INT 113 THE LEGAL IMPACT OF MULTINATIONAL TRADE AGREEMENTS
The US is now discussing two different multilateral free trade accords. For areas in Southeast
Asia and the European Union, respectively, these trade agreements include the Trans-Pacific
Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP).
Multinational trade agreements have historically had a significant legal influence on international
trade. These trade agreements will undoubtedly have a bigger influence on how business is done
globally, changing the boundaries of international law. Trade agreements will generally have a
favorable effect, despite the fact that these modifications may seem to add complication to an
already complicated international legal system. Moreover, these accords will strengthen
international connections and aid in the development of a budding global trading system.
Among the two trade agreements listed above, the TPP provides the most potential for growth
for all parties. Twelve nations from the Pacific Rim are now negotiating the TPP, a free-trade
agreement. Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New
Zealand, Peru, Singapore, the United States, and Vietnam are among the trading partners (U.S.
Trade Representative, 2014). The TPP is an initiative to create a comprehensive deal that will
lower tariffs and other trade restrictions while defining standards on a variety of topics
influencing trade and global competitiveness. More precisely, among the important issues that
negotiators seek to cover in this multilateral collaboration are intellectual property rights,
government procurement, and the role of the state in the private sector.
Each of the 12 member nations is anticipated to gain significantly economically from this trade
pact. The TPP's main partner, the United States, anticipates that by 2025, it would raise exports
by an estimated $125 per year, increase investments through lower tariffs, and create more
employment in the country (Lee, 2014). The TPP has the potential to support US Foreign Policy
in that region in addition to the economic advantages. The "Asia-Pacific Pivot" is the name given
to the Obama Administration's increased degree of engagement. This is an endeavor to moderate
U.S. economic relations with China as well as to strengthen those with TPP allies. More
American influence and presence in Asia will reassure American allies of the country's enduring
commitment at a time when China is expanding its political and military influence throughout
SouthEast Asia.
It is understandable that during the past 18 months, tensions have risen in the Asia-Pacific area.
Japan nationalized three of the five islands that make up the Senkaku/Diaoyu Islands in
September 2012. Japan has been in charge of the uninhabited islands for many years. China has
asserted multiple times that the islands fall under their jurisdiction and has contested the U.S.'s
"handover" of the territory since 1971. The area in question is close to fishing areas, shipping
lines, and speculators assert that there could be some oil deposits nearby. The action by Japan
served as the catalyst for China to conduct military drills in the area.
President Obama concisely expressed the U.S.'s commitment to Japan and its Asian allies when
visiting Japan on April 23–24 of that year. Obama stated that Article 5 of the Japan-US Security
Treaty applies to the Senkaku/Diaoyu Islands. The two nations will take action to counter the
shared threat of an assault against "territories under the administration of Japan," according to
Article 5 of the pact. This declaration undoubtedly gave Japan and its Asian neighbors more
confidence. The comment was evidence of the United States and Japan's unity in their security
relations because the United States seldom intervenes in border issues.
Ultimately, the TPP pact will account for 25.6% of global commerce and 37.5% of global GDP
(Australian Government, 2014). The Asia-Pacific Area is predicted to see the next period of
global economic expansion. Its population is anticipated to reach 175 million by 2030. In
actuality, it is anticipated that East Asian nations would overtake NAFTA and the Euro Zone to
become the greatest trade bloc in the world.
These arguments make it clear that Asia will gain a lot from the TPP. The economic advantages
are clear, but the area can be stabilized to the necessary degree by a stronger American presence
and influence. 320,000 US soldiers are already stationed in the area, and by 2020, it's anticipated
that 60 percent of the country's naval capability would be there (Pei, Pandya, Pei & Rotolo,
2013). An effort is being made to quell Chinese ambitions in the area by stepping up U.S.
presence. In either scenario, Asia-Pacific is positioned for success, and the outlook is generally
favorable. The TPP will lead to economic expansion and better relations with the United States.
Of course, there are advantages for American businesses as well. For instance, connections
between the United States and Malaysia are likely to improve given recent and anticipated
growth. One of Malaysia's largest importers is the United States, whose exports to Malaysia hit a
record high of more than $18 billion in 2010. In addition to a variety of agricultural products, the
top three U.S. exports in 2012 were equipment ($7.2 billion), airplanes ($1.2 billion), and iron
and steel ($364 million) (Office of U.S. Trade Representative). The majority of the machinery
exports are the result of Caterpillar, a huge American company with operations across Asia.
Also, it is anticipated that the TPP would result in higher sales for automakers. Just 1% of all
new passenger vehicles registered in Japan last year were manufactured by Ford and GM
(Florcruz, 2014). So, these two businesses would have a great potential to boost their sales
thanks to the TPP.
