Research report

Potential macroeconomic implications of the Trans-Pacific Partnership

7 Jan 2016

On October 4, 2015, 12 Pacific Rim countries concluded negotiations on the Trans-Pacific Partnership. If ratified by all, the agreement could raise GDP in member countries by an average of 1.1 percent by 2030. It could also increase member countries’ trade by 11 percent by 2030, and represent a boost to regional trade growth, which had slowed to about 5 percent, on average, during 2010-14 from about 10 percent during 1990 -07. To the extent that the benefits of reforms have positive spillovers for the rest of the world, the detrimental effects of the agreement due to trade diversion and preference erosion on non-members, would be limited. The global significance of the agreement depends on whether it gains broader international traction.


Over the last quarter century, trade flows of goods and services have increased rapidly. The value of world trade has more than quintupled, from $8.7 trillion in 1990, to more than $46 trillion in 2014. The relative importance of trade has increased too, from 39 percent of world GDP in 1990, to 60 percent in 2014. That said, global trade growth has slowed to about 4 percent per year since the crisis from about 7 percent, on average, during 1990-07. This slowdown in world trade reflects weak global investment growth, maturing global supply chains, and slowing momentum in trade liberalization (World Bank 2015).

On October 4, 2015, 12 Pacific Rim countries concluded negotiations on the Trans-Pacific Partnership (TPP), the largest, most diverse and potentially most comprehensive regional trade agreement yet. The 12 member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. While a detailed assessment will take time, this analysis and the assumptions used in its modelling exercise are based on a preliminary assessment of the agreement published in early November 2015.

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