US President Barack Obama scored a major policy victory on Wednesday (June 24) when Senate passed a Bill on the TPA that will pave the way for completion of the TPP.
Heard of these acronyms but don’t really know what they stand for?
Here’s a quick guide on what they are and why they matter to Singapore:
What is TPA?
TPA or Trade Promotion Authority is also known as "fast-track" authority. It gives President Obama enhanced powers to negotiate trade deals. The legislation prohibits Congress from amending the final trade deal, allowing them only a "yes" or "no" vote.
What is TPP?
TPP or Trans-Pacific Partnership is a 12-nation trade deal involving countries such as Singapore, Vietnam, Japan, Australia, Peru, Chile and Canada. The accord is a central element of President Obama’s foreign policy pivot toward Asia. It is expected to cover 40 per cent of the world economy and raise annual global economic output by nearly US$300 billion (S$403 billion). Negotiations on the TPP started proper in 2010. The countries involved still have tricky issues to resolve, ranging from intellectual property protection, monopoly periods for next-generation medicines to the treatment of state-owned enterprises.
The TPP builds on the Trans-Pacific Strategic Economic Partnership, or the P4 involving Singapore, Brunei, Chile and New Zealand, which came into effect in 2006.
Why is TPA important?
TPA essentially gives the Obama administration credibility to negotiate major trade deals and is an important step in moving the TPP forward. Some countries would not engage in final negotiations until President Obama obtains TPA as it gives the assurance that the terms of the final deal will not be amended by Congress. Japan, for example, has been a difficult negotiating partner because it wants to preserve trade barriers on rice, pork and other agricultural products. It had long been cautious about discussing details as it was unclear whether Obama had the power to conclude a deal.
Now that Senate has approved the bill, Japan’s minister responsible for trade negotiations, Mr Akira Amari, told reporters that this could pave the way for a deal as soon as next month.
Why does all this matter to Singapore?
Economically, Singapore already has many bilateral trade deals with other countries, including the United States, but this new trade deal will set the standard for the 21st century, with new rules pertaining to labour, the environment and intellectual property, among other things. For a small country like Singapore, access to markets is always important, and the TPP represents 40 per cent of the world's GDP.
Geopolitically, the deal would keep the US engaged in the Asia-Pacific, a region where China is slowly but surely gaining prominence.