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Congressional Research Service (CRS)

 

Trans-Pacific Partnership (TPP) Countries: Comparative Trade and Economic Analysis

Brock R. Williams, Analyst in International Trade and Finance

February 8, 2012

http://www.fas.org/sgp/crs/row/R42344.pdf

[full-text, 38 pages]

 

Summary

The Trans-Pacific Partnership (TPP) is a proposed regional free trade agreement (FTA) currently

under negotiation between Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the

United States, and Vietnam. The negotiating partners have expressed an interest in allowing this

proposed “living agreement” to cover new trade topics and to include new members that are

willing to adopt the proposed agreement’s high standards. To that end, Canada, Japan, and

Mexico recently stated that they would seek consultations with the partner countries about the

possibility of joining the negotiations.

 

The TPP negotiations are of significant interest to Congress. Congressional involvement includes

consultations with U.S. negotiators on and oversight of the details of the negotiations, and

eventual consideration of legislation to implement the final trade agreement. In assessing the TPP

negotiations, Members may be interested in understanding the potential economic impact and

significance of TPP and the economic characteristics of the other TPP countries as they evaluate

the potential impact of the proposed TPP on the U.S. economy and the commercial opportunities

for expansion into TPP markets.

 

This report provides a comparative economic analysis of the TPP countries and their economic

relations with the United States. It suggests that the TPP negotiating partners encompass great

diversity in population, economic development, and trade and investment patterns with the United

States. This economic diversity and inclusion of fast-growing emerging markets presents both

opportunities and challenges for the United States in achieving a comprehensive and high

standard regional FTA among TPP countries.

 

The proposed TPP and its potential expansion are important due to the economic significance of

the Asia-Pacific region for both the United States and the world. The region is home to 40% of

the world’s population, produces over 50% of global GDP, and includes some of the fastest

growing economies in the world. While current TPP negotiating partners made up about 5% of

U.S. trade in 2010, Asia-Pacific economies as a whole, made up over 60%.

 

The United States is the largest TPP market in terms of both GDP and population. In 2010, non-

U.S. TPP partners collectively had a GDP of $2.3 trillion, 16% of the U.S. level, and a population

of 195 million, 63% of the U.S. level. Entry of Canada, Japan, and/or Mexico would increase the

economic significance of the agreement on both these metrics. Among the TPP partners, the

majority of overall U.S. trade and investment flows are with Australia and Singapore. In

merchandise trade, however, the United States imports more from Malaysia than any other TPP

country. Considering the TPP region collectively, over 25% of all U.S.-TPP imports and exports

are in computers/electronic components. At the bilateral level, top U.S. exports are largely in the

same major product categories, but top U.S. imports vary considerably by country.

 

There are four U.S. bilateral FTAs in place with current TPP partners: Australia, Chile, Peru, and

Singapore. All other TPP partners except Peru, have agreements in place with five or more of the

other TPP partners. The Association of Southeast Asian Nations (ASEAN), of which Brunei,

Malaysia, Singapore, and Vietnam are members, accounts for much of this existing

interconnectedness. Moreover, ASEAN agreements with larger regional economies (e.g., China,

Japan, and Korea), present a second possible avenue for Asia-Pacific economic integration, albeit

one that currently excludes the United States.

 

Contents

Introduction...................................................................................................................................... 1

Economic Overview ........................................................................................................................ 2

Asia-Pacific Region................................................................................................................... 2

TPP Countries............................................................................................................................ 4

Potential New TPP Participants................................................................................................. 7

Japan.................................................................................................................................... 7

Canada and Mexico............................................................................................................. 7

Existing Trade and Economic Agreements...................................................................................... 8

Asia-Pacific Economic Cooperation (APEC)............................................................................ 9

Association of Southeast Asian Nations (ASEAN)................................................................... 9

Free Trade Agreements............................................................................................................ 10

U.S. FTAs and TPP ........................................................................................................... 11

Bilateral Investment Treaties ................................................................................................... 12

Trade, Investment, and Tariff Patterns........................................................................................... 13

U.S.-TPP Trade........................................................................................................................ 13

Merchandise Trade ............................................................................................................ 13

Services Trade ................................................................................................................... 17

Intra-TPP Trade ....................................................................................................................... 21

World-TPP Trade..................................................................................................................... 23

Investment Patterns ................................................................................................................. 25

Tariff Patterns .......................................................................................................................... 27

Conclusion ..................................................................................................................................... 29

 

Figures

Figure 1. Trans-Pacific Partnership Countries ................................................................................. 5

Figure 2. U.S. and TPP Average GDP Growth Rates....................................................................... 6

Figure 3. U.S. -TPP Trade and Investment Flows ........................................................................... 6

Figure 4. U.S. Merchandise Trade ................................................................................................... 8

Figure 5. Existing Trade Agreements among TPP Members......................................................... 11

Figure 6. U.S. Trade with Current FTA Partners and TPP Countries............................................. 12

Figure 7. Bilateral U.S. Merchandise Exports to TPP Countries................................................... 14

Figure 8. Bilateral U.S. Merchandise Imports from TPP Countries .............................................. 14

Figure 9. Total U.S Merchandise Imports from and Exports to TPP Countries............................. 15

Figure 10. Bilateral U.S. Services Exports to Select TPP Countries ............................................. 18

Figure 11. Bilateral U.S. Services Imports from Select TPP Countries......................................... 18

Figure 12. Total U.S. Services Exports to Select TPP Countries................................................... 18

Figure 13. Total U.S. Services Imports from Select TPP Countries .............................................. 18

Figure 14. Bilateral U.S. Services Exports to Select TPP Countries, by Category........................ 19

Figure 15. Bilateral U.S Services Imports from Select TPP Countries, by Category.................... 19

Figure 16. Services to TPP Countries and Japan through MOFAs of U.S. MNCs........................ 20

Figure 17. Intra-TPP Merchandise Trading Relationships............................................................. 22

Figure 18. Source of Merchandise Imports for non-U.S. TPP Countries ...................................... 24

Figure 19. Destination of Merchandise Exports for non-U.S. TPP Countries ............................... 24

Figure 20. Merchandise Imports into Singapore............................................................................ 25

Figure 21. Merchandise Imports into Australia ............................................................................. 25

Figure 22. Sources of U.S. FDI from TPP Countries..................................................................... 26

Figure 23. Destination of U.S. Direct Investment Abroad to TPP Countries ................................ 26

Figure 24. Average Applied Tariffs and GDP/Capita..................................................................... 28

Figure 25. Trade-to-GDP Ratio...................................................................................................... 29

 

Tables

Table 1. APEC Member Economic Statistics, 2010......................................................................... 3

Table 2. Top U.S.-TPP Trade Categories ....................................................................................... 16

Table 3. Bilateral Investment Treaties and Flows for TPP Countries ............................................ 26

Table 4. Highest Tariffs by Product Category................................................................................ 28

Table A-1. Trade Agreements in TPP Countries ............................................................................ 30

Table A-2. Intra-TPP Merchandise Trade ...................................................................................... 32

 

Appendixes

Appendix........................................................................................................................................ 30

Contacts

Author Contact Information........................................................................................................... 34

 

 

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