T.P.P. BACK ON TABLE
11 nations reach understanding on path forward, says Tokyo’s chief negotiator
TOKYO allies pledged their commitment to globalisation.
On the eve of the Group of 20 summit meeting in Hamburg, Germany, last week, Japan and the European Union announced the outlines of a broad agreement that would create a trading bloc encompassing US$20 trillion (RM86 trillion) in combined economic output. The deal was announced as the US appeared increasingly isolated on issues like free trade and the environment.
Trump has repeatedly made clear his antipathy to free trade, vowing to protect US workers and rebalance trade deficits with other countries. On Wednesday, US trade representative Robert Lighthizer sent a letter to the South Korean government saying that the administration was eager to revise a trade agreement between the two countries that has been in force for five years.
If Japan and the 10 other signatories are to keep the TPP alive, they would need, at the very least, to revise a clause that says the deal will come into effect only when ratified by six countries, representing 85 per cent of the combined economic value of the 12 original members. Without the US, that threshold cannot be reached.
Japan, which has the largest economy among the remaining trade partners, is pushing to preserve most of the ambitious rules that negotiators originally hammered out, as are Australia and New Zealand.
“The hope, of course, of Japan is to maintain the status quo of the already agreed framework, including the details,” said Tomohiko Taniguchi, a foreign policy adviser to Prime Minister Shinzo Abe.
While optimistic that Japan could lead the group towards consensus, Taniguchi acknowledged that the discussions would be challenging.
“Negotiations, once started, could turn in all sorts of different directions,” he said. “It’s a gathering of 11, after all, self-centred, even selfish countries. All sorts of negotiations are likely happening.”
Developing countries such as Vietnam and Malaysia may want to renegotiate some of the tougher requirements that they accepted in exchange for the promise of access to US markets.
The agreement, for example, requires developing nations to reform child labour laws, as well as improve the transparency of state-owned companies, and it permits drugmakers in the large economies to extend patent protection on many pharmaceuticals that the smaller countries want to manufacture.
Some of the developing countries may protest that such requirements are too onerous without the incentive of being able to export to US consumers.
“The problem is, when you take the United States out, the United States is two-thirds of the TPP,” said Jeffrey Wilson, a research fellow at the Perth US-Asia Centre at the University of Western Australia.
For developing countries being asked to make expensive overhauls, Wilson said, “What is the point of the deal anymore?”
Japan’s goal is to preserve as much of the original deal as possible in the hope that the US will eventually rejoin.
“We should welcome the United States when the United States decides to come back at some time in the future,” said Ichiro Fujisaki, a former Japanese ambassador to Washington.
Some observers see those hopes as naive.
“I think it’s simply wishful thinking that the Trump administration will change its mind about TPP,” said Takuji Okubo, managing director and chief economist at Japan Macro Advisors.
“So long as he remains the president, I don’t think he will actually make that turnaround.”
Japan has indicated that it wants to secure an agreement between the remaining countries in the TPP by November, when many of them will gather at a summit meeting in Vietnam.
Most analysts said any agreement was unlikely to be completed that quickly. Still, said Shumpei Takemori, a professor of economics at Keio University, the reopening of negotiations allowed Japan and its allies to “show the US administration that we have alternatives.” NYT
I think it’s simply wishful thinking that the Trump administration will change its mind about TPP.