A big deal: Canada and Mexico join the Pacific Trade Pact

Article Highlights

  • The decision to invite Canada and Mexico to join negotiations for the TPP was largely buried in media reports.

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  • Adding Canada and Mexico to the TPP will result in a free trade area covering around 658 million people.

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  • Canada and Mexico joining the TPP will result in a free trade area of about $20.5 trillion in economic activity.

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The most significant development during the G-20 summit in Mexico occurred on the sidelines and was largely buried in media reports: The decision to invite Canada and Mexico to join negotiations for the Trans-Pacific Partnership agreement (TPP). Adding Mexico and Canada to the current nine-member TPP will result—if negotiations are successful—in a free trade area covering some 658 million people and about $20.5 trillion in economic activity.

Further, many trade analysts predict that the move by Canada and Mexico will produce a domino effect, beginning with the addition of Japan and South Korea within the next year. That would produce a free trade area encompassing more than 700 million people with a combined GDP of some $26 trillion. It is this prospect that gives substance to the claim that, in an otherwise lackluster and frustrating G-20 summit, such a breakthrough is potentially a really big deal.

For most of their history, the TPP negotiations have been conducted beneath the radar of publicity or media attention. They began with four small nations—Singapore, Brunei, New Zealand, and Chile (P-4)—aiming for a high standard, U.S.-model Free Trade Agreement, with the goal of providing a pathway to an inclusive, trans-Pacific trade and investment open market. Subsequently, Australia, Peru, Vietnam, and Malaysia signed on, but the transforming event came with the Bush administration’s decision to start the process for membership in its last months in office.

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About the Author

 

Claude
Barfield
  • Claude Barfield, a former consultant to the office of the U.S. Trade Representative, researches international trade policy (including trade policy in China and East Asia), the World Trade Organization (WTO), intellectual property, and science and technology policy. His many books and publications include Swap: How Trade Works with Philip Levy, a concise introduction to the principles of world economics, and Telecoms and the Huawei conundrum: Chinese foreign direct investment in the United States, an AEI Economic Studies analysis that explores the case of Chinese telecom equipment maker Huawei and its commitment to long-term investment in the US.
  • Phone: 2028625879
    Email: cbarfield@aei.org
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    Name: Hao Fu
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    Email: hao.fu@aei.org

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