politics

Final version of TPP deal released; U.S. requests on hold

7 Comments
By Charlotte Greenfield and Colin Packham

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From a logical trade perspective in relation to economic, business, finance and commercial perspective, TPP member countries still doesn't quite see the big picture for the reason why Trump wrote an executive order to withdraw from the Trans-Pacific Partnership, and as well one to renegotiate NAFTA.

There are plenty of people and pundits that have focused on the risks and the dangers with the Trump trade policies. Meanwhile, those most directly affected aren't quite as draconian on the outlook -- quite the opposite. The executives and trade partners that Trump have met so far have largely been optimistic. Whether they mean it or not, they understand the value of doing business with the U.S. consumer. 

There are clear opportunities for win-wins – especially in a world that must rebalance trade to avoid more cycles of the booms and busts, like the boom-bust the world experienced over the past two decades. The administration has the leverage of power but they also have the leverage of rewards. Despite what the media tells us, behind closed doors the new administration seems to negotiate by carrot rather than stick. Trump comes to meetings bearing gifts, and that creates buy-in. 

When you bring American CEOs in and tell them that you’re going to give them a 20 percentage point tax cut, you’re going to slash the regulation burden (by "75%" as he said), you’re going to give them about 30 (more or less) percentage point tax cut on repatriating offshore money, and your going to launch a trillion dollar infrastructure spend, all in an effort to juice the economy to a 4%+ growth rate, they're going to be very excited -- even if you tell them they can no longer access the cheapest production in the world.

In the end, they'd rather have a hot economy to sell into, than a stagnant economy, even if it comes with a higher cost of production. And may find that, in the end, the after-tax profit margins of these big U.S. corporates may be better given all of these incentives, even if they make things here. Better revenues, and maybe better margins to go with it.

Remember, the optimism of U.S. small business owners made the biggest jump since 1980 on the prospects of growth-friendly Trump policies. GDP equals Consumption + Investment + Government Spending + Net Exports. Ultra easy monetary policies have made borrowing cheap, saving expensive and created the economic stability necessary to get hiring over the past several years. That has all kept consumption going. 

The "build it here" policies are a recipe for capital investment to finally ramp up. Add to that, a big government infrastructure spend, and we're getting the pieces of the puzzle in place to see much better economic growth. A hotter U.S. economy will mean a hotter global economy. With that, I suspect net exports will ultimately pick up as well, with a healthier, more sustainable global economy.

3 ( +4 / -1 )

Doesn’t TPP also include spying, data collection, copyright stuff etc?

2 ( +3 / -1 )

It's a secret, don't express your opinion. That will result in a form of democracy damn it stupid democracy.

2 ( +2 / -0 )

Steven Ciobo is having a laugh. Modelling on the impacts for the Australian economy suggest something like a 1% GDP gain over a decade or more. That's like $13 billion. Not over one year, but spread out over many years. Its a drop in the bucket. Its the developing economies that will benefit the most, like Vietnam. Japan will not benefit much either.

Its the strategic nature of the agreement thats important about and the desire to raise the quality of trade agreements. But how many of those details have now been suspended surrounding IP, or environmental or other areas?

2 ( +2 / -0 )

Many of the worst Mickey Mouse copyright provisions the US was demanding appear to be gone. The ISDS secret arbitration tribunals that let companies sue the government for lost profits are still in this final agreement.

0 ( +0 / -0 )

Trump oppose anything Obama was promoting. Japan took advantage and became leader of tpp talks. About cars, Japanese auto makers are ahead in tpp member nations. Rice is another products US tried to sell to Japan by recommending US grown long grain rice Japanese. should eat. China. was not a member. Then Sushi boom spreader in USA and Northern Calif. Short grain rice farmers did not have enough to export to. Japan. Bad luck continued. But Trump is no longer against tpp.

-1 ( +0 / -1 )

I think Japan can import beef from Australia and New Zealand easier. than from USA..

0 ( +0 / -0 )

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