After five years of negotiations, the United States and Japan on Monday sealed the Trans-Pacific Partnership (TPP) with 10 other nations.
The free trade agreement ties together 40 percent of the global economy and could become the largest regional accord in history.
Billed by US President Barack Obama as the framework for “21st-century trade issues,” the TPP was the subject of last-minute disputes between the US and Australia over regulations for the pharmaceutical industry.
The accord affords the US a new framework to act as a counterweight to the influence of China in the region
The goal of the wide-reaching treaty is to phase out tariffs and establish common rules for the 12 economies involved, whose main members are the US and Japan.
The agreement envisions the creation of common standards for trade, investment, information exchange and intellectual property.
The other countries involved in the negotiations are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The deadline had originally been October 2, but the signing was postponed due to disagreement over rules for pharmaceutical products.
The TPP project, which Obama pushed forward from the beginning of his first term in office – together with four other countries – could cement his economy legacy.
The new accord affords the US a new framework to act as a counterweight to the influence of the Chinese economy in the region. Even though Beijing was not involved in the talks, it will be affected by the consequences of the deal.
The 12 TPP nations have agreed on new regulations for sectors ranging from the pharmaceutical industry to the automobile sector. The agreement also includes plans for new trade tariffs, the opening of the markets to exports, unified rules on intellectual property with regard to data handled by large corporations, and protection periods for drug manufacturers’ products.
This last item held up weekend negotiations, pushing them beyond the Sunday deadline. The US wanted drug companies to have their medicines protected for 12 years before other firms could use the same formulas, in order to bring the TPP in line with existing US legislation. But other countries such as Australia were asking for a maximum of five to eight years’ protection, out of fear that a delay in innovation could increase costs and prevent the development of generic drugs.
The new free trade agreement for the Pacific Rim still needs to be ratified by US Congress, which has been immersed in an unpredictable situation following the resignation of House Speaker John Boehner. The country is also in the middle of the 2016 presidential race, and the TPP could become a new source of friction among the candidates.
English version by Susana Urra.