TPP Agreement Facing Negotiation Challenges

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Dr. Jayant Menon, Lead Economist with the Asian Development Bank, raised concerns about negotiations for the Trans-Pacific Partnership (TPP) this week during the Global Trade Development Forum in Kuala Lumpur, saying the agreements were in danger of becoming “too shallow.”

He indicated that the original intention of the TPP was being watered down as many countries participating in the negotiations were asking for larger shares of tax incentives and for more incentives to be included, making the agreement “distorted” and “inconsistent” amongst member countries vying for inclusion.

The TPP is a proposed Asia-Pacific free trade agreement that would include Australia, Brunei, Malaysia, New Zealand, Singapore and Vietnam in Asia, and Canada, Chile, Mexico, Peru and the United States in the Americas.

Menon stated that “We have seen blank spaces over several crucial matters in the agreement, particularly on the re-structuring of State-Owned Enterprises, and the TPP must rectify inconsistencies and iron-out complex and messy trading systems. We are not sure how it will pan out in the end – probably it will end up being shallow.”

RELATED: China Set to Lose Out to Vietnam as U.S. TPP Deal Looms

Chris Devonshire-Ellis, also attending the event, says “Clearly there is still some naivety and vested interests coming out in the negotiations that threaten to make the exercise futile. This is a governmental issue – civil servants and their governments like to say they have accomplished great things without actually having done so, and the TPP could run around on the shores of protectionism and woolly, meaningless rhetoric.”

“There is a chance within the TPP to upgrade manufacturing capabilities in countries such as Vietnam, Mexico and Chile, and this is in danger of being eroded. If so, China will take great advantage while TPP participants dither and dress up a watered down version as a negotiated success when it is nothing of the sort,” Devonshire-Ellis further commented.

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