After a long period of negotiations the 12 members of the Trans-Pacific Partnership (TPP) reached an agreement on October 5th. This could have big implications for member countries of TPP and for the rest of the world economy.

1. What does mean the TPP for China and the world economy?
After a long period of negotiations the 12 members of the Trans-Pacific
Partnership (TPP)reached an agreement on October5th. This could
have big implications for member countries of TPP and for the rest of
the world economy.
For Japan and US the TPP has a great meaning. It will allow many
Japanese goods to enter with no tariffs to TPP markets like US (some will
immediately go down to zero while others will do after some years)
especially products where Japan is very competitive as electrical
appliances, automobiles, industrial machinery, chemicals. For its part US
could sell more of its agricultural goods to Japan and invest more there. But
as important as it is in the economic side, also in the political side he TPP
will make stronger the alliance between Japan and U.S. It is part of the US
“pivot” to Asia strategy of President Obama. TPP rules will cover 40% of
the world economy and US will continue to reinforce its presence in the
Asian region with this agreement and for Japan it means that will have US
on its side in the coming future.
For Peru it could mean better access to markets like Japan, even if we have
already a Free Trade Area with this country, and also access to new
markets like Australia and Vietnam. The issue for Peru is to have the
products to sell to these markets.
Countries like Chile and Mexico the TPP means that they will continue to
sell more to markets in Asia and North America. For countries like
Colombia not a member of the TPP it will make more urgent the need to
reach trade agreements with countries in Asia. In the case of Argentina and
Brazil, they would continue being excluded because their markets are
closed and they are not eager to reach trade agreements with other
countries.
The multilateral negotiations within the World Trade Organization are
going nowhere as it is difficult for the many countries there to reach an
agreement among themselves and also because discussions in some
subjects, as labor standards or intellectual property rights, is opposed by
some of them. That’s why regional agreements like TPP are in fashion
now. So in the future probably the weakness of the WTO will become more
evident and trade agreements will be reached among group of countries
who share more similarities among themselves.
It could be said that China could be the one which could lose more with the
TPP, becausefor example some Chinese products competewith Japanese

2. goods and with the TPP Japanese goods will get preferential access to TPP
markets, and also because TPP countries that use parts and components
from China to manufacture some goods now will prefer or will have to use
parts and components from other TPP countries to qualify for preferential
access to other TPP markets. Other effect is that investment from countries
like US and Japan will get better access to other TPP markets. In general
new rules for services, investment, intellectual property rights have been
set up mainly by the US in the TPP and these US want to establish also
these rules in other agreements like in the TTIP (with European Union
countries) and China is being excluded from this process.
What can China do? China should continue with its efforts to integrate
more with the economies of the East Asian region trying to conclude soon
the Regional Comprehensive Economic Partnership with the ASEAN
group plus Japan, South Korea, India, Australia and New Zealand. Also
China should involve more countries in its strategy of achieving its “one
belt one road” initiative to reestablish the land and maritime Silk Roads
across Asia and Europe and to Africa, and make active use of the Asian
Investment and Infrastructure Bank, the BRICS New Development Bank
and other funds that is setting up. Chinese companies also should be more
active going abroad to invest not only in the natural resources sectors.
Finally China should continue to openmore its economy, to foster
competition and continue the reforms to modernize more its economy.