The Trans-Pacific Partnership’s Role in International Trade and Bargaining Power
Sources:
http://indianexpress.com/article/opinion/editorials/outside-the-club/
http://www.nytimes.com/2015/10/07/world/asia/trans-pacific-partnership-china-australia.html?_r=0
The Trans-Pacific Partnership (TPP) will drastically alter international trade forever. This pact, signed by 12 countries (orange on the diagram below)—United States, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—allows for more accessible and cheaper trade routes, while also establishing new standards for labor and environmental law between these nations. Even more shocking is that the countries included in the TPP account for nearly 40 percent of the global economy. The final hurdle before this revolutionary trade agreement goes into effect is the ratification process required for it by the lawmakers of all 12 nations. Once that is accomplished, there will be a definitive shift in negotiation power of the TPP nations as they form an exclusive and powerful trade club that stimulates their respective economies at the expense of other countries.
To see these implications, we must view the trade routes between all nations as a large network. Currently, the bargaining and negotiation power of large Asian countries like India and China are relatively strong in the Asian region since are two of the strongest economies in that area. However, with the TPP in place with both India and China not a part, the bargaining power of the two most populous countries in the world has markedly dropped. If the countries (nodes) were assigned values that relate to their negotiation power, the values assigned to India and China would be lower with the TPP in place while the values of its TPP neighbors (Japan, Vietnam, Malaysia, Singapore, etc.) would rise. The Indian Express reports that trade totaling $2.7 billion would be diverted away from India, rising to $3.8 billion if South Korea joins the TPP. Clearly, as more neighboring countries of India join the TPP, its international negotiating power decreases and its ties (representing trade agreements) with surrounding regions become weaker.
While India is a specific example, this same effect holds true for all other nations not a part of the TPP as they realize a decline in their international bargaining status. With the TPP skewing international trade in favor of a select few, it is clear to see why so many nations and individuals oppose the enactment of the plan. They want to ensure that their countries do have weakened trade ties and lower negotiating power due to their exclusion from the elite trade club of the TPP.