Trans-Pacific Partnership (TPP): What is it all about?

Donald Trump has announced he intends to withdraw America from the Trans-Pacific Partnership (TPP) on the first day of his presidency.

The president's decision to quit the decade-long project appears to have scuppered the hopes of many nations for a new, ground-breaking free trade deal across the Pacific.

It has caused a stir among relevant Pacific Rim countries, such as Australia, Japan and New Zealand, which make up 40% of the world's economy.

But what exactly is TPP and what does America's impending exit now mean?

  • What exactly is TPP?

Barack Obama attended a TPP leaders meeting on Saturday Credit: Reuters

The Trans-Pacific Partnership is a proposed agreement among 12 Pacific Rim countries aimed at deepening economic ties.

It is designed to cut tariffs while simultaneously creating trade to boost growth.

The countries involved are: the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.

China is the notable absentee.

Following seven years of protracted negotiations, a finalised proposal was signed in February - however the treaty is yet to be ratified before it can enter force.

The TPP could create a new single market - roughly 40% of the world economy - similar to that in the European Union.

  • What are the pros of TPP?

TPP aims to boost economic growth. Credit: Reuters

The supporters of TPP hope the agreement would help promote economic growth.

Advocates argue TPP would support the creation of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories' countries; and promote transparency, good governance, and enhanced labour and environmental protections.

Supporters of TPP talk of "greater access" to goods and services.

Geo-politically, it is believed a deal would bring China's neighbours closer to the US and reduce their dependence on Chinese trade.

  • So what are the arguments against it?

Critics argue TPP devastates smaller businesses Credit: Reuters

Critics claim that free-trade agreements such as TPP contribute to income inequality in high-wage countries by promoting cheaper goods from low-wage nations.

Most income gains would, some argue, go to those already earning high wages.

Former Democrat presidential hopeful Bernie Sanders has argued that trade agreements like TPP "have ended up devastating working families and enriching large corporations".

  • So what has Trump decided to do?

Trump, an experienced businessman himself, previously announced that he would withdraw the US from the TPP deal on his first day as president.

The billionaire, who promises to bring back jobs to the US, has previously described it as "a potential disaster for our country".

The Republican has announced the US will instead create "bilateral trade deals that bring jobs and industry back onto American shores".

Trump also said he would direct the Labour Department to investigate abuses of visa programmes "that undercut the American worker" and promised to issue a rule that for every new regulation, two old ones must be eliminated.

He has also promised to cancel some of the "job killing restrictions" on energy production, including shale and "clean coal", which would create "millions of high paying jobs".

  • How could this impact the UK and EU?

Britain needs to negotiate new trade deals Credit: PA

TPP would, in theory, make US businesses more competitive.

This could mean lower prices for American consumers and businesses, which would indirectly affect UK and EU businesses, depending on the economic climate.

Under European law, the UK was not previously able to strike trade deals with other countries.

But now that Britain has left the EU, it needs to forge new trade deals - and TPP or no TPP will arguably affect those deals and negotiations both positively and negatively.

  • What have world leaders' reactions been to Trump's move?

Japan's Prime Minister Shinzo Abe said that TPP would be "meaningless" without US participation.

Australia's Prime Minister Malcolm Turnbull said that other TPP countries believed the deal was an "important strategic commitment".

"It's very clear from Australia's point of view, that getting access, greater access for Australian exports - whether it's goods or services - to those big markets, is manifestly in our interest", he said.

New Zealand Prime Minister John Key maintained that there remained alternatives.

"The United States isn't an island. It can't just sit there and say it's not going to trade with the rest of the world," Key said.

"At some point they're going to have to give some consideration to that. But naturally, we're a bit disappointed".