1012 GMT June 25, 2019
The pact, known as the Trans-Pacific Partnership, aims to encourage trade between the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Together, the countries account for 40 percent of world economic output. Trade unions and other critics say the deal will expose workers to more foreign competition and cost jobs, AP reported.
For President Barack Obama, sealing the trade deal is a major victory on a centerpiece of his international agenda. It is also a welcome boost for Japan's Prime Minister Shinzo Abe and his efforts to jolt one of the world's biggest economies out of two decades of stagnation.
"This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products," Obama said in a statement. "It includes the strongest commitments on labor and the environment of any trade agreement in history, and those commitments are enforceable."
The deal has been negotiated for a decade and has faced opposition in many countries. It was unpopular with protected industries such as textiles, agriculture and autos in Japan, the United States and other nations. Medical groups were concerned by a US push to extend the patents of drugs that would limit access to life-saving medicines in poor countries. Opponents also feared that procedures for resolving disputes between corporations and governments could undermine the sovereignty of states.
Business risk consultancy Eurasia Group said it expects every country to eventually approve the deal despite it being contentious. It said Canada's upcoming election is a key hurdle as Canadian participation will be in doubt if Prime Minister Stephen Harper is not re-elected.
"The deal is politically charged in many of the participating countries, but now that it is struck, we expect it to be ratified across the board," said Eurasia Group's Sean West in a report.
Alan Bollard, executive director of the 21-nation Asia-Pacific Economic Cooperation group, said the trade agreement can still go into effect even if parliaments in some countries refused to ratify it. Countries that were not part of the negotiations, such as South Korea, might also join up later.
Eurasia forecasts that the pact will add $285 billion to the combined gross domestic product of the 12 countries by 2025 and increase exports within the bloc by $440 billion. In percentage terms, Vietnam gets the biggest boost in GDP while in absolute terms Japan has the most to gain, it said. China, which is not part of the agreement, would lose some trade opportunities.