TPP: With Trump out, is China in?

Trump's withdrawal from the TPP may have ushered in an era of Chinese-led trade deals throughout the world, according to an examination of what each nation is considering instead of the agreement.
Written by Corinne Reichert, Contributor

(Image: CBSNews.com)

With the Trans-Pacific Partnership (TPP) having been dumped by new United States President Donald Trump on his first week in office, the question remains as to whether the remaining signatories will attempt to push through the deal by themselves or with China's aid -- or whether they will instead use a Chinese-led deal.

The TPP, signed by its 12 member states in February 2016, was designed to regulate trade between the US, Australia, New Zealand, Canada, Singapore, Vietnam, Malaysia, Japan, Mexico, Peru, Brunei, and Chile.

However, with US withdrawal, it cannot come into force, as it was negotiated under the condition that a minimum of six countries with a combined GDP of 85 percent of the 12 signatories must ratify it. As the US accounts for 60 percent of the combined GDP, the TPP cannot come into effect without either changes being made to the conditions -- or another large economy taking the US' place.

Even if the TPP does not move forward, at least half of the nations involved have said they will instead consider Chinese-led multilateral trade deals, such as the Regional Comprehensive Economic Partnership (RCEP), which China is negotiating with Australia, India, Japan, South Korea, New Zealand, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

ZDNet has examined and compiled what each nation wants to do following the news of the US' withdrawal, and whether they are in or out of the TPP.

United States: Out -- in favour of bilateral trade agreements

Trump formally withdrew from the TPP on Monday, after the White House said in a statement over the weekend that he would use one of his first Executive Orders to back out of the trade deal in favour of bilateral agreements with each nation.

Enshrining the protectionist viewpoint on foreign policy, the White House said the president has decided to adopt an "America first" attitude that involves returning "millions of jobs to America's shores" by backing out of multilateral trade agreements such as the TPP.

"The president understands how critical it is to put American workers and businesses first when it comes to trade. With tough and fair agreements, international trade can be used to grow our economy ... this strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers," the statement said.

"In addition to rejecting and reworking failed trade deals, the United States will crack down on those nations that violate trade agreements and harm American workers in the process ... By fighting for fair but tough trade deals, we can bring jobs back to America's shores, increase wages, and support US manufacturing."

The US' withdrawal occurred in spite of repeated warnings that Trump risks "abdicating" trade leadership in the Asia-Pacific region by refusing to ratify the TPP, as it would create an opportunity for China to step in with its RCEP deal and consequently put millions of jobs across the US at risk.

Australia: In -- considering China's RCEP or Chinese involvement with TPP

Australian Prime Minister Malcolm Turnbull has argued that the TPP can still be salvaged, and could be opened up to China joining the trade deal, given that it is unlikely the US will change its policy. Turnbull added that some of the other TPP signatories have even "urged" Australia to begin domestic ratification of the treaty now.

"We will be consulting with the other countries that have agreed to the TPP, and we will seek to secure, from Australia's point of view obviously, trade deals that are in our interest ... we'll be looking to see what new arrangements can evolve from the TPP. A great deal of work has gone into it. There is another big regional trade deal that does involve China called RCEP. Work on that is progressing at the same time," Turnbull said on Australia Day.

"The TPP would need to be renegotiated among the remaining countries to continue without the US ... Japan has ratified the TPP and urged us, encouraged us, to complete our ratification process, as, indeed, have other countries."

According to Turnbull, the TPP should not be abandoned despite the US' withdrawal, because it opens up Australian access to Mexico and Japan and provides common standards that have previously been a barrier to trade throughout the Pacific Rim.

The prime minister added that the protectionist viewpoint when it comes to trade is outdated: "A blast right back into the 1950s".

Australia's Treaties Committee in November also recommended that the federal government still ratify the TPP in spite of the likelihood that it would be abandoned by the US, but said work needs to be done to convince an increasingly "nationalist and isolationist" public of this.

New Zealand: In -- engaging with TPP nations; considering China's RCEP

While Prime Minister Bill English has said the US' withdrawal from the TPP will be damaging for New Zealand, he added that Trade Minister Todd McClay is due to meet with the US trade minister in several weeks in the hopes of salvaging some of the benefits of the TPP.

McClay himself said New Zealand still sees value in going forward with the TPP without the US.

"Over the next weeks and months, I'll be engaging with other TPP countries, visiting some of them, to talk about the agreement and whether it still has value for New Zealand and for them," he said in a statement.

"My sense is it's probably likely to, but this will be a conversation I should have with them to see what the next steps forward are.

"I don't think TPP is dead."

On China's possible involvement in the TPP, McClay said on BBC News that it is too early to be discussing countries that may be added to the treaty -- but said RCEP negotiations are progressing.

Japan: In -- trying to get the US back in

Japan, which has already ratified the trade agreement, has said that the TPP is "meaningless" without the United States taking part -- but Prime Minister Shinzo Abe has said he will use his meeting with Trump in Washington in early February to attempt to convince Trump of the advantages of the TPP.

