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Trump’s Withdrawal from TPP

As promised during campaign, Trump signed official withdrawal from TPP, effectively ending the negotiation with the potential Asian-Pacific partners. Killing TPP stems from the idea of the new administration that compared to the collective negotiations, individual negotiations with each country will lead to better ‘deals’ for the US. The opinions on TPP are polarized and range from strong support of the partnership to its complete rejection (outline of major pro’s and con’s of TPP). Obama’s administration could not convince the congress majority to express support for TPP.

Withdrawal from TPP opens huge opportunity for China, which promotes the creation of Regional Comprehensive Economic Partnership under its leadership. The potential TPP members expressed agreement to join RCEP after plans to kill TPP was announced. Bloomberg presents the report on US withdrawal from TPP:

China is advocating for a 16-nation pact being led by Southeast Asian nations that lacks some of the environmental and labor protections Obama negotiated into the Trans-Pacific Partnership, and does not currently include the U.S.

Xi and other Chinese leaders are also looking to fill the U.S. leadership vacuum, taking advantage of Trump’s protectionism to boost ties with traditional U.S. allies like the Philippines and Malaysia …

“The U.S. is now basically in a position where we had our horse, the Chinese had their horse — but our horse has been put out to pasture and is no longer running in the race,” said Eric Altbach, vice president at Albright Stonebridge Group in Washington and a former deputy assistant U.S. Trade Representative for China Affairs. “It’s a giant gift to the Chinese because they now can pitch themselves as the driver of trade liberalization.” …

Senator John McCain, an Arizona Republican who chairs the Armed Services Committee, ripped Trump’s decision. Obama’s last defense secretary, Ash Carter, once said that the Asia-Pacific trade pact would be more strategically valuable than another aircraft carrier battle group in the Pacific.

U.S. withdrawal from the pact “will create an opening for China to rewrite the economic rules of the road at the expense of American workers,” McCain said. “And it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it.” …

The Regional Comprehensive Economic Partnership now being championed by China includes Southeast Asian countries, as well as Japan, South Korea, Australia, New Zealand and India.

While it reduces tariffs, it wouldn’t require its members to take steps to liberalize their economies, protect labor rights and environmental standards or protect intellectual property. Developing nations within the agreement are also given more time to comply with regulations that do exist.

“It’s an opportunity for China to defer its own reforms and use its own system as a model to draw other countries closer to its orbit,” Dan Ikenson, the director of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, said in a phone interview. (Read the full article)

See also:

China’s ‘Iron Fist’ Policy

Sources:

Trump Withdrawal From Asia Trade Deal a Boon for China

TPP: Arguments for and against the trade pact

4 things to watch now that the U.S. has withdrawn from TPP trade deal

Trump Kills TPP, Opposes “Border Adjustments”, Promises “Major Border Tax”: Trade Hardball