Prospects for TPP

Delegates sit in a meeting room at the end of the TPP11 meeting, on May 21, 2017.
Delegates sit in a meeting room at the end of the TPP11 meeting, on May 21, 2017. PHOTO: EPA

WHAT IS THE TPP?

The Trans-Pacific Partnership is one of the most ambitious free trade pacts ever negotiated.

Initially, it brought together 12 Pacific Ocean economies - the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Before the abrupt exit of the deal's largest partner, the US, the signatories accounted for a whopping 40 per cent of the global economy.

Under former US president Barack Obama, it was sold to American allies as a unique opportunity to seize the initiative on worldwide trade - and ensure China does not get to dictate global terms of commerce.

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Supporters said it would scrap barriers to the free flow of goods, services and investment capital. They also hailed the potential to ensure a level playing field for all firms, as well as protecting workers' rights and the environment - breakthrough issues in emerging markets such as Vietnam.

WHY DID US PRESIDENT DONALD TRUMP JUNK IT?

Scrapping the TPP was an oft-repeated Trump campaign promise, and the first major move on trade he took after taking office.

He called the deal a "rape" of American interests and blamed free trade pacts like the TPP for the loss of American jobs, though most experts agree automation is behind a decline in industrial work.

Trump trade officials have called for fair trade deals, vowing to plough efforts into bilateral trade pacts instead of multilateral deals, including with countries in Asia-Pacific.

 
 

HOW CAN THE DEAL SURVIVE?

Under the original terms of the TPP, the pact had to be ratified by six countries that account for a combined 85 per cent of signatories' gross domestic product. With the US out of the deal, that is impossible to achieve.

But the remaining nations - the so-called TPP 11 - have options. They can change the clause outlining ratification rules to allow the deal to move ahead.

Yet, some fear that tinkering with the terms of the pact after years of already gruelling negotiations, could reopen treacly issues between the countries.

CAN THE U.S. COME BACK?

Members have said that the door remains open for the US - and other countries such as South Korea and Colombia which have expressed interest - to join.

While analysts say it is unlikely that Mr Trump will return to the deal any time soon, the unpredictable leader has been known to reverse his position on previous pledges.

WHAT'S IN IT FOR THE TPP11?

The TPP is called a high-quality trade deal, meaning that it goes deeper than other free trade agreements in terms of labour regulations, environmental rules, intellectual property protections and other requirements. Without the TPP, there are no other high-quality deals on the table for signatories.

Plus, even though the pact is seriously weakened without the huge US market, it does still allow smaller economies like Vietnam greater access to big economies such as Japan.

WHAT DOES CHINA THINK?

The TPP was seen as a mechanism to counter China's economic clout. And the world's second-largest economy is unlikely to welcome its revival.

But China is also part of a trade pact initiated by Asean - the Regional Comprehensive Economic Partnership - that is currently under negotiation.

That deal brings together the 10 South-east Asian countries, as well as China, India, Japan, South Korea, Australia and New Zealand.

Something of a mirror image to TPP, it does not include the US and is less ambitious on issues such as employment and environmental protection.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on May 22, 2017, with the headline 'Prospects for the pact'. Print Edition | Subscribe