Trade Implications of the Trans-Pacific Partnership for ASEAN and Other Asian Countries

Abstract

The Trans-Pacific Partnership (TPP) aspires to become a state-of-the-art trade agreement linking 12 countries on both sides of the Pacific. In addition to establishing a free trade agreement (FTA) among these countries, negotiators are pursuing a long list of other issues, both trade-related and non-trade related. This paper examines the likely effects of the TPP on trade alone, taking into account the fact that all of the potential members of the TPP are already participants in other FTAs. Using information from the World Trade Organization (WTO) on the existence of these FTAs plus data on the identities of countries’ major trading partners for both exports and imports, I discuss the likely effects on a list of countries in terms of trade creation, trade diversion, preference erosion, and “trade reversion”—the reversal of trade diversion that has already occurred due to existing FTAs. The list of countries includes all of the members of the TPP as well as of the Association of Southeast Asian Nations (ASEAN). In addition it includes 10 additional Asian economies that are not part of either.