With Donald Trump abandoning trade pact, questions about the future of worldwide trade.
U.S. President Donald Trump has abandoned the Trans-Pacific Partnership, leaving the ambitious trade agreement in limbo. Here are some key questions about the pact, which supporters said would write the rules for 21st century commerce:
What is the TPP?
The Trans-Pacific Partnership is one of the most ambitious free trade pacts ever negotiated. It brings together some of the diverse economies that abut the Pacific Ocean—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam—and accounts for a whopping 40 percent of the global economy.
Under then-U.S. president Barack Obama it was sold to American allies as a unique opportunity to seize the initiative on worldwide trade—and ensure China, with its surging economy and growing global importance—does not get to dictate the terms. Supporters say it would scrap barriers to the free flow of goods, services and investment capital. They claim it would also ensure a level playing field for all firms, protecting labor rights and incorporating important environmental safeguards.
So why has Trump junked it?
Critics say the TPP was hammered out during secretive meetings in luxury hotels and will do little other than benefit the usual suspects—big businesses. Trump’s insurgent presidential bid was built, in part, on a pledge to overturn the trade deals, which many of his supporters blame for lost U.S. jobs.
They say the TPP was another bad deal for America’s industrial heartlands, allowing foreign manufacturers and food producers tariff-free access to the U.S. market—meaning U.S. firms and farms, whose production costs are higher, could not compete.
What will happen to the TPP now?
Many leaders invested serious political capital in the TPP, selling it to reluctant electorates as a way to yoke America closer to the like-minded democracies of the Pacific Rim. One option is for the remaining 11 members to press ahead and get the agreement up and running. Australia said Tuesday it hoped to recast the pact without the U.S. and opened the door for China to sign up.
Another possibility is to reopen negotiations from scratch, which would give Trump the chance to sell an “improved” deal to his electorate.
Trump, however, suggested he would pursue bilateral deals, saying he would be “going back to those countries one-on-one” to find terms more favorable to the United States.
Are there other options?
Yes—the Beijing-backed Regional Comprehensive Economic Partnership (RCEP) now being negotiated, which brings together the 10 Southeast Asian countries of ASEAN, as well as China, India, Japan, South Korea, Australia and New Zealand.
Something of a mirror image to TPP, it includes six of the Washington-led grouping’s 12 members but not the U.S., and would encompass more than three billion people. RCEP is generally seen as less ambitious on issues like employment and environmental protection.