A short overview of some free-trade agreements
TPP, TTIP, RCEP et al: What these agreements want — and where they stand right now
For a long time, multilateral free-trade agreements (FTAs), which aim at lowering tariffs and promote trade between several countries, faced little to no opposition. Over the last years, criticism has been mounting, and reached a new high with the election of Donald Trump. Because it can be sometimes difficult to keep an overview of all the acronyms and what they mean, we have created a short overview of the most important FTAs below.
The Ambitious One: Trans-Pacific Partnership (TPP)
Countries covered: United States, Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore, New Zealand
Population covered: 804 million
Before the TPP became a punching bag for both candidates for the U.S. presidency, it was the centerpiece of President Barack Obama’s “Pivot to Asia” strategy. Proponents have hailed TPP as the new “gold standard” for trade agreements. A study shows that the direct short-term effect on America’s economy would likely be modest, because a lot of tariffs between the countries in the TPP have already been eliminated. But the TPP also has a more geopolitical and long-term focus designed to create a common framework of rules — on environmental regulations, worker protection, human rights, dispute settlement and regulatory cooperation — and to secure the U.S.influence in Asia vis-à-vis China (which currently isn’t party to the agreement). Given President-elect Donald Trump’s promise to pull out of the deal on his first day in office, it seems likely that the TPP will not be implemented in its current form.
The Hibernating One: Transatlantic Trade and Investment Partnership (TTIP)
Countries covered: United States, European Union member states
Population covered: 1.06 billion
Whereas TPP was successfully negotiated but is unlikely to achieve ratification, TTIP is still in the negotiation phase — and is already in deep trouble. Several prominent European politicians have publicly announced that the proposed deal has failed, blaming the U.S. for a lack of willingness to compromise. “TTIP’s problem is that it has to bring together two different systems — the U.S. and the EU — both of which believe they are superior”, says Patrick Ziltener, professor at the University of Zurich, who has researched trade agreements for several years. For example, the EU is skeptical about the so-called investor-state dispute settlement (ISDS), which would allow companies to sue states over breaches of the agreement and which is often criticized for lack of transparency and due process. The EU has proposed an alternative called the Investment Court System (ICS), which works more like an international court.
The Signed One: Comprehensive Economic and Trade Agreement (CETA)
Countries covered: Canada, European Union member states
Population covered: 778 million
CETA almost suffered a similar fate as its larger brother TTIP when Wallonia, the French-speaking part of Belgium, initially opposed its signing before finally agreeing at the last minute on October 30. The agreement still needs to be ratified by the national parliaments of all EU member states before it can be implemented. In 2015, the EU and Canada announced that they had agreed to integrate the Investment Court System (ICS) into the deal. Contrary to the ad-hoc dispute settlement of the ISDS, the ICS would establish a permanent tribunal as well as an appellate tribunal to settle dispute between companies and countries.
The Straightforward One: Regional Comprehensive Economic Partnership (RCEP)
Countries covered: All ASEAN member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam); Australia, China, India, Japan, South Korea, New Zealand.
Population covered: 3.37 billion
Depending on your viewpoint, the RCEP is either “lower quality” or “leaner” than the likes of TPP and TTIP. Where the latter agreements tried to create complex frameworks of common rules, the Chinese-backed RCEP is content to just create a unified market and to reduce the “spaghetti bowl” of bilateral free-trade agreements in the region (ASEAN indeed already has bilateral agreements with each of the additional six member countries). Negotiations on the RCEP are still ongoing, but with the likely demise of the TPP, the fortunes of the deal, which would cover almost half the world’s population, are rising.
The Working One: North American Free Trade Agreement (NAFTA)
Countries covered: United States, Canada, Mexico
Population covered: 476 million
Of all the agreements discussed here, NAFTA is the only one which is actually in effect ‚ and has been since 1996. Its focus has been to eliminate tariffs between its three member countries. NAFTA is largely viewed as a success, with regional trade increasing from $290m in 1993 to $1.1bn in 2016. Despite this, and because it is hard to actually determine which effects are a result of the agreement, it has also come under criticism in the U.S.: Donald Trump said during the campaign he wanted to “rip up” the deal, though he has been more muted since having been elected.
