United States Withdraws from the TPP (IN10646) / Brock R. Williams, Ian F. Fergusson.

Format:

Book

Author/Creator:

Williams, Brock R., author.

Fergusson, Ian F., author.

Series:

Insight (Library of Congress. Congressional Research Service)

Language:

English

Subjects (All):

Foreign trade regulation.

Physical Description:

1 online resource (4 unnumbered pages) : illustrations.

Place of Publication:

[Washington, District of Columbia] : Congressional Research Service, 2017.

Summary:

On January 23, President Trump directed the United States Trade Representative (USTR) to withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP) agreement; the acting USTR gave notification to that effect on January 30. The TPP is a proposed free trade agreement (FTA), signed by the United States and 11 Asia-Pacific countries on February 4, 2016. The agreement requires ratification by the member countries before it can become effective. Implementing legislation, the vehicle for U.S. ratification, was not submitted by the President or considered by Congress, in part due to the contentious debate over the agreement. Because the TPP had not taken effect, U.S. withdrawal does not immediately affect U.S. tariffs or other trade commitments. The United States also has existing FTAs with six of the TPP countries (Australia, Canada, Chile, Mexico, Peru, and Singapore), which this announcement does not affect. TPP supporters argue that the withdrawal could damage U.S. negotiating credibility, undermine U.S. economic leadership in the region, hurt U.S. firms' competitiveness abroad, and give China greater leverage to set regional trade rules. TPP opponents see the withdrawal as preventing greater U.S. import competition and potential job losses. Beyond the trade realm, some analysts also argue the withdrawal may signal declining U.S. engagement in the region and inability to assert leadership at a time when China's rise and North Korea's growing nuclear and missile capabilities are testing the U.S.-led rules system and challenging U.S. influence. What happens to the TPP now? As signed, the TPP cannot take effect without U.S. participation. The TPP requires ratification by at least 6 countries representing 85% of the original 12 members' collective GDP, requiring both U.S. and Japanese participation to become effective. Given the size of the U.S. market relative to the other TPP countries (U.S. GDP accounts for about 65% of the group's total), the U.S. withdrawal reduces the economic value of the pact for the other members, especially countries without an existing U.S. FTA, such as Japan. However, following the Trump Administration's repeated statements over several months that it has no intent to change its position on TPP participation, the remaining 11 signatories have expressed uniform support for proceeding with the agreement without the United States. On the sidelines of the May APEC ministerial, these countries set a November time frame to establish how best to proceed toward that goal. To date, Japan and New Zealand have ratified the agreement.

Notes:

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