Transpacific partnership in the post-pandemic world.

The inclusion of Britain into TPP will definitely open up new frontier and opportunities for the post-Brexit world. The post-Brexit world went through many unprecedented changes and according to some estimates, the Brexit referendum has led to the decline in British income by 1.3%.

Joining the trade agreement will definitely create a conducive atmosphere for the participating nations. It is a common fact that USA has withdrawn itself from this trade agreement way back in 2017. But, the modified form i.e. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is still intact and might act as linchpin in reviving the economy of post-pandemic world.

TPP – a win-win situation for Britain?

Though the GDP of participating nations now is less than 40 percent of the global GDP, but it assumes great significance for the participating nations. The pact will open new vistas of trade for Britain in the twelve Pacific Rim countries.

Further, the extending shore-line of the Pacific Rim nations will serve as the tremendous source for the natural resources like oil. While the major markets like India and south east Asia is still grappling with the pandemic, the small island nations will serve as the necessary market destination for Britain.

On the flip side, there are serious downside risks. Trade agreement rests upon certain premises. Or if we consider the famous theory of ‘comparative advantage’, there needs to be certain relative advantage for the trading nations. There seems to be more relative advantage for Britain. Tariff-free imports might influence the domestic market in the Pacific nations. Ostensibly, similar situations appears in the case of Britain too, where farmers in Britain complained about the reducing import tariff on dairy products from Australia. But, the disadvantage might seems higher for the smaller Pacific nations if we go by the convention that smaller nations are not generally the recipients of benefits in trading with large nations.

TPP- the implicit agenda

Ostensibly seems like a trade deal, but it was framed on the geo-political reasons and necessities. One of the main reasons was to curtail the dominance of China in the international economy. The trade deal will open up new boundaries for the smaller Pacific nations to the European world, thereby, restricting the dominance of China’s influence on its neighborhood. In addition, the deal was finalized so as to bring these nations closer to the USA. Though, this is not the case at present now, as the USA withdrew from TPP in January 2017.

TPP & multipolar world

Today’s world is progressing towards the growth of higher echelons. A multipolar world is a viable and better option now. TPP should be organized in such a manner that the world moves towards the platform of a multipolar world, rather than a unipolar world. Any diversion from such an aim will only resort to economic imperfections like inequality.

Nobel laureate, Joseph Stiglitz has explicitly stated his concerns upon the drafts of TPP and asserted that it serves the interest of the wealthiest.

Moreover, it might create economic ills like currency manipulation. This could serve as the precursor to another trade war, this time between the Pacific nations and European nations.
Post- pandemic world might lead to the situation, whereby, some nations progress at the expense of others.

Future course of TPP

Looking at the growth prospects of the developed world, nations like South Korea, Taiwan, and Thailand have expressed their intent to join the trade bloc. This is an important aspect as it covers and occupies a market of nearly 500 million people.
The coming future will very much rest upon the demand-side economics rather than the supply-side economics. In this scenario, TPP is bound to play its role.

But as Adam Smith has mentioned centuries ago that, people’s natural self-interest would promote greater prosperity. So, this self-interest should be ‘natural’ one rather than an ‘induced’ one.

About the author

vipal

My name is Vipal Bhagat, going to be doctorate in applied economics. My aim is to analyse and interpret the current economic happenings around us, according to the core and basic principles of economics.

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