A fresh wind from the Pacific
May 12, 2011 / Bruce Stokes
European Voice
With a U.S. Congressional vote on trade deals with South Korea, Colombia, and Panama now almost inevitable, the administration of U.S. President Barack Obama is rapidly making a priority of the Trans-Pacific Partnership (TPP) agreement, a free-trade agreement involving the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.
The White House now sees this as Obama’s defining trade legacy. But the TPP also has important implications for Europe as it contemplates a freetrade agreement with Japan and wrestles with China on a range of trade issues.
For Europeans, a key element in the negotiations will be the rule of origin.
To qualify for the benefits of trade agreements, some portion of a good needs to be produced in one of the countries party to the accord. If Washington hopes to use the TPP to boost domestic production and exports, it will need that portion to be high. And the rigorous rules that the EU negotiated with Seoul for the EU Korea free-trade agreement will likely be a model. A hig rule of origin would also encourage German car-makers, to cite one example, to produce in the United States for the TPP market. A low rule of origin would create new competition for those manufacturers in the U.S. market.
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