This is the first post in a series of three that examine the Trans-Pacific Partnership and the Pacific Alliance, and what they mean for each other and the growing Pacific region economy.

The first decade of the 21st century was dominated by wars in the Middle East and global financial crises. The second decade, however, promises to be shaped by the growing economic might emanating from the Pacific region. Two separate initiatives seek to capitalize on and strengthen this new dynamic: the Trans-Pacific Partnership (TPP) and the Pacific Alliance (PA). Both are ambitious plans that endeavor to boost economic development and foster political cooperation through more robust trade and investment among their respective members. But are these two agreements compatible? And what will their success mean for the region?

The Trans-Pacific Partnership started as a 2006 agreement between Brunei, Chile, New Zealand, and Singapore that was then called the Trans-Pacific Strategic Economic Partnership. In 2008, Australia, Peru, the United States, and Vietnam joined the negotiations, with Malaysia following in 2010, and Canada and Mexico climbing onboard in 2012. Recently, Thailand and Japan have announced plans to join the negotiations. Collectively, the 11 current TPP countries account for about 40% of global GDP and, according to Brooking’s Josh Meltzer, 8.6% of global trade.

The TPP’s economic heft matches its ambitious agenda. The members envisage a comprehensive agreement that would remove tariff and non-tariff barriers to trade in all areas of goods and services trade, including perennial trouble spots like agriculture and textiles. They also hope to strike a deal on rules governing foreign direct investment, intellectual property rights, government procurement, state-owned enterprises (SOEs), and other multilateral economic concerns. Such an agreement would be significantly more advanced than any economic accord in which TPP members currently participate.

This is a heavy undertaking, but 16 negotiating rounds have already been concluded and TPP leaders have set the October 2013 ASEAN summit as the target for completing talks. Because TPP members already enjoy extensive FTA coverage with each other, US$1.5 trillion of US$1.9 trillion of trade is covered by existing FTAs, market access issues will not be insurmountable. This does not mean, however, that certain areas don’t present tough challenges – New Zealand dairy access to the U.S., Singaporean and Vietnamese SOEs, textile rules of origin, FDI in Mexico’s energy sector, just to name a few. Nevertheless, the progress made to date is encouraging and it is likely that negotiators will be successful in striking a comprehensive economic bargain that integrates these Pacific region economies.

The TPP is touted as a “21st-Century agreement,” because members want it to be a model for future economic pacts that go beyond trade and investment. The rules that TPP negotiators agree on will impact economic decisions in each one of the member countries. New, higher standards on intellectual property, SOEs, regulatory harmonization, competition, and various commercial areas like energy and telecommunications will shape the future of participating economies and offer a global model for the next generation of FTAs. If successful, the TPP will herald a new stage in global economic relations.

The idea of striking such a comprehensive agreement among such distinct and geographically divided countries is only now feasible thanks to the ascent of emerging economies in East Asia and Latin America. A broadening in the balance of economic power from Europe and North America toward the east and south is evident. In fact, the TPP is not the only effort at integrating the region. On the next post, we’ll take a look at another regional initiative – the South American-led Pacific Alliance. We’ll review it’s history, goals, and prospects for success. Then, in our third installment, we’ll examine how the Trans-Pacific Partnership and the Pacific Alliance will impact one another, and what they mean for the region as a whole.