CC BY
5
I
SCIENCE TIME
■
GENERAL ANALYSIS OF TRANS-PACIFIC PARTNERSHIP AND HOW IT EFFECTS RUSSIA AS A NON-MEMBER STATE
Sidenova Liudmila Vladimirovna, Far Eastern Federal University, Vladivostok
E-mail: lyuda.sidenova@icloud.com
Abstract. This article analyzes TPP performance from economic point of view and how world trade and individual countries in general are influenced by TPP policy in terms of macroeconomic indicators.
Key words: Trans - Pacific Partnership, GDP, policy, trade, economy.
As we all understand TPP is one of the most effective partnerships. It's also the most promising economic agreement in the world, due to rapidly evolving cooperation in Asia - Pacific region. But how does TPP effect Russia as a non-member state?
Trans - Pacific Partnership was formed on the basis of a free trade agreement between Singapore, New Zealand, Chile and Brunei, October 5, 2005. United States, Australia, Peru and Vietnam joined the negotiations on this agreement during the period from 2008 - 2010. Than TPP was transformed into the main integration project in Asia - Pacific region. In October 2010 Malaysia joined TPP, a bit latter in 2012 Canada and Mexico entered the partnership, the last was Japan with its late decision on March 2013.
Agreement on the Trans-Pacific Partnership consists of 30 chapters and covers a bunch of trade issues. Mainly, TPP controls international trade's market access, as well as the movement of capital and labor force. Also TPP adjusts internal rules in the Member States, such as labor law, the environment protection policy, intellectual property etc.
Over the last quarter century, trade flows of goods and services have increased rapidly (fig.1). The value of world trade has more than quintupled, from $8.7 trillion in 1990, to more than $46 trillion in 2014. The relative importance of trade has increased
1 SCIENCE TIME 1
too, from 39 percent of world GDP in 1990, to 60 percent in 2014. That said, global trade growth has slowed to about 4 percent per year since the crisis from about 7 %, on average, during 1990-07. This slowdown in world trade reflects weak global investment growth, maturing global supply chains, and slowing momentum in trade liberalization (World Bank 2015).
A. Trade B. Trade
US$„ trillions-ECA 20 MNA
15
EAR —LAC
-SAR —SSA
-World (right axis)
10
OrJIiDCOOMfffliOO 0)£J>00>cI>00000*-
coiooisooooo
t- i- T- 1- i- fj CJ CJ f-J f-J
Percent 90
■ 1990
■ 2000 2014
N W °
Source; World Development Indicators 2015.
A. EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin America and the Caribbean, MNA = Middle East and North Africa, SAR = South Asia, SSA = Sjb-Saharan Africa. Regional aggregates include high-income and advanced countries, including the European Union.
Fig. 1 Growth in world trade due to increasing trade agreements
Reached agreements in trade industry of agricultural commodities:
- TPP countries agreed not to impose import and export restrictions and taxes on all agricultural products, including remanufactured goods;
- TPP countries agreed to promote the reformation of agricultural policy by eliminating agricultural export subsidies, also by developing WTO's commitments on export state trading enterprises;
- TPP countries agreed to increase transparency in certain types of activities related to agricultural biotechnologies.
Investment agreements and financial services:
- Markets are open to foreign investors, except certain specified areas
- In terms of financial services, there is an agreement upon obligations under
| SCIENCE TIME |
bond market portfolio management.
Details of the agreement were not disclosed, during negotiations US insisted on ensuring the smooth exchange of data and special data transparency standards
Agreements in bulk (state) purchases: In terms of bulk purchases, TPP countries signed a "positive list" of agents carrying out government procurement in each member state (listed only those agents who will provide foreign companies authority to participate in tenders), which means relatively low commitments.
The TPP is primarily focused on reducing the restrictiveness of non-tariff measures (NTMs), but also incorporates provisions to cut tariffs. The use of restrictive NTMs is more prevalent in TPP advanced market economies, with a higher incidence of restrictive NTMs and lower incidence of less restrictive NTMs.
Individual member country impact. The largest gains in GDP are expected in smaller, open member economies, such as Vietnam and Malaysia (10 percent and 8 percent, respectively).12 Both countries would benefit from lower tariffs and NTMs in large export markets and at home and from stronger positions in regional supply chains through deeper integration (World Bank 2015). The impact on NAFTA members (all also members of TPP) would be small, on the order of 0.6 percent of GDP, because trade represents a modest share of GDP and because existing barriers to their trade (which is already mostly among them) are already low for the most traded commodities. Non-member impacts. Since almost half of trade is among TPP member countries, trade diversion effects could be limited (Figure 2 D). Nondiscriminatory liberalization effects (positive spillovers) account for 21 percent of the gains of members and 42 percent of estimated global gains, reflecting improved regulatory processes and the streamlining and harmonization of NTMs and investment barriers among TPP members. As a result, aggregate GDP losses to non-members could be of limited size (0.1 percent by 2030). Only in Korea, Thailand and some other Asian countries, the estimated GDP losses would exceed 0.3 percent of GDP since they would lose competitiveness in TPP members, which are currently among their most important export.
But as for today, TPP countries share in the Russian trade turnover doesn't exceed 10%, where most of the revenue comes from Japan and the USA. Also, the structure of trade turnover doesn't show substantial change of conditions for the implementation of Russian products. According to calculations, pecuniary losses of Russian economy from the formation of TPP are estimated at about $ 100 million and are concentrated in a possible decrease in the supply of products to the markets of TPP countries. So that "possible decrease" happened: according to the Federal Customs Service, the volume of Russian commodity export to TPP countries decreased by 25.2 % and the number of imported goods reduced by 36%, while the entire foreign trade turnover decreased by 34.3% in 2015. Such a strong decline is a result of "non-
1 SCIENCE TIME 1
agreement" of TPP on the issues of currency regulation. The situation with Russian economy could be better, if the negotiations on currency regulation resulted a formation of recommendation package, according to which Member States of TPP:
- will not devalue its own currency to reduce the cost of exports;
- strengthen the transparency in monetary policy;
- create a committee to discuss ways of managing the exchange rate and macroeconomic policies in general.
A. Change in GDP: TPP members
B. Change in GDP: Non-members
Percent 0.2 0.0 — -0.2 -0.4 -0.6 -0.8 -1.0
txt
¡2 2
№ b N
s I id o * I 5
ü
<D C1 Isl tD
- JK c
flj </>
o
$
c -a
<B £
0) to fi
- O
trt '
O <
V, 0) tr
o
LL
<
111
Ti
c
05
C. Change in exports: TPP members D. Change in exports: Non-members
Fig. 2 Country specific impact of TPP: GDP and trade by 2030
From that point, future positive effects for Russia (if it'll join TPP) are associated with the improvement of the investment climate in developing countries as well as better conditions for entering markets of Malaysia, Peru and Chile. Free trade zone between the EAEC and Vietnam opens a number of opportunities for Russian
»
404
I
SCIENCE TIME
I
companies. The development of industrial cooperation can stimulate the incorporation of Russian products in the value chain within the TPP. However, it might be constrained by long transitional period of liberalization of access to US markets.
Literature:
1. Trans-Pacific Partnership (TPP). Ministry of Trade and Industry, Singapore.
2. Joint Press Statement between President Barack Obama and Prime Minister Yingluck Shinawatra. The White House, Office of the Press Secretary.
3. «Trans-Pacific Partnership, a comprehensive regional economic partnership: analysis of prospects for the development and assessment of the impact on the Russian economy and foreign trade». Russian Academy of Foreign Trade, August 2014. F. 209-
24-14.
