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Part 7 Cases
The Trans Pacific Partnership (TPP) Is Dead: Long Live the CPTPP!
On February 4, 2016, ministers from 12 governments signed off on the Trans Pacific Partnership (TPP), a free trade deal among 12 countries, including the United States, Japan, Australia, New Zealand, Chile, Canada, Mexico, and Vietnam. China was not part of the deal. Together, these countries accounted for 36 percent of the world’s GDP and 26 percent of world trade. In the United
States, critics of the deal were quick to register their opposition. Donald Trump, now president of the United States, said that the “TPP is a terrible deal.” Bernie Sanders, one of the leading Democratic contenders, called it “disastrous” and “a victory for Wall Street and other big corporations.” Many other politicians, wary of the fact that 2016 was a general election year in the United States, were also quick to criticize the deal. In contrast, the administration of Barack Obama heralded the TPP as a historic deal of major importance. Editorials in influential publications such as The Wall Street Journal and The Economist urged the U.S. Congress to ratify the deal.
The TPP planned to eliminate or reduce about 18,000 tariffs, taxes, and nontariff barriers such as quotas on trade between and among the member countries. By expanding market access and lowering prices for consumers, economists claimed that the deal would boost economic Shuttestock/creativetan growth rates among TPP countries and add about $285 billion to global GDP by
2025. Because the United States already has very low tariff barriers, most of the tariff reductions would occur in other countries. U.S. agriculture would have been a big beneficiary.
The TPP would eliminate import tariffs as high as 40 percent on U.S. poultry products and fruit and 35 percent on soybeans—all products where the United States has a comparative advantage in production. Cargill Inc., a giant U.S. grain exporter and meat producer, urged lawmakers to support the pact. A number of large, efficient U.S. manufacturers also came out in support of the deal,
which would eliminate import tariffs as high as 59 percent on U.S. machinery exports to TPP countries. Boeing, the country’s largest exporter, said that the deal would help it compete overseas, where it gets 70 percent of its revenue. Several technology companies, including Intel, voiced support for the deal, pointing out that it would eliminate import taxes as high as 35 percent on the sale
of information and communication technology to some other TPP countries.
Some U.S. companies urged Congress to vote against the deal. Ford opposed the deal because it would phase out a 2.5 percent tariff on imports of Japanese cars into the United States and a 25 percent tariff on imports of light trucks—even though under the agreement, those tariffs would be phased down over 30 years. Labor unions opposed the deal, arguing that it would result in further losses of U.S. manufacturing jobs and lead to lower wages. The tobacco company Philip Morris opposed the deal because it would prevent tobacco companies from suing foreign governments over antismoking measures that restrict tobacco companies from using their logos and brands to market tobacco products. Several big drug companies also opposed the deal because it only protected new biotechnology products from generic competition for 5 years, rather than the 12 years they had before.
Data supporting these
various claims and counterclaims were offered by a
number of independent
studies, including those
from the World Bank, the
Institute of International
Economics (IIE), and Tufts
University. Both the World
Bank and the IIE concluded that by creating
more overseas demand for
American goods and services, by 2030 the TPP would raise U.S. wages slightly
above what they would have been without the deal. The
IIE study estimated that the TPP would increase annual
U.S. exports by $357 billion, or 9 percent, by 2030. The
IIE study also calculated that overall, there would be no job
losses in the United States. Although some sectors would
see job losses, the IIE suggested that these would be offset
by job gains elsewhere. The study from Tufts University
was the most pessimistic, estimating that the deal would
result in the loss of 450,000 jobs in the United States over
10 years. To put this in context, between 2010 and 2015, the
U.S. economy created 13 million new jobs, so the worstcase estimate of losses amounted to no more than two
months of job growth during the 2010–2015 period.
Just three days into his administration, President
Donald Trump withdrew the United States from the TPP,
calling it a “ridiculous trade deal.” Many predicted that
without the United States, the deal would quickly collapse—
but that did not happen. Instead, led by Japan, the
Cases
remaining 11 nations pressed ahead with a revamped
deal. Renamed the Comprehensive and Progressive Trans
Pacific Partnership (CPTPP)—or TPP for short—the deal
signed in Chile on March 8, 2018, will dramatically lower
tariffs and other trade barriers between the 11 nations.
