Looking Abroad, Nicaragua Explores TPP Membership
Per the initiative of President Daniel Ortega, Nicaragua expressed its interest in joining the Trans-Pacific Partnership (TPP) on March 1 in a public announcement by the country’s first lady, Rosario Murillo, as reported by La Prensa. 12 countries, which together represent 40% of global production, negotiated the TPP in 2015. The Nicaraguan government also announced that it would initiate dialogue between different domestic sectors to start analyzing the potential benefits of the TPP to Nicaragua.
The government, which stated its goal of a 5% growth rate for the next five years earlier in the month, has made its stance on the TPP quite clear. According to the government’s official blog El 19 Digital, the Minister for Promotion, Industry and Trade (MIFIC) stated that joining a trade agreement as influential as the TPP would generate greater employment and give an opportunity for national products to enter new international markets. In addition, he reiterated the important role that foreign direct investment plays in developing countries and the necessity to open his country to foreign capital.
On his part, President of the Central Bank Ovidio Reyes emphasized consumer benefits due to lower tariffs and prices. Further still, he highlighted the TPP’s stipulations on labor rights, intellectual property, and environmental standards, which he opined were beneficial to the Nicaraguan economy. Furthermore, Nicaragua’s private sector has declared its support for the president’s initiative via the Superior Council of the Private Enterprise (COSEP).
Although Nicaragua’s largest labor union, the National Front for Labor (FNT), has yet to confirm its official position, it has agreed to participate in the dialogue. Each association will meet during the following weeks to debate the advantages the TPP could bring to their particular industry. The FNT’s Secretary-General stated, nonetheless, that they support any policy that will bring more employment, more education, and an overall better standard of living for Nicaraguan workers.
However, there are concerns that not all economic sectors stand to benefit if Nicaragua joins the TPP. Notably, the textile industry would face competition from countries with lower production costs. The risk of trade diversion would be reduced, nonetheless, if all countries faced similar tariff schedules and export conditions.
Even if Nicaragua ultimately decides to join the TPP, which awaits ratification, the original member countries would have to approve Nicaragua’s admission to the agreement. While the ambitious trade agreement has stirred up a fierce debate all across the globe, and hopeful developing countries like Nicaragua look to it as a potential source of progress, the future of the TPP remains uncertain.