Major deals between developed and developing economies are not commonplace: On September 25, the 193 members of the United Nations announced a new global action plan for achieving Sustainable Development Goals including no poverty in any form by 2030. A week later, the Trans-Pacific Partnership, or TPP, concluded negotiations that form the largest regional trade agreement in history, one representing nearly 40 percent of global GDP. It is pertinent to ask, to what extent will the TPP bolster or undercut the sustainability goals? The answer – it’s a mixed bag.
The Pacific trade deal presents four major strengths that contribute to implementation of the goals:
First, with more than 18,000 tariff lines reduced to zero, according to a fact sheet provided by the Office of US Trade Representative, 12 countries will merge into a more integrated market. Upon ratification by the participating countries, that would significantly lower transaction costs for firms to trade among the TPP members, boosting economic growth and creating jobs.
Liberalization of some critical sectors in difficult markets – such as Japan’s agricultural products, including rice, wheat and beef, or Canada’s dairy products – may pave the way for these countries to open these sectors in future negotiations with other countries.
Second, on environmental protection, the TPP agreement should be given credit for having a higher level of commitment than previous trade agreements. The parties promise to cut the most harmful fishery subsidies and prohibit illicit trade activities from illegal logging and wildlife trafficking – great steps toward supporting SDG 14, protecting life below the water, and SDG 15 protecting life on land.
Third, the TPP pact has one chapter dedicated to labor rights to prevent the race to the bottom. Its members make an explicit statement supporting international core labor standards, from the freedom to form unions and bargain collectively to prohibitions against child labor and forced labor, and protection against employment discrimination.
Although these standards are only minimum requirements to all signatory countries under the International Labour Organization, this is the first time they will be incorporated in a large regional trade agreement with teeth, namely, possible trade sanctions against producers who violate core standards.
Fourth, this agreement would make positive contributions to other sustainable development goals by emphasizing good governance, anti-corruption measures and codes of conduct with high standards. TPP also has a chapter on development and capacity building. These are in line with the SDG 16 addressing justice and good governance and SDG 17 on effective partnership.
Negative impact on poor
However, the TPP agreement will have negative impact on poor countries and people in vulnerable situations, while the SDGs obligate all countries to carry out an effective partnership to “work in a spirit of global solidarity, in particular solidarity with the poorest and with people in vulnerable situations.”
Citizens of a poor country outside the negotiations will have no say at all on how TPP will affect their interests. For example, US subsidies to cotton farmers have been the largest concern for cotton farmers in poor countries.
According to a research by Oxfam, US cotton farmers receive three times more in subsidies than the entire USAID budget for Africa’s 500 million people. Trade-distorting cotton subsidies have pushed down the global price of cotton, costing Benin, Burkina Faso, Chad and Mali more than US$100 million a year.
Even for Vietnam, the poorest developing country within the TPP, its export potential in labor-intensive sectors such as textile and clothing will be compromised by a restrictive “yarn forward” rule of origin insisted on by the US – if Vietnamese clothing exporters would like to enjoy the TPP market’s zero tariff, all components, from yarn to fabric to final item, must be produced by one of the members to the agreement.
Note that the US is the most competitive producer of yarn, thread and fabric among the TPP countries.