What now for the TPP?
AFTER Donald Trump vowed to abandon the Trans-Pacific Partnership, here are some key questions about a huge trade pact that supporters said would write the rules for 21st-century commerce – but which might now be doomed.
What is the TPP?
The Trans-Pacific Partnership is one of the most ambitious free trade pacts ever negotiated.
It brings together some of the diverse economies that abut the Pacific Ocean – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam – and that account for a whopping 40 percent of the global economy.
Under US President Barack Obama it has been sold to American allies as a unique opportunity to seize the initiative on worldwide trade – and ensure China, with its surging economy and growing global importance – doesn’t get to dictate the terms.
Supporters say it would do away with barriers to the flow of goods, services and investment capital.
They claim it would also ensure a level playing field for all firms, protecting labour rights and incorporating important environmental safeguards.
So why does Trump want to junk it?
Critics say the TPP was hammered out during secretive meetings in luxury hotels and will do little other than benefit the usual suspects – big businesses.
Mr Trump’s insurgent presidential bid was built, in part, on a pledge to overturn the trade deals that many of his supporters blame for what they see as a drain of US jobs and capital.
They say the TPP would be another bad deal for America’s industrial heartlands, allowing foreign manufacturers and food producers tariff-free access to the US market, meaning US firms and farms, whose production costs are higher, could not compete.
What’s going to happen to the TPP now?
Many leaders have invested a lot of political capital in the TPP, selling it to reluctant electorates as a way to yoke America closer to the like-minded democracies of the Pacific Rim region.
Some will be hoping that Mr Trump changes his mind before taking office.
If that doesn’t work and he sticks to his guns, a sized-down 11-member bloc could press ahead and get the agreement up and running, leaving the door open for a future US administration to join up if the political tide changes.
Option three is to re-open negotiations on the whole thing, which would offer Mr Trump the chance to sell an “improved” deal to his electorate as his success.
Finally, they could just abandon it and look elsewhere for a 21st century trade deal.
Are there other options for a free trade pact?
Yes – the Chinese-backed Regional Comprehensive Economic Partnership (RCEP), which brings together the 10 Southeast Asian countries of ASEAN, as well as China, India, Japan, South Korea, Australia and New Zealand.
Something of a mirror image to TPP, it includes six of the Washington led grouping’s 12 members – but not the US, and would encompass more than 3 billion people.
RCEP is generally thought of as less ambitious on things like employment and environmental protection. –