Wait...TPP Isn't Dead? - Global Trade Magazine
  January 27th, 2017 | Written by

Wait…TPP Isn’t Dead?

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  • For TPP to come into force, the US and Japan would both have had to ratify the pact.
  • The TPP was largely advanced through US-Japanese cooperation.
  • The US withdrawal from TPP dealt a blow to US-Japan relations.

President Donald Trump’s executive order withdrawing the United States from the Trans-Pacific Partnership (TPP) at the very least hammered a nail into the coffin of the inchoate trade pact and in all likelihood will be seen as the ultimate coup de grace.

So, is TPP alive or dead? On the one hand, the eleven other members of the pact have not indicated any intention to withdraw. Some Canadian actors are reportedly pursuing the possibility of continuing the TPP without the US. That’s also one idea touted by Takashi Terada, a professor at Doshisha University in Kyoto, Japan, who presented his views, along with other Japanese scholars at the Center for Strategic and International Studies in Washington earlier this week.

On the other hand, for TPP to actually come into force, it would have required ratification by at six least of its members and by countries representing at least 85 percent of the collective 12-nations’ GDPs. The latter provision means that both the US and Japan would have had to ratify the pact. Unless TPP’s rules are changed by its remaining members, therefore, it is not viable at this point without US participation.

The TPP was largely advanced through US-Japanese cooperation, noted Terada, and the US withdrawal dealt a blow to US-Japan relations. TPP also would have been helpful for US exporters, according to Terada, as the Japanese made enormous market-access concessions in sectors such as agricultural products, including beef.

Terada is not enthused by President Trump’s approach of replacing TPP with bilateral deals between the US and its trading partners. “New bilateral free trade agreements take time,” he said.

Given Terada’s disdain for negotiating new bilateral FTAs, he proposed three scenarios in which TPP could continue.

Plan A would be for the agreement to take effect with the participation of the United States. “This would require revising some of the provisions to satisfy Trump,” said Terada. One such could be the inclusion of a provision on enforcement for currency manipulation violations. The current TPP includes reporting requirements relating to currency manipulation, but no enforcement mechanism.

Plan B would be to link the TPP with the the Regional Comprehensive Economic Partnership (RCEP), an initiative that includes the ten ASEAN members plus China, Japan, South Korea, India, Australia, and New Zealand. Terada would include Canada, Mexico, Chile, and Peru in the mix to form a 20-nation trading bloc. RCEP includes trade easing measures such as lower tariffs and non-tariff barriers but lacks the comprehensive nature of TPP, which includes labor, environmental, digital, and intellectual property provisions.

Some have suggested that a TPP without the United States would make it easier for China to join the group. Terada rejects that notion. “A TPP with China,” he said, “would be geopolitically almost meaningless.”


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