Trump’s pullout of TPP opens way for China

Pres­i­dent-elect on YouTube an­nounces he’ll with­draw from TPP

Kuwait Times - - BUSINESS -

An Asia-Pa­cific trade deal stands al­most no chance of work­ing now that US Pres­i­dent-elect Don­ald Trump has pulled the plug on it, pro­po­nents of the pact said yes­ter­day, open­ing the way for China to as­sume the lead­er­ship man­tle on trade. Ja­pan and Aus­tralia ex­pressed their com­mit­ment to the pact yes­ter­day, hours af­ter Trump vowed to with­draw from the 12-na­tion Trans-Pa­cific Part­ner­ship on his first day in of­fice, call­ing the deal “a po­ten­tial dis­as­ter for our coun­try.”

Trump’s dec­la­ra­tion ap­peared to snuff out any hopes for the deal, a sig­na­ture trade ini­tia­tive of Pres­i­dent Barack Obama, five years in the mak­ing and meant to cover 40 per­cent of the world econ­omy. The TPP, which aims to cut trade bar­ri­ers in some of Asia’s fastest-grow­ing economies and stretch from Canada to Viet­nam, can’t take ef­fect with­out the United States. It re­quires the rat­i­fi­ca­tion of at least six coun­tries ac­count­ing for 85 per­cent of the com­bined gross do­mes­tic prod­uct of the mem­ber na­tions.

Ja­panese Prime Min­is­ter Shinzo Abe said “the TPP would be mean­ing­less with­out the United States,” even as par­lia­ment con­tin­ued de­bat­ing rat­i­fi­ca­tion and his govern­ment vowed to lobby other mem­bers to ap­prove it.

Yet even with­out US rat­i­fi­ca­tion, the TPP won’t just die, a se­nior Ja­panese of­fi­cial said. “It just con­tin­ues in a state of not be­ing in ef­fect,” said Shin­pei Sasaki of the Cab­i­net Of­fice’s TPP head­quar­ters. “In the fu­ture if the United States takes the pro­ce­dures and it passes Congress, that would sat­isfy the pro­vi­sions and the TPP would go into ef­fect.”

Other mem­bers of the 12-na­tion group­ing could con­ceiv­ably work around a US with­drawal. Aus­tralian Trade Min­is­ter Steven Ciobo told re­porters in Can­berra coun­tries could push ahead with the TPP with­out the United States by amend­ing the agree­ment and pos­si­bly adding new mem­bers. “We could look at, for ex­am­ple, if China or In­done­sia or an­other coun­try wanted to join, say­ing, ‘Yes, we open the door for them sign­ing up to the agree­ment as well.’” But Sin­ga­pore’s Prime Min­is­ter Lee Hsien Loong said re­open­ing ne­go­ti­a­tions wouldn’t be easy. “If you sign a fresh agree­ment, you have to go through it again. We haven’t crossed that bridge yet. We’ll cross it if and when we come to that.”

China’s ri­val pact

China has pushed its own ver­sion of an Asia-Pa­cific trade pact, called the Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship (RCEP), which no­tably ex­cludes the United States. It is a more tra­di­tional trade agree­ment, in­volv­ing cut­ting tar­iffs rather than open­ing up economies and set­ting labour and en­vi­ron­men­tal stan­dards as TPP would. The RCEP was a fo­cus of at­ten­tion at the Asia Pa­cific Eco­nomic Co­op­er­a­tion sum­mit in Peru over the week­end.

Tan Jian, a se­nior mem­ber of China’s del­e­ga­tion at the sum­mit, said more coun­tries are now seek­ing to join its 16-mem­ber bloc, in­clud­ing Peru and Chile, and cur­rent mem­bers want to reach a deal as soon as pos­si­ble to counter ris­ing pro­tec­tion­ism. China’s for­eign min­istry said yes­ter­day Bei­jing has an “open at­ti­tude” to­ward any ar­range­ments that pro­mote free trade in the re­gion as long they don’t be­come “frag­mented and politi­cized”.

For­eign min­istry spokesman Geng Shuang said the RCEP was an ini­tia­tive led by the 10-mem­ber Association of South­east Asian Na­tions (ASEAN), which China has been pro­mot­ing. “We are will­ing to keep push­ing the (RCEP) talks process with all sides to achieve pos­i­tive progress at an early date,” he said. Viet­nam last week shelved its own rat­i­fi­ca­tion of TPP, af­ter Obama aban­doned ef­forts to push it through a lame-duck Congress, while Malaysia has shifted its at­ten­tion to the RCEP.

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