Trans-Pacific Partnership (TPP)

DEFINITION of 'Trans-Pacific Partnership (TPP)'

The Trans-Pacific Partnership (TPP) is a proposed free trade agreement linking the United States and 11 other Pacific Rim economies. In 2015 Congress gave Barack Obama fast-track authority to negotiate the deal and put it to an up-or-down vote without amendments; all 12 nations signed the agreement in February 2016. The following August, Senate Majority Leader Mitch McConnell said there would not be a vote on the deal before Obama left office. 

Since both major-party nominees, Donald Trump and Hillary Clinton, opposed the deal, it was considered to be dead on arrival. Trump's victory solidified that view, and on January 23 he signed a memo instructing the U.S. trade representative to withdraw the U.S. as a signatory to the deal and pursue bilateral negotiations instead. Trump has nominated Robert Lighthizer to be the next trade representative, but as of January 30 the Senate has not confirmed him.

BREAKING DOWN 'Trans-Pacific Partnership (TPP)'

The agreement would have lowered tariffs and other trade barriers among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. In the U.S. the deal is viewed in the broader context of the Obama administration's military and diplomatic "pivot" towards East Asia, which then-Secretary of State Hillary Clinton outlined in an Op-Ed in Foreign Policy 2012. 

That year, Clinton said the deal set the "gold standard in trade agreements." Likely in response to an unexpectedly fierce primary challenge from Senator Bernie Sanders, she has since said she opposes the deal. Her opponent, Donald Trump, has made opposition to the TPP and similar deals – including NAFTA, which Clinton's husband signed into law as president in 1993 – a centerpiece of his campaign. 

Opposition to the deal centers around a number of themes. The secrecy surrounding the negotiations strikes some as anti-democratic. For others, trade deals are believed to be the source of foreign competition that has contributed to a loss of U.S. manufacturing jobs. Others are disturbed by the "investor-state dispute settlement" (ISDS) clause that would allow corporations to sue national governments that violate trade agreements.

Supporters of the deal contend that trade agreements open new markets for domestic industries, creating new jobs and contributing to economic growth.

Alternatives to the TPP

Following Trump's order to pull the U.S. out of TPP, other signatory countries – which had negotiated for seven years to finalize the deal – have discussed a couple of alternatives.

One is to implement the deal without the U.S. Australian Prime Minister Malcolm Turnbull reportedly discussed this option with the leaders of Japan, New Zealand and Singapore following the U.S.'s withdrawal. A Japanese government official told reporters that the country would not continue to pursue the deal, however. The U.S. is by far the largest economy to have participated in TPP negotiations, and other countries likely see the trade-offs involved as unattractive without access to the U.S. market.

China is also pushing for a multilateral Pacific Rim trade deal, called the Regional Comprehensive Economic Partnership. The deal would link China to Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam, Australia, India, Japan, South Korea and New Zealand. While in office, Obama repeatedly stressed the need to finalize TPP, arguing, "we can't let countries like China write the rules of the global economy. We should write those rules."