Certain member states of the Trans-Pacific Partnership countries now need convincing to stay on board with the massive trade deal even as the 11 remaining TPP countries continue talks without Washington this week.
After President Donald Trump’s decision to withdraw the U.S. earlier this year the TPP no longer remains alive as the world’s largest trade pact. with the goal of completing preparatory work for a treaty by November, as agreed upon in May, its surviving participants have agreed to forge ahead without Washington.
However, as some participants look to rework existing provisions in light of Washington’s absence, internal divisions are a key obstacle.
“On the one hand, you have Japan, Australia and New Zealand who would like to push ahead with the agreement as is, just with some only technical modifications to allow it to come into force,” Andrew Staples, Southeast Asia director at Economist Corporate Network, said. on Friday. “But countries such as Malaysia and Vietnam, on the other hand, are questioning whether a deal makes sense without getting access to the U.S. market.”
Amid expected rises in foreign direct investment inflows and exports, Kuala Lumpur and Hanoi were seen as the pact’s top beneficiaries before Washington pulled out from the TPP. And seen strengthening from the removal of tariffs in the U.S. and other major importers were Vietnam’s garment industry and Malaysian electronics, in particular.
Staples explained that particularly regarding transparency, government movement of data as well as environmental and labor standards, both Southeast Asian governments originally agreed to sweeping changes in their business environments to advance in the U.S. market.
But, he continued, now both nations are re-considering their commitments after the broadened U.S. access is off the table. “Malaysia, in particular, has said they would like to re-open negotiations on contentious issues, such as drug development data.”
Prime Minister Nguyen Xuan Phuc was quoted as saying last month as saying that Vietnam, meanwhile, is debating which TPP elements can be renegotiated.
And a thorn in Tokyo’s side is the reluctance of both countries. Japanese Prime Minister Shinzo Abe recently said that the world’s third-largest economy says existing members should not lose momentum and hopes for a U.S. return to the table, Japan is spearheading current TPP discussions.
The Japan-EU Economic Partnership Agreement — which is a factor that could influence TPP talks, is also playing high on the minds of Japanese negotiators as the Japanese leader is also under pressure to ensure the smooth completion of a bilateral trade deal with Europe in addition to persuading hesitant members.
“Progress toward a Japan-EU deal will fuel momentum behind Abe’s efforts to finish a TPP-11 agreement without the U.S., in part by keeping Japan’s protectionist farmers and their backers in his Liberal Democratic Party on the defensive,” analysts at consultancy Eurasia Group said in a Wednesday note.
“If, however, negotiations on the Japan-EU Economic Partnership Agreement unexpectedly collapse or a final deal is not ratified by both sides, Abe’s push to burnish his leadership credentials and advance a robust trade policy agenda will suffer a large setback,” they wrote.
(Adapted from CNBC)