Donald Trump in the White House: Implications for the Future of the TPP and Free Trade in ASEAN

Donald Trump in the White House: Implications for the Future of the TPP and Free Trade in ASEAN

November 16, 2016

US president-elect Donald Trump’s resistance to the Trans-Pacific Partnership (TPP) is notable and the future of the trade agreement is presently on tenterhooks. For the supporters of the TPP, Trump’s triumph has indicated that their worst terrors are going to reveal. Rivals of the trade agreement are cheering at their desire that Trump will now move rapidly to satisfy one of his most controversial campaign pledges – to relinquish the TPP. Any prospects of the US renegotiating the TPP are dreary as well as unrealistic – the trade agreement was seven years in the making, carefully arranged and involved negotiations from a few nations on both sides of the Pacific.

Consequence for ASEAN

So now if the US does eventually pull back from the TPP, what consequences will this have for the free trade in the ASEAN area? Before examining this, it should be looked at that TPP’s potential lack of success is probably not going to have any important instant economic effect on the area. It was not an trade agreement in force, but rather just offered prospects of newer free trade rules coming into effect sooner rather than later. Rather than being a step backwards, it is progressively an absence of further progress as far as improvement of free trade in the area is concerned.

Brunei, Malaysia, Singapore and Vietnam are the four ASEAN member states who are gatherings to the TPP, and of them, merely Singapore has a different FTA with the US. While some of them – particularly Singapore and Vietnam-recognize that the TPP is presently in risk, they have made it clear that they will advance in arranging their own particular FTAs with different nations in the Asia-Pacific region.

Among the ASEAN members, Vietnam was generally considered as the nation most likely to get a prompt economic boost from the TPP. As per Vietnam’s Minister of Trade and Industry Tran Tuan Anh, the nation will proceed with changes to enhance its business and investment environment and arrange further arrangements whether US president-elect Donald Trump opposes the TPP or not. Deputy Prime Minister and Foreign Minister Phạm Binh Minh expressed that if the TPP is not approved, it will be viewed as a setback, as nations invested much energy and exertion on the negotiation process. Nonetheless, he noticed that other than the TPP, Vietnam has decided FTAs with several other partners, including the European Union (EU). Agent Minister of Industry and Trade Do Thang Hai said that with or without the TPP, Vietnam’s agreement towards global economic integration will stay unaltered.

An avid supporter of the TPP, Singaporean Prime Minister Lee Hsien Loong has expressed that he feels “frustrated that the TPP looks very not likely to happen, or won’t be passed, or approved now” as reported by The Straits Times. The daily paper cited him alluding to Trump: “He had no concern for the TPP at all and I believe that is a failure to every one of us who worked so hard to arrange the TPP”.

In answer to questions if the TPP could be rescued if its terms are renegotiated or conceivably changed to incorporate nations like China, Lee said, “It’s not all that simple to say we change the terms, what are you going to change?… And in the event that you get another nation, it would be a totally new agreement through and through in light of the fact that another nation, especially if it’s a major one, is not going to sign on to everything which has as of now been concurred before they were members”.

The Road Ahead

China is probably going to gain from potential US abdication of the TPP. China is the key driver behind the Regional Comprehensive Economic Partnership (RCEP), an exchange understanding between the 10 individuals from ASEAN, and Australia, China, India, Japan, New Zealand and South Korea. If the TPP fails, the momentum towards the RCEP is probably going to gain strength as China is probably going to push for an effective conclusion.

Japan, a key US partner who saw the TPP as a viable system to contain China’s developing financial clout in the locale, has shown ability to turn towards the RCEP. Japanese Prime Minister Shinzo Abe has expressed that there is currently “high chance that there would be a turn to the RCEP if the TPP doesn’t go ahead”. He included that Japan “will shift focus to RCEP should the TPP not go ahead”. Pioneers of Asia-Pacific nations, including the US, Japan, Australia and China, are planned to meet during the up coming Asia-Pacific Economic Cooperation (APEC) yearly summit in Lima, Peru on November 19-20. China’s President Xi Jinping is relied upon to earn support for the RCEP from Asia-Pacific nations amid the summit.

Unlike most other free trade agreements, the TPP incorporated some special provisions on regions, for example, work measures, administration and transparency norms, and environmental and intellectual property protection. RCEP, then again, does exclude provisions that accentuate security of licensed innovation, free stream of data or the leveling the field between private organizations and state-possessed undertakings.

With the diminished prospects of the TPP, it is currently conceivable that nations, for example, Vietnam and Malaysia, which had made considerable bargains on issues, for example, work rights, will now need to proceed onward to different agreements. The RCEP, for example, could be a reasonable option for Vietnam if the TPP neglects to proceed. Vietnam stands to gain from expanded sourcing of generation from such RCEP part nations as Japan, South Korea and China.

While the RCEP will remain an option, a more probable result is that the TPP’s place may well be taken by the Free Trade Area of the Asia-Pacific (FTAAP), a proposed bigger larger trade-pact for the Asia-Pacific locale, additionally advanced by Beijing.

In the last analysis, similar to Vietnam, nations required in the TPP will have Plan B’s. However, as New Zealand’s representative to the US commented as of late, “The catastrophe would be that the Plan B’s we have would exclude the United States”.

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