Trans-Pacific Partnership (TPP) Excludes Europen Union (EU) (ENGLISH, Macedonian translation)
Channel: Sam Vaknin's Musings
Date: 2015-10-11

The Trans-Pacific Partnership (TPP) is by far the biggest Free Trade Agreement (FTA) in history. It incorporates 12 countries with a combined Gross Domestic Product (GDP) equal to roughly 40% of the global economy and exports and imports which amount to about 35% of the world’s total, or $28 trillion. In the vast territories the TPP brought together there are 800 million, mostly young, inhabitants. The USA, Canada, Japan, Australia, Mexico, Malaysia, and Singapore are among its signatories.

The TPP will lower or abolish more than 18,000 bilateral tariffs, especially on agricultural goods. It establishes a common framework to tackle intellectual property rights, including industrial patents and drug licenses. It opens up this vast territory to professionals and providers of services. It puts in place labour and environmental standards. It also creates a dispute settlement mechanism accessible to individual and corporate foreign investors.

In its current form, the TPP undermines the rules and regulations of the World Trade Organization (WTO) as promulgated in the Uruguay round of talks in 1995. It is, therefore, a direct challenge to the current multilateral regime of international trade. It is likely to lead to the fragmentation of global trade into competing, insular blocs, each with its own protectionist policies. 

The TPP is also a major step backward, mainly because it excludes China and the European Union (EU). The EU has a free trade agreement with the USA (called TIPP – Transatlantic Trade and Investment Partnership), but it is nowhere near as comprehensive as the TPP. China is likely to gravitate towards Russia, Turkey, Central Asia, and Africa. Latin America is already effectively integrated with the economy of the USA. Only the EU is left out in the cold.

The EU will face unfair competition in critical Asian export markets: lower tariffs for TPP members, higher tariffs for EU products, commodities, and goods. Some European agricultural goods will be banned altogether! 

Europe’s economies rely on exports. Exports equal between 40-70% of the GDP of many key members of the EU (Germany, Italy, Spain, France, UK) - compared to 13% of GDP for the USA. The figures are even higher for non-EU members such as Macedonia. Any decline in exports to Asia will inexorably lead to long-term economic stagnation, deflation, and massive social unrest in the EU. It may even prove to be a coup de grace to this ill-fated experiment at European integration, in the wake of the migrant crisis, the euro crisis, the looming pension crisis, and the surging anti-EU sentiment within its member states, old and new alike.

Macedonia must immediately start to diversify its export markets. Currently, about three fifths of its exports and imports are to and from European destinations. It must urgently begin to look elsewhere: Asia, the Middle East, Africa, even the pacific and North America. It must move away from tangible, physical goods to digital products and intellectual property which can be sold anywhere instantaneously and to tourism. Macedonia cannot rely on Europe anymore. It is no longer the important global player that it used to be.