IRONICALLY, HIS ONLY LEGACY:

A comprehensive Asia-Pacific free trade deal is still on track to cross the finish line by year's end despite a daunting list of unresolved issues and U.S. President Barack Obama's absence from a regional summit that is ironing out differences on the pact. [...]

1. Why is it important?

If completed, the TPP would cover two-fifths of the world economy and one-third of interracial trade. It aims not just to eradicate tariffs on goods and services, but would cover labor and the environment, intellectual property, government procurement and state-owned enterprises.

Burgeoning global supply chains have been a significant boost to world trade in recent decades, strengthening the case for free trade zones. Increased internationalization and verticalization of production means that final goods now have a higher degree of foreign content. The International Monetary Fund reckons that the foreign content share in gross exports has, in effect, almost doubled in 40 years, according to Gustavo Reis, a senior international economist at BofA Merrill Lynch.

Moreover, the higher foreign content in final goods increases trade in intermediate goods. Trade in intermediate goods now accounts for more than two-thirds of global trade, blurring the boundaries of national trade interests by making international trade more intertwined. This expanded global supply network is one reason why there has been limited use of traditional protectionist measures in the aftermath of the global financial crisis.

Both the U.S. and the Japanese administrations have embraced the project and consider it significant. "The TPP looks like a rare breed of an ambitious multilateral project with political backbone," Reis said.

2. How involved is the U.S.?

The TPP is one of the main pillars of the Obama administration's ambitious second-term trade agenda and is central to its plans for boosting America's presence in Asia. In effect, the U.S. is leading the negotiations.

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