO Doha Round, the WTO as described by ex-WTO Director General Mike Moore was “becoming the League of Nations of the 21 Century World Economy: impotent and irrelevant.”[2]

In an article published by the Guardian on November 2011, the WTO membership has failed to deliver pro-development changes; finding “development” in the Doha Development Round is like looking for a needle in a haystack. Development countries have been completely side-lined by the economic and political interests of global powers.[3] Even the general public and “protest community” have lost interest – “we don’t see rallies and demonstrations surrounding the WTO meetings as we used to” as Jean-Pierre Lehmann wrote in a blog post on The World Economic Forum blog.[4]

In an interview with the Financial Times dated 5 April 2013, Mexico’s candidate for Director General at the WTO Mr. Herminio Blanco was quoted as saying “The innovation in rules designed to eliminate obstacles to trade between the U.S. and Europe are very advanced, and they are going to surpass by a long way the rules that were established in the WTO 20 years ago.” The challenge was “how to harness the energy and design of these new rules so that they can be adapted for trade between 159 countries.”[xv]

Objective of the TPP

The TPP is a high-standard, comprehensive regional Free Trade Agreement (FTA) that will boost trade and investment between TPP countries as well as integrate the region into a single manufacturing base and market.[xvi] The TPP aims to set a new standard for global trade, and incorporate next-generation issues[5]  that will boost the competitiveness of TPP countries in the global economy.[xvii]

 How Singapore would benefit from the TPP

In a press release by the Ministry of Trade and Industry (MTI) Singapore on the 5th of October 2015, Mr. Lim Hng Kiang said, “The TPP embodies what Singapore sees as the future of the Asia-Pacific. It will transform the region by reducing tariff and non-tariff substantially for both goods and services, encouraging greater investment, and addressing new trade challenges in the modern economy. The TPP has also been deliberately designed to be more inclusive, so that small and medium-sized Singapore enterprises can take full advantage of its benefits”[xviii]

Trade figures from the Ministry of Trade and Industry (MTI) Singapore showed that the TPP countries represents a population of 800 million and have a combined GDP of around U.S.$30 trillion, amounting to 40% of the global GDP. In 2013, the TPP countries accounted for 30% of Singapore’s total goods trade, worth S$300 billion, and 30% of foreign direct investment in Singapore amounting to S$240 billion.[xix]

What’s next for the TPP?

The 12 TPP countries will work intensively to tie up remaining details, and produce the final text for public review. The countries will also each begin respective domestic approval processes, to bring the TPP into force.[xx]

According to the new White House’s Trade Promotion Authority (TPA) rules, U.S. Congress now has 30 days to review the trade deal before it is made public and 90 days to debate it. At the same time, the U.S. International Trade Commission, an independent government agency, will have 105 days to study the TPP accord and present its conclusions.[xxi]

Of course, the U.S. is not the only government that needs to approve the agreement.

Gain More Insight On The TPP


[1] The Bogor Goals are a set of targeted goals for realizing free and open trade in the Asia-Pacific agreed by member economies in 1994 in Bogor, Indonesia.

[2] The TPP, The WTO. The 21st Century Global Trade Mess and The Poverty of Nations –

[3] The WTO has failed developing nations –

[4] How the WTO can stay relevant –

[5] New issues including the development of the digital economy, and the role of state-owned enterprises in the global economy: Summary of the Trans-pacific Partnership Agreement –

[i] Trans-Pacific Partnership Negotiations Conclude Successfully –

[ii] Historic Pacific trade deal faces skeptics in U.S. Congress –

[iii] Trans-Pacific SEP –

[iv] Trans-pacific Partnership (TPP) Negotiations –

[v] Ministry of Trade and Industry Press Release: United States to join four Asia-Pacific countries to negotiate investment and financial services under multilateral trade agreement –

[vi] Trans-pacific Partnership (TPP) Negotiations –

[vii] Trans Pacific Partnership Agreement (TPP) –

[viii] The Trans-Pacific Partnership (TPP) – Opportunities and Challenges for Vietnam:

[ix] Pacific Economic Cooperation Council Update –

[x] Regional Economic Integration Agenda –

[xi] The Mutual Usefulness between APEC and TPP –,d.c2E

[xii] Obama’s no show at APEC summit could affect TPP negotiations –

[xiii] The Mutual Usefulness between APEC and TPP –,d.c2E

[xiv] Doha Trade Talks collapse –

[xv] WTO must ‘adapt’ to remain relevant –

[xvi] Trans-Pacific Partnership negotiations conclude successfully –

[xvii] TPP (Trans-Pacific Partnership) –

[xviii] Trans-Pacific Partnership negotiations conclude successfully –

 [xix] Trans-Pacific Partnership negotiations conclude successfully –

[xx] Trans-Pacific Partnership negotiations conclude successfully –

[xxi] Road to TPP deal riddled with potholes –