Daily Management Review

Obama's Asia Pivot: What It's All About?


10/06/2015


The US, Japan and the 10 countries of the Pacific coast reached a final agreement on a treaty on the Trans-Pacific Partnership (Trans-Pacific Partnership, TPP)on Monday in Atlanta, Georgia, writes The Wall Street Journal. Together, these countries control 40% of world trade. The agreement, that in fact extends the two-decades contract of NAFTA (US, Mexico and Canada), has already become a big foreign policy victory for President Barack Obama, writes the WSJ. However, there is no guarantee of its approval by the US Congress: the vote on the TPP is only possible at the beginning of 2016 - the last year of Obama’s presidency.



Besides the United States, Japan, Mexico and Canada, TPP includes Australia, New Zealand, Peru, Chile, Vietnam, Malaysia, Brunei and Singapore.

In a statement, the US President said, in particular, that the agreement on the TPP "levels the playing field for American workers and entrepreneurs, so that we could export more goods labeled ‘made in the USA’, thereby maintaining high-paying jobs at home." "95% of potential consumers of our products live outside the borders of the United States. This means that we cannot allow countries like China to determine the rules of the global economy. These rules have to be written by us, opening up new markets to American goods and setting high standards of occupational safety and ecology", - Obama said.

The US president said that the TPP will eliminate 18,000 duties on American products, and will also include "the most extensive real commitments on labor and environmental protection" of all such agreements and "free and open Internet." Duty-free trade set for most commodity groups, duties on the rest of the group are reduced, and mutual recognition of many regulatory decisions is introduced.

The signing of the agreement, which has been prepared since 2008, was preceded by five days of fierce bargaining in Atlanta, writes WSJ. The last major obstacle was the United States’ dispute with Australia over the synthesized generic drugs: in the end, Australia won by five to eight years of protection for similar drugs of biological origin produced in its territory. Canada and Japan have agreed to open up their markets for American dairy products; in return, New Zealand will benefit in the American dairy market.

Malaysia and Vietnam, signed the TPP, agreed to allow independent trade unions.

An additional paragraph to the agreement, which is still to be refined, is the protection of TPP members from reciprocal currency wars, writes WSJ citing its source. However, we are not talking about the actual protection measures - there may be only coordination meetings on monetary policy once a year. Automotive Ford Motor Company earlier urged Congress not to approve the mechanism of TPP without actual monetary protection.

Along with the reform of the health insurance, TPP project is one of the most important points of the socio-economic program of Barack Obama, known as ‘Asia Pivot’. Against him were environmentalists and trade unions, who believe that the free trade agreement will increase unemployment in the United States.

source: wsj.com






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