US will cede leadership in APAC by abandoning TPP: US trade chief

The US would 'abdicate' its leadership in the Asia-Pacific region and deliver it 'into China's arms' if it abandons the TPP, a speech by current Trade Representative Michael Froman has warned Trump.
Written by Corinne Reichert, Contributor

Ahead of next week's inauguration of the next president of the United States, current Trade Representative Michael Froman has told the incoming Donald Trump administration that it risks "abdicating" trade leadership in the Asia-Pacific region by refusing to ratify the Trans-Pacific Partnership (TPP).

While Froman said he agrees with Trump's tough trade stance with China, saying the Obama administration has filed 15 challenges on China's practices at the World Trade Organisation over the last eight years, he said withdrawing from the TPP would create an opportunity for China to step in with its own free trade deal being negotiated between 16 countries.

"There simply is no way to reconcile a get-tough-on-China policy with withdrawing from TPP," Froman said on Tuesday during a speech to the Washington International Trade Association.

"That would be the biggest gift any US president could give China, one with broad and deep consequences, economic and strategic.

"It would be a strategic miscalculation of enormous proportions.

"Why would we cede our role as a Pacific power? Does anyone really think US interests are better served if China, rather than the US, writes the rules of the road?"

President-elect Donald Trump has vowed to issue a formal notice of withdrawal from the TPP on his first day in office, on January 20.

In November, Obama's administration suspended its efforts to get the agreement through Congress following the surprise election of Trump, who called the TPP a "disaster" during his election campaign and said it would threaten American jobs by introducing lower-wage competition.

"We have worked closely with Congress to resolve outstanding issues and are ready to move forward, but this is a legislative process and it's up to congressional leaders as to whether and when this moves forward," United States Trade Representative spokesman Matt McAlvanah said in November.

Obama's administration had warned Congress prior to Trump's election that not approving the TPP would risk trade rival China pushing through its own deal with APAC nations. According to Obama, this would put millions of jobs across the US at risk.

Singaporean Prime Minister Lee Hsien Loong similarly told the US Chamber of Commerce in August that the ratification of the TPP is "a litmus test of your credibility", adding that the nation will be better off with its "doors open" to trade.

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

Australian Prime Minister Malcolm Turnbull has said he raised the TPP issue with Trump directly following the latter's election victory, with Australian Trade Minister Steve Ciobo having said that while the remaining 11 nations could still go ahead with the deal, it is unlikely to survive with the US withdrawing.

"With the United States not being part of it, first of all ... officially the TPP would not get up," Ciobo said at the end of last year.

"Secondly, if we looked at, well is there still enough merit to look at a trade deal among the 11 of us, it changes the metrics substantially."

Despite this, the Australian Treaties Committee subsequently recommended to the federal government that the TPP still be ratified in spite of the likelihood that it will be abandoned by the US, as well as concerns from the copyright industry.

At the end of last year, the Treaties Committee's report said it is in the nation's interest to ratify the treaty; however, it did concede that work needs to be done to convince an increasingly "nationalist and isolationist" public of this.

"The committee is aware of the resurgence in nationalist and isolationist points of view across the globe, and the threat this represents to the benefits brought by free trade," the Treaties Committee said.

"Addressing these views is an underlying theme in the committee's recommendations and comments throughout the report. Australia relies on the benefits of free trade for its economic and social success.

"While the committee finds the TPP to be in Australia's national interest, the committee is aware that there is much work to do to ensure that the Australian public is also convinced of this."

Among other things, the committee also recommended that the federal government be less secretive when negotiating treaties; allow third parties and industry to be involved; allow independent analysis by the Productivity Commission or similar; pass the safe harbour provisions amendment to the Copyright Act; and take "binding treaty action" on the TPP.

With AAP

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