The revised agreement, which still excludes China, covers
500 million people in nations that produce more than
13 percent of global gross domestic product.
According to David Parker, New Zealand’s Trade
Minister: “I think this agreement serves as an antidote to
the protectionist trend we’re seeing in the world. I think
the CPTPP is more important than it was a year ago. This
rise of protectionism is worrisome. . . . Countries that are
in the agreement have got a different route where they can
club together in a friendly manner, and facilitate the growth
of their own economies for the benefit of their people.”2
Although the United States is no longer party to this
deal, several leaders of the signatory nations have indicated that they would welcome the U.S. back into the
fold, although this seems unlikely to happen so long as
Donald Trump is president. There are also indications
that a post-Brexit Britain might seek to join the CPTPP.
Sources
Caitlin McGee, “Controversial TPP Pact Signed amid New
Zealand Protests,” Aljazeera, February 4, 2016; Catherine Ho,
2
”The New TPP Trade Deal: Going Ahead without Trump.” Al Jazeera
News, March 24, 2018. https://www.aljazeera.com/programmes/
talktojazeera/2018/03/tpp-trade-deal-trump-180323073314104.html.
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“Fact Checking the Campaigns for and against the TPP Trade
Deal,” The Washington Post, February 11, 2016; Tripp Mickle and
Theo Francis, “Trade Pact Sealed,” The Wall Street Journal,
October 6, 2015; Peter Petri, and Michael Plummer, “The
Economic Effects of the Trans Pacific Partnership: New
Estimates,” Peterson Institute for International Economics, working paper 16-2, January 1, 2016; “China Picks Up the U.S. Trade
Fumble,” The Wall Street Journal, November 17, 2016; “The New
TPP Trade Deal: Going Ahead without Trump,” Aljazeera News,
March 24, 2018; and “Japan Approves Bill to Ratify Successor to
TPP Free Trade Pact,” Japan Times, March 24, 2018.
Case Discussion Questions
1. What were the proposed benefits of the TPP?
2. What were the potential drawbacks of the U.S.
entering the TPP? What would be the drawbacks
to other nations?
3. Why do you think Donald Trump was so adamantly
opposed to the TPP?
4. Why do you think the 11 remaining signatories went
ahead with a revised deal after the United States
withdrew?
5. Is the CPTTP a threat to American economic
interests?
6. What is the opportunity cost to the United States
of withdrawing from the TPP?
7. If you were in a position to advise Donald Trump
regarding future American relations with the
CPTPP, what would you tell him?
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Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Introduction to International Business (MGT 321)
Due Date: 30/03/2024 @ 23:59
Course Name: Introduction to International
Business
Course Code: MGT-321
Student’s Name:
Semester: Second
CRN:
Student’s ID Number:
Academic Year:2023-24-2nd
For Instructor’s Use only
Instructor’s Name: Njoud AlJohani
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
Knowledge:
1.1: Identify and evaluate the significant trade agreements affecting global commerce
Skills:
2.1: Analyse the effects of culture, politics and economic systems in the context of
international business
Values:
3.1: Carry out effective self-evaluation through discussing economic systems in the
international business context
Case study
Please read Case 6: “The Trans Pacific Partnership (TPP) Is Dead: Long Live the
CPTPP” available in your book (International business: Competing in the global
marketplace (13th ed.), at page no.634, and answer the following questions:
Case study Question(s):
1. Explain the proposed benefits of the TPP.
(Marks: 2.5)
2. What were the potential drawbacks of the U.S. entering the TPP? What would be
the drawbacks to other nations? Discuss.
(Marks: 2.5)
3. Is the CPTTP a threat to American economic interests? Discuss.
(Marks: 2.5)
4. Why do you think the 11 remaining signatories went ahead with a revised deal
after the United States withdrew? Give logic in support of your answer. (Marks:
2.5)
Important Notes:
• This is an individual assignment.
• All references must be cited using APA format. This includes both in-text
citations and the reference list at the end of the document.
• Originality, Similarity and Plagiarism Check: Your work must be original. All
papers will be submitted through SafeAssign software to check for similarity and
plagiarism. Any instance of academic dishonesty will result in a grade of zero for
the assignment. No exceptions and no second chances!
Answers
1. Answer2. Answer3. Answer4. Answer-