TPP exit not best way to maintain competitiveness

Without doing a full analysis on the pros and cons of the Trans-Pacific Partnership (TPP), United States President-elect Donald Trump has decided he wants to take the United States out of the proposed trade pact ("China in driver's seat as Trump wants out of TPP"; Nov 23).

From his rhetoric, he thinks the TPP would result in the loss of jobs for Americans. He is in favour of having bilateral pacts with individual nations instead.

Should Mr Trump abandon the TPP, would he also do likewise with pacts that the US has with other regions?

As the US is the largest economy, the work of negotiating and signing different pacts with so many countries individually could be mammoth and messy.

Also, it may create new loopholes, as the physical flows of goods are sometimes not so direct and straightforward in certain parts of the world.

The administrative work of dealing with so many individual pacts could be very chaotic and unproductive.

One possibility the US could consider is fine-tuning the TPP and use it as the main mechanism. It could then use some bilateral arrangements as a temporary measure, should it need to protect certain industries.

Equally important, as a world leader, the US should think seriously of the huge non-economic costs it would have to pay should it forsake the TPP.

Eventually, how much a country would benefit from a trade pact, whether bilateral or multilateral, depends largely on how competitive it is, relative to other trading partners.

Mr Trump should do a thorough review of the US economic system to identify strengths and weaknesses in the productivity and skills of its industries and workers. He should also review policies and measures that hinder productivity and competition.

Its high-tech industries may be doing well in research and development, but how about other sectors and industries?

Perhaps the US could gain some short-term advantage through limited bilateral arrangements. But maintaining competitiveness in its economic system is the real challenge it has to tackle if it wants to maintain its global supremacy in the long term.

Albert Ng Ya Ken

A version of this article appeared in the print edition of The Straits Times on November 24, 2016, with the headline 'TPP exit not best way to maintain competitiveness'. Print Edition | Subscribe