US 'will lose out' if new president does not back TPP

The United States stands to lose out on the benefits of free trade and investment from the Trans-Pacific Partnership (TPP) initiative if it does not gain ongoing support under new White House leadership.

Mr Alastair Newton, a geopolitical analyst for the Nomura financial services group, said the US services sector would miss out on public procurement projects in Asia - particularly in Malaysia, which is opening up to foreign investors.

He also noted that US companies would face challenges in anti-trust measures when seeking access to the Japanese market, where legislation and enforcement are weak. This enables cartels to regulate the market to create monopolies or oligopolies in various sectors.

Mr Newton outlined this during a media conference call recently on the impact of a US presidential victory for Republican candidate Donald Trump. He said should the billionaire-turned-politician make it to the Oval Office, he could put his own stamp on US trade policy.

"His trade agenda would be a top priority during his first 100 days in office," said Mr Newton. "He could walk away from the TPP even if it is ratified (by Congress)."

In his campaign speeches, Mr Trump had labelled the TPP as "a horrible deal" and pledged to withdraw the US from the free trade pact. He said the TPP would deal a death blow for US manufacturers by opening up the market to cheap, subsidised goods. He said it "ties us up and binds us down".

The pact was signed by 12 member countries in New Zealand in February but requires ratification by each country's legislature. The proposed free trade bloc comprises Singapore, Australia, Canada, Japan, Malaysia, Mexico, Peru, the US, Vietnam, Chile, Brunei and New Zealand.

The TPP was designed to develop market access for made-in-America goods by eliminating taxes and trade barriers.

The free-trade flows and fair competition would help to grow the world's largest economy.

Mr Newton said trade and investment-oriented Asia views the TPP in a positive light, including strong US stewardship.

"The strategic importance of the TPP is awesome. Many in China and other countries would see the TPP as the economic dimension of the US strategic pivot to Asia.

"The upper echelons of the Chinese Communist Party claim that the TPP is a broad US policy to contain the re-emergence of China on the global stage," he said.

Mr Newton said that if the TPP should fail, this would cause US allies in the region to doubt their dependence on Washington as a strategic partner on the economic, political and security fronts.

Geraldine Goh

A version of this article appeared in the print edition of The Straits Times on August 08, 2016, with the headline 'US 'will lose out' if new president does not back TPP'. Print Edition | Subscribe