Taking the Measure of the TPP as Negotiated

Abstract

We assess the impact of the Trans-Pacific Partnership (TPP) as negotiated, based on the actual text and liberalization schedules, supplemented by the technical summaries provided by various governments interpreting the outcome of the negotiations. In addition to the impact of tariff reductions and the expansion of agricultural market access through tariff rate quota concessions, we take into account estimates of likely preference utilization, and the impact of non-tariff barriers on trade in goods and services and on investment. We evaluate the latter on the basis of the extent to which the TPP reduces the parties’ scores on indexes measuring restrictiveness of the parties’ regimes for goods, services, and investment. We also take into account the value of binding market access commitments for services trade. We consider the potential spillovers on third parties of higher labour and environmental standards as well as of standards harmonization. We comment on the welfare costs stemming from the administrative burden of preferential trade and from compensating agricultural subsidies promised in some parties’ sensitive sectors; and discuss the implications of the TPP intellectual property regime. The assessment is based on a dynamic specification of the Global Trade Analysis Project model, modified to directly represent goods and services trade conducted through foreign affiliates, as well as on a cross-border basis, and to reflect the impact of liberalization of foreign direct investment.

Keywords: Trans-Pacific Partnership, TPP, CGE model, trade liberalization, FDI, Mode 3 services, non-tariff barriers, NTBs, standards, value of bindings, spillovers

JEL Classification: F02, F13, F15