- Title: Analyst reaction after Trump pulls out of TPP, opening the way for China
- Date: 22nd November 2016
- Summary: PANAMA CITY, PANAMA (FILE) (REUTERS) VARIOUS OF CARGO SHIP CARRYING CONTAINERS PASSING THROUGH PANAMA CANAL
- Embargoed: 7th December 2016 12:07
- Keywords: TPP Trump pulls out TPP opening way China
- Location: LONDON, ENGLAND, UK + TIANJIN, CHINA + TOKYO, JAPAN + SYDNEY, AUSTRALIA + PANAMA CITY, PANAMA
- City: LONDON, ENGLAND, UK + TIANJIN, CHINA + TOKYO, JAPAN + SYDNEY, AUSTRALIA + PANAMA CITY, PANAMA
- Country: Various
- Topics: Commodities Markets,Economic Events
- Reuters ID: LVA00759J0EJ1
- Aspect Ratio: 16:9
- Story Text:An Asia-Pacific trade deal stands almost no chance of working now that U.S. President-elect Donald Trump has pulled the plug on it, proponents of the pact said on Tuesday (Nov. 22), opening the way for China to assume the leadership mantle on trade.
Japan and Australia expressed their commitment to the pact on Tuesday, hours after Trump vowed to withdraw from the 12-nation Trans-Pacific Partnership on his first day in office, calling the deal "a potential disaster for our country."
Trump's declaration appeared to snuff out any hopes for the deal, a signature trade initiative of President Barack Obama, five years in the making and meant to cover 40 percent of the world economy.
"I guess the optimist would hope that this is a warning shot across the bowes and that rather than throw away 7 years of hard work he'll try to renegotiate in terms of the agreement more in line with what he sees as a fair trade policy for the US. The absolute downside would be that he does pull out, that would probably be the end of the whole deal. Abe said today that without the US the deal is pretty much dead in the water, so let's hope he's going to try a bit more constructive when he's actually in office and this is just a warning shot over the bowes," said Darren Sinden, Independent Analyst.
The TPP, which aims to cut trade barriers in some of Asia's fastest-growing economies and stretch from Canada to Vietnam, can't take effect without the United States. It requires the ratification of at least six countries accounting for 85 percent of the combined gross domestic product of the member nations.
Japanese Prime Minister Shinzo Abe said "the TPP would be meaningless without the United States," even as parliament continued debating ratification and his government vowed to lobby other members to approve it.
Other members of the 12-nation grouping could conceivably work around a U.S. withdrawal.
Australian Trade Minister Steven Ciobo told reporters in Canberra countries could push ahead with the TPP without the United States by amending the agreement and possibly adding new members.
But Singapore's Prime Minister Lee Hsien Loong said reopening negotiations wouldn't be easy.
China has pushed its own version of an Asia-Pacific trade pact, called the Regional Comprehensive Economic Partnership (RCEP), which notably excludes the United States. It is a more traditional trade agreement, involving cutting tariffs rather than opening up economies and setting labour and environmental standards as TPP would.
"China chose not to join the TPP arrangements, it felt much like Donald Trump does, that the agreement would be detrimental to its own national interest. I think they'll take a watching brief from the side line. Donald Trump's talked about bilateral trade agreements. I suppose they could try and win, the Chinese could try and win some sort of PR coup be saying that we're prepared to negotiate with you now in the absence of the US. That might suit Mr. Trump in some perverse way but I think it's too early to say and I don't think the Chinese are ones for rash action so I imagine they'll be waiting to see what happens in those first 100 days of the Trump presidency before making any decision on that," added Sinden.
The RCEP was a focus of attention at the Asia Pacific Economic Cooperation summit in Peru over the weekend.
Tan Jian, a senior member of China's delegation at the summit, said more countries are now seeking to join its 16-member bloc, including Peru and Chile, and current members want to reach a deal as soon as possible to counter rising protectionism.
China's foreign ministry said on Tuesday Beijing has an "open attitude" toward any arrangements that promote free trade in the region as long they don't become "fragmented and politicized".
Foreign ministry spokesman Geng Shuang said the RCEP was an initiative led by the 10-member Association of Southeast Asian Nations (ASEAN), which China has been promoting saying they are willing to keep pushing the (RCEP) talks process with all sides to achieve positive progress at an early date.
Vietnam last week shelved its own ratification of TPP, after Obama abandoned efforts to push it through a lame-duck Congress, while Malaysia has shifted its attention to the RCEP. - Copyright Holder: FILE REUTERS (CAN SELL)
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