What is the Trans-Pacific Partnership and how does it work?

The Hanjin Chongqing container ship departs the Port of Los Angeles in San Pedro, California.
Patrick T. Fallon | Bloomberg | Getty Images
The Hanjin Chongqing container ship departs the Port of Los Angeles in San Pedro, California.

The United States and 11 countries in the Pacific region announced Monday that they've reached an accord on the Trans-Pacific Partnership deal to liberalize trade among the participating countries and set common standards and cut barriers.

The pact, which would be a defining agreement for President Barack Obama, now needs to find approval in Congress. But Monday's announcement is a major step forward in the administration's long-running effort to complete the deal, part of a broader strategy to offset China's rising global economic and diplomatic influence.

But what exactly is the TPP?

The TPP is a trade and investment agreement among Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam.

Cathleen Cimino-Isaacs, a research associate at the Peterson Institute for International Economics, called it a "big deal," since the 12 countries account for a third of global trade. The U.S. already has trade agreements with most of the countries. However, the TPP would open new partnerships with countries, including the powerhouse of Japan and an emerging Vietnam.

"There hasn't been an agreement between so many countries on the trade front for quite some time," Cimino-Isaacs told CNBC.

And notably, China is not on the list.

The accord includes several policies that would make trade and investment run more smoothly between Pacific countries — key among them is lowering tariffs. But the deal would also address many nontariff barriers, such as the standards and regulations that govern some services and investments, Cimino-Isaacs said.

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Another reason why this agreement is so important, said Cimino-Isaacs, is that it covers comprehensive trade areas not already dealt with the World Trade Organization. In essence, she said, the TPP seeks to fill such "WTO plus areas" that can further "liberalize" trade among the countries.

Several committees will be established to deal with compliance, communication and penalties, she said. Labor standards could become a potential issue for countries that don't meet the same standards as others. "There will be some innovative ways to deal with compliance," she said.

As for how Americans will feel the impact of the deal, Cimino-Isaacs said that is something that will take a while to see.

"In general, gains for trade deals such as this, would be seen over the longer term, but would include benefits such as higher real wages and cheaper imports," she said.

The debate

So what are the deal's chances for passage? The politics of trade apparently depend — mostly — on how much individual regions stand to gain.

Though the accord faces a tough fight in Congress, the battle so far has largely ignored party lines. Rather, much — but not all — of congressional support for expanding Asian trade depends on the importance of those exports to state's economies, based on a CNBC state-by-state analysis of exports to Asian countries.

A majority of Americans supports new trade deals, according to a Reuters/Ipsos poll in May, despite opposition from unions and anti-trade activists. The poll, taken in the week that ended May 27, found that 56 percent of Americans support new trade deals, with just 13 percent opposed. Thirty-one percent were undecided.

Exports make up nearly 14 percent of the U.S. economy, the biggest share since the end of World War II, according to a recent report by HSBC. Thanks to its proximity and size, Canada is expected to remain the top export market for U.S. goods for the foreseeable future. But HSBC projects that by 2030, China will edge out Mexico as the second- largest U.S. trading partner. By then, Korea is expected to become the fourth largest, followed by Brazil, edging Japan out of the top five. Further down the list, China, India, Malaysia and Vietnam are seen as the fastest-growing markets for American goods, with growth of about 9 percent a year, according to HSBC.

Read More Despite failure in Congress, Pacific trade deal can happen

That's why the TPP, if completed, would be the biggest U.S. trade pact since 1994, when the North American Free Trade Agreement opened up trade between the United States, Canada and Mexico. But opponents of freer trade with Asia blame NAFTA for the wave of U.S. factory closures and job losses that have accompanied globalization in the decades since.

"TPP will be a disaster for American workers," Bernie Sanders, the Vermont senator running for president, told a union rally in April.

But the trade deal is strongly supported by businesses seeking to boost exports in the world's fastest growing markets. Much of the Senate support for trade authority came from states with the most to gain from increased trade with Asia.

Thanks to Asia's voracious thirst for Texas oil and gas, for example, the state is the top exporter in the nation, according to Census Department data. Both Republican senators — John Cornyn and presidential candidate Ted Cruz — voted to give the White House trade authority despite strong opposition to the rest of the Obama administration's agenda.

What's inside TPP?
What's inside TPP?   

The politics of trade, though, is complicated by many issues that opponents believe trump the economic benefits of increase trade. Some argue that any trade deal needs to include tough measures to thwart currency manipulation by countries seeking to gain advantage for their products but devaluing their currencies. Others want better protections for intellectual property rights or measures to improve working conditions in trade partner countries.

But much of the pushback has come from opponents who fear the deal would hurt American workers. Some of the most vocal opposition came from Sen. Barbara Boxer, D-Calif., the state with the second biggest share of U.S exports to Asia.

"The last major deal Congress approved cost us hundreds of thousands of jobs, lowered the wages of American workers and increased income inequality. And we are still dealing with the legacy of NAFTA," Boxer said.

And both New York Democrats — Charles Schumer and Kirsten Gillibrand — voted against the measure despite the state's role as the fourth-largest exporter to Asian markets.

The economic cost of opposing the trade deal, though, may be smaller than the raw numbers could indicate. Though New York and California are among the biggest exporters to Asia, those sales make up a less than 4 percent of California's overall gross domestic product and less than 2 percent in New York.

Reuters contributed to this report.