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Trans-Pacific Partnership (TPP) was signed early this year by 12 nations, including the United States, Japan, Singapore, Australia, Canada, and Mexico. The signing was the culmination of years of negotiations, but the pact still must be ratified to take effect. If all members ratify the treaty, it will go into effect two months later, but that’s an unlikely scenario. The agreement also will become law if at least six countries representing at least 85% of the total member GDP ratify it within two years. Because of their size, both the United States and Japan would need to ratify the deal for it to become effective.
Assuming TPP is ratified, it will reduce tariffs and promote economic cooperation among member countries and could result in a market similar to the European Union, though much larger. The 12 countries have a population of about 800 million, almost double that of the EU, and represent 40% of global GDP and one-third of world trade.
Along with reducing tariffs, the TPP would introduce an internal system for resolving disputes, which could pave the way for companies to sue governments that provide their countries with protectionist assistance such as low-cost loans, debt forgiveness, or preferential access to goods and services.
The pact also addresses e-commerce, requiring member countries to protect consumers from fraud, ensure their privacy, and stop unsolicited messages. It prevents duties on e-commerce and stops member nations from favoring their own producers and suppliers or blocking other countries.
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