After eight years of ongoing negotiations, on 5 October 2015, trade ministers of the Trans-Pacific Partnership (TPP) announced that a sweeping free trade agreement had finally been struck.
The Trans-Pacific Partnership would create a free-trade zone among 12 nations around the Pacific, making it the world's largest. The countries within its scope account for 40 per cent of the world's economic output.
The 12 countries in the TPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam.
TPP will eliminate most tariffs in a region spanning roughly 40% of the global economy. It will eventually lower trade barriers to goods and services in the Asia-Pacific region and possibly set commercial rules of the road for much of the world's trade in the years ahead.
Tariffs and other barriers faced by a wide range of Canadian products from various sectors will be cut; these sectors include agriculture and agri-food, fish and seafood, forestry and value-added wood products, metals and mining, and manufactured industrial goods.
The agreement will also provide improved access in areas such as financial, professional, architectural and engineering, research and development, environmental, construction and transportation services.
TPP countries include some of Canada's largest importers of agriculture and agri-food products such as the United States, Japan and Mexico as well as emerging countries that have strong economic growth such as Vietnam, Singapore and Malaysia.
Benefits By Sectors
- Agricultural and Agri-food Products
- Fish and Seafood
- Forestry and Value-added Wood Products
- Services and Financial Services
- Industrial Goods and Consumer Products
- Trade is equivalent to more than 60 percent of Canada's annual gross domestic product (GDP), with one in five Canadian jobs linked directly to exports.
- Twelve countries make up the TPP: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
- The TPP membership represents a market of nearly 800 million people and a combined GDP of $28.5 trillion.
- Eighty-one percent of Canada’s total exports already go to TPP members.
- TPP countries include some of the fastest-growing economies in the world, and this is expected to continue to be the case.
- Many of the TPP members are wealthy economies. The average per capita GDP in TPP countries is nearly $35,000.
- The Asia-Pacific region is expected to represent two thirds of the world’s middle class by 2030 and one half of global GDP by 2050.
- Canada has concluded free trade agreements covering 51 nations.
- Canada's new free trade agreements with the European Union, South Korea and TPP countries will give Canadian businesses preferential access to over 60 percent of the world’s economy and more than 1.3 billion consumers.
The text of the lengthy deal has not been released yet, but the U.S. Trade Representative has released a summary of its 30 chapters. (source) Each country will need to ratify the final text of the deal before it takes effect. In Canada, that will take the form of a vote in Parliament, following the election. (source) A vote is expected early next year in the U.S. Congress, and it could prove difficult.
NAFTA And TPP
TPP does not end or replace the North American Free Trade Agreement (NAFTA). NAFTA still exists, but in areas where the two agreements conflict the newer one will usually prevail. (source)
Pacific Customs Brokers is monitoring this situation and will continue to post updates to the Trade News section of our website as they become available.
For more information on this agreement and to see how this it unfolds, please visit the Trans-Pacific Partnership (TPP) section of Foreign Affairs, Trade and Development Canada website. U.S. businesses might find the Trans-Pacific Partnership (TPP) section of the United States Trade Representative website more helpful.