The Political Economy of a “21st Century” Trade Agreement: The Trans-Pacific Partnership

John Ravenhill is the Director of the Balsillie School of International Affairs and Professor of Political Science at the University of Waterloo.

Abstract: The Trans-Pacific Partnership (TPP) is the first of the ‘Mega FTAs’ to be signed and, if ratified, will create the world’s largest preferential trade area. The negotiators of the TPP aspired to create ‘a next generation transformative agreement’ that would address a new trade agenda focused on regulatory coherence and business facilitation. The expectation was that this agenda would generate a 21^st Century trade politics that would be less contentious, at least among business actors, than previous trade negotiations that were dominated by market access questions. Studies of another Mega FTA under negotiation, the Transatlantic Trade and Investment Partnership (TTIP), which has a similar agenda to the TPP, found unified business support for the agreement domestically and the emergence of transnational business coalitions in support of the agreement. The domestic and international politics of the TPP differed significantly from these configurations, however. This paper explores the reasons for these differences, linking them to recent theorizing on trade politics. In particular, the TPP experience supports arguments that global value chains (GVCs) that involve vertical intra-industry trade introduce ‘traditional’ distributional issues that will divide business interests domestically—and, in the case of GVCs organized on different geographical bases, internationally as well. Other divisions among business actors—both domestically and across countries—over the sharing of existing rents and of new rents generated by regulatory harmonization also figured prominently in the TPP negotiations.