"The TPP is meaningless without the US, because it would lose the fundamental balance of benefits," Japanese government spokesperson Koichi Hagiuda said earlier this week.

According to Turnbull, however, Abe is continuing to push the remaining signatories to ratify the agreement, too.

Stocks of many Japanese auto manufacturers -- including Toyota, Nissan, Mazda, and Mitsubishi Motors -- fell on the Tokyo Stock Exchange after news that the US had pulled out of the TPP, with Trump making the comment on Monday that Japan's trade conditions were unfair due to the high duties imposed on US goods, including cars.

Trump has tweeted that he wants to strengthen the US' domestic auto industry rather than relying on imports, such as those from Japan.

Singapore: In -- pushing China's RCEP and APAC free trade

Singapore's Ministry of Trade and Industry has said that it is committed to striking trade deals to ensure a cohesive set of rules is established across the region.

"Without the participation of the US, the TPP agreement as signed cannot come into effect," the ministry said in a statement [PDF].

"There are other regional integration initiatives still ongoing, including the Regional Comprehensive Economic Partnership and the proposal for a Free Trade Area of the Asia-Pacific. Singapore will continue to participate in these initiatives.

"We will have to discuss the way forward with the other TPP partners first. Each of the partners will have to carefully study the new balance of benefits."

Canada: Out

Canada has simply said that the TPP cannot legally progress without US involvement, because of the way the trade deal was framed.

"This agreement was so constructed that it can only enter into force with the United States as a ratifying country," Foreign Affairs Minister Chrystia Freeland said on Tuesday.

"So the TPP as a deal cannot happen without the United States being a party to it."

Canada is, in addition, a member of the trilateral North American Free Trade Agreement, which Trump has also said will be renegotiated under the threat of the US withdrawing if Canada and Mexico refuse to negotiate on terms that give "American workers a fair deal".

Chile: Out -- pushing deal with China, Korea, and TPP nations

According to Latin American news agency TeleSur, Chilean Foreign Minister Heraldo Muñoz told journalists that while other trade deals with the US would be possible, "it wouldn't be the TPP".

"The TPP as it was going forward is off the table," TeleSur reported Muñoz as saying.

"That doesn't mean that Chile is going to change tack. We are going to persist in the opening up of the world ... as we did in the past, with bilateral deals, and regional deals."

Muñoz has reportedly invited trade ministers from the other 10 TPP nations, as well as from China and South Korea, to a discussion in March to confer on how to proceed with an alternative trade deal.

Vietnam: In -- encouraging 'economic integration' in APAC

Vietnamese Ministry of Foreign Affairs spokesperson Le Hai Binh said the country will continue the affiliated economic reforms despite the possibility of the TPP being dropped without US involvement. Emphasising the step towards economic integration throughout APAC, Vietnam is also looking to increase exports of textiles.

"After six years of intense negotiation, the participating countries succeeded in signing the Trans-Pacific Partnership, a new-generation free trade agreement. Should the agreement come into force, it will offer shared benefits for all the member nations," Le Hai Binh said.

"Viet Nam considers the participation in the TPP and other FTAs one further step to implement our policy of proactively facilitating the comprehensive economic integration, to complete the law system and market-oriented economy institution, which will help create a new momentum for development, and contribute to the regional integration and economic linkage.

"Therefore, Viet Nam will continue its reforming process and make better domestic preparation of trade agreements of which Viet Nam has been and will be member."

Malaysia: In -- considering China's RCEP

Malaysia's Ministry of International Trade and Industry (MITI) has said that if the TPP does not come into force, it will be a "missed opportunity". In its absence, the Malaysian government said it would focus on China's RCEP, as well as the ASEAN Economic Community (AEC) Blueprint 2025 and pursuing bilateral agreements with TPP members.

"In our view, TPPA is a balanced agreement beneficial to all of its members. The US will also benefit from better market access to countries which they do not have FTA with, such as Japan, Vietnam, and Malaysia," MITI argued [PDF].

"With the latest development in the US, the TPPA chief negotiators from other 11 countries will be in constant communication with each other to consider all available options before deciding the best way forward.

"Domestically, MITI and all relevant ministries will engage with various stakeholders to get their views and feedback on the latest development of the TPP and the way forward."

Mexico: Out -- in favour of bilateral trade agreements to remain 'relevant'

According to CNN, Mexican President Enrique Pena Nieto has said that it will be fully focused on forming bilateral trade agreements with the TPP member states.

"Our priority is to consolidate ourselves as a relevant actor to intensify the flows of commerce, investment, and tourism, and particularly before the evident difficulty due to the materialisation of the TPP," CNN quotes Nieto as saying.

"Mexico will immediately initiate conversations to generate new bilateral trade accords with the participant countries in this partnership."

Peru: Out -- pushing Chinese deal

Peruvian President Pedro Pablo Kuczynski has announced that Peru will work alongside China and APAC nations to work the most significant portions of the TPP into a new trade agreement, Reuters has reported.

"We are going to take the best things out of TPP and get the not-so-good stuff out," Kuczynski said on broadcaster RPP.


Brunei's absolute monarchical government has yet to make a statement on the future of the TPP.

With AAP

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