What's going on?

The Japanese minister responsible for the negotiations of the Trans-Pacific Partnership (TPP) has suggested that President Obama step up his personal involvement to ensure a deal successfully navigates the US political system and, ultimately, gets done. The TPP is a proposed trade agreement between twelve Pacific Rim countries, including Japan, the US and Australia. Negotiations have been ongoing for close to seven years and a successful conclusion to the talks is one of the Obama administration�s primary trade agenda goals.

What does this mean?

In order to complete the deal, President Obama needs what is called Trade Promotion Authority, which is a fast-track route through the US Congress for trade agreements. It is thought that there is enough Republican support in Congress to get this fast-track authority passed, but the window for passing the bill is closing as the start of the summer congressional recess is only three months away. The willingness of Republicans in Congress to give President Obama any sort of legislative achievement and opposition from anti-free trade Democrats could hurt its chances of success.

Why should I care?

If the Trans-Pacific Partnership were enacted, it would be an international trade agreement covering about 40% of global economic output. Trade between Pacific Rim countries would increase and commiserate benefits � and drawbacks � would result. Increased trade is generally good for economic growth, which is good for the stock market. Also, multinational corporations, such as most of the companies that make up the main US and Japanese stock indices, tend to benefit from the ability to move production to the lowest cost regions and sell goods into countries that will pay the most for them. For these reasons and others, a completed TPP is likely a long-term positive for the stock markets of the countries involved and especially for multinational companies that operate within the new free trade area.