Last week’s talks between Trans-Pacific Partnership states demonstrated members’ commitment to inking the wide-spanning free trade agreement even though the meeting failed to produce any major breakthroughs.
TPP signatories face a daunting task in finalizing a new framework by November – the agreed upon deadline, after President Donald Trump’s administration withdrew the U.S. from the deal. But experts said that it seems that the group, known as the TPP-11, is up to the challenge undxer Tokyo’s leadership.
“The TPP-11 countries recognize that a 21st Century, multi-party regional trade agreement in Asia Pacific is very much needed, with or without the United States,” said Steven Okun, vice chairman of the Asia Pacific Council of American Chambers of Commerce.
He explained that issues such as compliance with multi-jurisdictional supply chain regulations and intellectual property rights behind borders, that are faced by multinational businesses are hardly addressed adequately by the current “spaghetti bowl of bilateral trade deals” across the region.
And in addition to providing duty-free access for nearly all goods, opening up services and investment and ensuring cross-border data flows, a TTP deal is widely expected to address those issues.
“All of these upsides to the TPP apply with or without the U.S., so it is not surprising that the remaining members are looking to move forward even without U.S. participation,” Okun said.
Members had decided to embrace a new framework to take into account Washington’s absence, Japan’s Kazuyoshi Umemoto said on the sidelines of last week’s meeting of chief negotiators. He added that on whether to revise trade and investment rules from the original pact, more discussions were needed.
Japanese media reported that August or September is the most likely time that the 11 chief negotiators are now expected to meet again.
“There is a considerable international backlash against globalization and free trade, evident from the U.S. decision to withdraw from the TPP, so Asia-Pacific governments are giving a high priority to making progress with trade liberalization through a number of initiatives, including TPP-11 and the regional Comprehensive Economic Partnership,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.
Miha Hribernik, senior Asia analyst at Verisk Maplecroft, said in a recent note that Thursday also saw the 11 states decide to lower the strict threshold for a deal to come into force. This note helps to explain that “the original document had to be ratified by six countries, accounting for at least 85 percent of the total gross domestic product of the original twelve signatories — an impossible task without the U.S.”
Still, among the key obstacles to a new accord are internal divisions between members, particularly Vietnam and Malaysia who are seeking to renegotiate the earlier terms.
Biswas said that that in advancing a new agreement, the TPP-11 may be hoping for other Asia-Pacific countries to join and anticipated, on this front, that the group would achieve progress.
Okun said that “a TPP-11 deal would still provide greater access to economies such as Australia and Japan, and give each of the TPP-11 a commitment for market liberalization, which will be in the long-term interest of each member,” despite members losing increased U.S. market access as a result of Washington’s withdrawal.
(Adapted from CNBC)