Rushing to Finish a Global Free-Trade Deal
June 15, 2012
On paper, big, ambitious free-trade deals are the best kind. The more countries that agree to open their markets, the greater the benefits to consumers. But there's a catch: If big trade deals try to include too many countries or take on too many issues, the negotiations can collapse under the weight of thousands of pages of details, says BusinessWeek.
This is the challenge that faces the negotiators of the Trans-Pacific Partnership, which stands to be the greatest single achievement in the history of the free trade movement.
- Thus far, nine countries are participating in discussions: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam.
- These countries collectively represent the United States' third-largest export market for goods and the fourth-largest for services.
- To increase the probability of a successful outcome to the talks, substantial trade partners like Canada, Mexico and Japan were excluded from talks for fear that their complex and varied interests would cause talks to become sluggish.
The impressiveness of the free trade deal is not isolated to the number of collaborating countries -- the breadth of the discussion is also crucial.
- Participating countries will discuss easing regulations on imported goods, making international companies' products easier to deliver to multiple markets.
- The treaty also seeks to eliminate the hassle of getting goods and packages through customs, which differ from country to country and are a major stumbling block to trade.
- It will also tackle complicated issues such as copyright law and patents.
- The United States' substantial tariffs in sectors such as manufacturing imports will also be the subject of negotiation.
Admittedly, the absence of such trade powerhouses as China, Canada, Mexico and Japan limits the effectiveness of the agreement in stimulating trade. However, those seeking a deal were justified in being concerned: the Doha Development Agenda of the World Trade Organization infamously went nowhere with talks stalling after 10 years.
Source: Peter Coy, "Rushing to Finish a Global Free-Trade Deal," BusinessWeek, May 31, 2012.
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