A major Pacific Rim trade deal looked dead in the water a year ago.
In one of his first acts in office, United States President Donald Trump nixed what he denounced as the "job-killing" Trans-Pacific Partnership (TPP). Japanese Prime Minister Shinzo Abe had, at the time, reacted by saying it would be "meaningless" to pursue such a pact without the world's largest economy.
Tokyo's calculations, however, would soon change. By April last year, it was at the forefront of a major pushback against the surge in protectionism as it vowed to build an open and free economic order in the Asia-Pacific.
The agreement in Tokyo on Tuesday (Jan 23) by the remaining 11 countries in the original TPP to move forward on the revised deal - now renamed the Comprehensive and Progressive Agreement for TPP (CPTPP) - caps a trade pact over 10 years in the making, with its roots in an agreement between Singapore, Brunei, Chile and New Zealand.
Singapore's Ministry of Trade and Industry (MTI) said in a statement that Tuesday's outcome "reaffirms the CPTPP countries' collective commitment towards greater trade liberalisation and regional integration".
Waseda University economist Shujiro Urata has forecast a boost of 0.9 per cent to the Japanese economy once the CPTPP is enforced, which he said was "not a small number" for the world's third largest economy that is growing about one per cent a year on average.
"Increasing business opportunities for Japanese firms in foreign markets and reducing investment barriers abroad will open doors for a domestic market that is suffering from a declining population and ageing demographic," he said.
He also said Japan's interests lie in the importance of such multilateral deals in pushing through structural reforms that can jumpstart the nascent recovery of the world's third largest economy.
But the Economist Intelligence Unit's Japan analyst, Ms Agathe L'Homme, told The Straits Times that she expected the effects of the CPTPP would not be felt until the 2020s, "given the lengthy ratification and implementation process".
Singapore too will stand to reap benefits from the deal after it comes into force, even though it already has free trade pacts with all the CPTPP member countries save for Canada and Mexico.
The other countries in the TPP-11 group are Australia, Brunei, Chile, Malaysia, New Zealand, Peru and Vietnam.
DBS senior economist Irvin Seah, a former negotiator for free trade agreements (FTAs), told The Straits Times that the CPTPP was significant as it involved more commitments than the bilateral deals, including intangible areas such as environment and labour issues.
"Stronger growth in the Asia-Pacific region will also definitely benefit trade-dependent countries like Singapore," he said. "Given that the world is now enjoying a synchronised recovery, any trade liberalisation in such a scale will definitely be a bonus to everyone."
OCBC economist Selena Ling added that the CPTPP agreement was a "testament that trade agreements are not passe", and might add momentum to talks for other multilateral trade deals such as the Regional Comprehensive Economic Partnership (RCEP).
Dr Urata said the CPTPP's terms could serve as a model for future FTAs, including the 16-nation RCEP, which was mooted by Asean and brings on board Australia, China, India, Japan, New Zealand and South Korea.
Eventually, it could also be a step towards the Free Trade Area of the Asia-Pacific (FTAAP), a long-term goal to link Pacific Rim economies from China to Chile, including the US.
"For economic growth, a business environment that is transparent, open and fair is needed. In this regard, the CPTPP is set to make an enormous contribution. It also plays the role of a breakwater against the waves of protectionism," Dr Urata said.
Japan and Singapore said on Tuesday that the CPTPP members will keep the door open for other potential territories to join the pact after it is in force.
South Korea, Indonesia, Thailand, the Philippines and Taiwan have expressed interest in taking part, while it is hoped the US will eventually be persuaded to return.
