How mega-regional trade deals are reshaping global trade

1. What are mega-regional
trade agreements?

2. The Upshot…
 Mega-regionals are deep integration partnerships between
countries or regions with a major share of world trade and foreign
direct investment (FDI)
 Beyond simply increasing trade links the deals aim to improve
regulatory compatibility and provide a rules-based framework for
ironing out differences in investment and business climates
 The two most significant mega-regional trade agreements
currently under discussion are the Trans-Pacific Partnership (TPP)
and the Trans-Atlantic Trade and Investment Partnership (TTIP)
 Both agreements would affect at least a quarter of world trade in
goods and services (TPP: 26.3%; TTIP: 43.6%) and of global FDI

3. Who’s involved

4.  Originally a four-way free trade agreement between Brunei, Chile, New
Zealand and Singapore, the TPP now encompasses eight additional
countries: the US, Australia, Canada, Japan, Malaysia, Mexico, Peru and
Vietnam. South Korea might also join the group
Trans-Pacific Partnership (TPP)

5.  The TTIP negotiations, launched in June 2013, aim for a far-
reaching trade agreement between the US and the EU. It includes
plans to remove trade barriers as well as improve alignment,
compatibility and possible harmonization of regulations and
standards
 Research suggests it could boost the EU’s economy by €120 billion
and the US economy by €90 billion annually
Trans-Atlantic Trade and Investment
Partnership (TTIP)

6. “[Mega-regionals] provide a means for facilitating
existing patterns of commerce and building new ones.
They enable businesses and governments to respond
proactively to competitive challenges and create higher
common denominator trade agreements. And if designed
with open architecture, they hold open the option of
building out eventually to a healthier multilateral
outcome.”
- Susan Schwab and Karan Bhatia
The optimisits’ case…

7. …but risks remain
“If regional trade agreements and their power asymmetries
take over, there is a risk that the World Trade Organisation
would go down in future history books as a 70-year
experiment where world trade was rules-based instead of
power-based. It would, at least for a few more years, be a
world where the world’s rich nations write the new rules-of-
the-road in settings marked by vast power asymmetries. This
trend should worry all world leaders.”
- Richard Baldwin

8. { Mega-regional Trade Agreements - Game-Changers
or Costly Distractions for the World Trading System?
Read the full report here:
http://www3.weforum.org/docs/GAC/2014/WEF_GAC_TradeFDI_Mega
RegionalTradeAgreements_Report_2014.pdf