The revised Trans-Pacific Partnership (TPP), including Asean’s Vietnam, Brunei, Singapore and Malaysia, could offset Donald Trump’s protectionism amid prospects of taking effect this year and future enlargement.
The members of the original agreement, other than the US, in the week signed the deal for the TPP 11, or Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which retains most provisions of the 2016 trade pact. The 11 nations, which account for around 15 per cent of world trade and have a combined GDP of US$13.7 trillion, want to bring the agreement forward from 2019 as was originally planned.
Once ratified over the next two years, the pact is expected to eliminate 98 per cent of tariffs between the 11 countries.
Washington withdrew from the TPP in January last year, after Trump took office.
Chile, Peru, New Zealand, Japan and Mexico are reportedly eager to complete that process this year.
Australia and Canada are the other members.
TPP 11 was “extremely timely [coinciding with] protectionist pressures that could end up in what nobody wants, which is a trade war”, said Chile’s foreign minister Heraldo Munoz.
Trump’s apparently ill-considered attempt to enforce tariffs on steel and aluminum have been criticised by TPP members.
For logistics and transport firms, the tariff-free entry of containers is expected to cut considerable costs for exporters who pay up to 20-per-cent duty in some countries.
Sothl Korea, Thailand, Indonesia, the Philippines, Taiwan, Colombia and a fanciful UK have all expressed an interest in joining.
The Philippines reportedly sees the agreement as a way to avoid falling behind Vietnam, a TPP member that has already signed a trade deal with the European Union. Indonesian President Joko Widodo has expressed hope of joining the TPP as well, apparently in the hope it might offset Chinese dominance in the South China Sea.
Steven Ciobo, Australian trade minister, said the pact gives the country preferential access to Canada and Mexico for the first time as almost 25 per cent of Australia’s total exports, worth almost US$69 billion, went to the other 10 countries in the 2016-17 financial year.
“The signing is a significant moment for open markets, free trade and the rules-based international system. It sends an important message to the world that prosperity is achieved through breaking down trade barriers, not building them,” Ciobo told the media.
Donald Trump is reinforcing his support base. Picture credit: Defence Media