Is the Trans-Pacific Partnership a ‘Natural’ Trade Bloc?

The Trans-Pacific Partnership began as a free trade agreement between Brunei Darussalam, Chile, New Zealand and Singapore which was enacted in 2004. Since that time, additional countries have entered into formal negotiations to expand the trade bloc, including the USA, Mexico, Peru, Australia, Malaysia, Canada, Vietnam and Japan. This paper seeks to determine whether these countries represent a ‘natural’ trade partnership by comparing and contrasting the trade complementarity index between each pair of countries within the partnership and those other countries counted in the APEC 21 countries plus India, which is a member of the RCEP trade bloc.Previous studies have concluded that ‘natural’ trade partnerships are largely determined by geographic regions, which would suggest that this particular agreement would divert, not create trade, as it spans across the Pacific Ocean, and across the Western and Eastern Hemispheres as well as the Northern and Southern Hemispheres. However, this paper hypothesizes that the Heckscher – Ohlin trade model would predict that this agreement is a ‘natural’ trade bloc, as this model can be applied to trade between countries at different levels of economic development, which are present amongst the signed and negotiating countries in the TPP