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India’s World – Importance of the TPP deal

India’s World – Importance of the TPP deal


The Trans-Pacific Partnership or TPP is one of the biggest trade deals in history. It was signed in February in New Zealand by 12 Pacific Rim countries. The TPP involves 12 nations (the US, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). Together these countries account for the 40% of the global economy and 26% of world trade. The TPP, as yet, does not include China.

The TPP is aimed at dismantling tariff and non-tariff barriers to trade and investments between the participant countries. It also hopes to streamline regulations to implement among other things common standards for the protection of foreign investments and intellectual property rights. However, the TPP has not come into force yet and will have to be ratified over the next two years. In this time period, at least six member countries must approve the final text of the deal for the TPP to be implemented. The TPP is expected to serve as model for future trade deals in other regions.

The pact aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth. Member countries are also hoping to foster a closer relationship on economic policies and regulation. The agreement could create a new single market something like that of the EU. The deal is a remarkable achievement given the very different approaches and standards within the member countries, including environmental protection, workers’ rights and regulatory coherence – not to mention the special protections that some countries have for certain industries.

Those in favour say this trade deal will unleash new economic growth among countries involved. Those against fear it could mean jobs will move from the US to developing countries. They also do not like the fact the five-year talks were held largely in secret.

It is being said that the TPP has high potential to promote economic growth and improve people’s living standards by facilitating the free cross-border movement of key factors of economic activity, such as goods, people, money, and information. Failure to bring the TPP into force would be a great loss to not only the TPP countries such as Japan and the US but also the global economy.


  • Some experts argue that the Trans-Pacific Partnership (TPP) is a secretive, multinational trade agreement that threatens to extend restrictive intellectual property (IP) laws across the globe and rewrite international rules on its enforcement.
  • The TPP would have extensive negative ramifications for users’ freedom of expression, right to privacy and due process, as well as hindering peoples’ abilities to innovate.
  • The TPP suffers from a serious lack of transparency, threatens to impose more stringent copyright without public input, and pressures foreign governments to adopt unbalanced laws.
  • Some critics also claim that TPP paves the way for companies to sue governments that change policy on, say, health and education to favour state-provided services.
  • The TPP will also intensify competition between countries’ labour forces.
  • But the biggest criticism has been of what the campaigners allege were secretive negotiations, in which governments were said to be seeking to bring in sweeping changes without voters’ knowledge. However, defenders say the reason the negotiations were not made public was because there was no formal agreement on them.

Negatives of this agreement:

  • Most of the gains in income would go to workers making more than $88,000 a year. Free trade agreements contribute to income inequality in high-wage countries by promoting cheaper goods from low-wage countries.
  • That would be especially true of the TPP because it protects patents and copyrights. Therefore, the higher-paid owners of the intellectual property would receive more of the income gains.
  • The agreement regarding patents will reduce the availability of cheap generics, making many drugs more expensive.

India and TPP:

The TPP will likely affect India’s exports to the member countries of TPP. It is estimated that, once this deal is in place, trade worth $2.7 billion will be diverted away from India. The costs could be even higher if India is unable to participate in global supply chains due to the TPP’s rules on standards, labour and environment policies. And, standardisation of intellectual property regimes across the TPP countries and rules on expropriation may make it more difficult for India to attract foreign investment over, say, a Vietnam. Besides, it might even alter India’s bargaining power and negotiating positions.

For India, the agreement provides an opportunity to reflect on its approach to multilateral trade talks, while underscoring the need to build a strong multi-disciplinary cadre of specialist free-trade analysts and negotiators. Though the World Bank projects a limited ‘trade diversion’ impact on non-members, including aggregate GDP losses of about 0.1 per cent by 2030, India could suffer market share losses in certain categories of exports as a result of preference erosion. With the South Asian Free Trade Agreement (SAFTA) having made little to no difference to India’s terms of trade in the neighbourhood, and the country having ceded substantial ground at the latest Nairobi meeting of the World Trade Organisation, it is high time the government proactively girded for the challenges ahead. Like China, where an editorial in the state-run Global Times exhorted the Asian giant’s leadership to focus on strengthening its own economy than worry about the TPP, India too needs to aim at setting its house in order. From ensuring the creation of a domestic common market through adoption of the long-delayed Goods and Services Tax, to building its own multilateral bloc of emerging and developing economies that can act as a bulwark against TPP-like groupings, India has its task cut out.