Negotiators from Japan, the United States and ten other Pacific nations reached an agreement for a comprehensive trade pact on Monday that would be the signature achievement of President Barack Obama’s economic “pivot” to Asia.
The deal comes after five years of talks and despite opposition from farm lobbies in Japan to trade unions in America who fear that freer trade across the Pacific Ocean will depress prices and wages.
Australia and New Zealand were also wary of allowing pharmaceutical companies access to their government-run health insurance programs.
But the potential gains of what is called the Trans Pacific Partnership are enormous. The twelve nations that are part of the deal already account for 40 percent of the world’s annual economic output. In addition to Brunei, Chile, Malaysia, Mexico, Peru, Singapore and Vietnam, Colombia, the Philippines, South Korea and Taiwan have expressed an interest in joining the pact.
Supporters say the treaty, if enacted, could boost global economic output by $220 billion over the next ten years.
National legislatures still have to approve the agreement.
Beyond the economic benefits, the partnership is also an effort on Obama’s part to bring rival China into the existing liberal world order rather than have it attempt to create a competing, presumably more authoritarian, order under its own leadership.
China wasn’t part of the negotiations. But the treaty could pressure the country, which is expected to soon overtake America as the world’s largest economy, to meet its standards and stop trying to game global trade to impede foreign companies.
The pact covers tariff reductions for cars and foodstuffs, intellectual property rights for drugs and movies, online commerce rules and dispute settlement for multinational corporations.
Negotiators were urged the wrap up the talks before this year’s parliamentary elections in Canada and next year’s presidential elections in the United States.