TPP partners under pressure from U.S. exit

Image copyright Getty Images Image caption CPTPP negotiators are due to meet on Thursday for the second and final round of talks If China succeeds in joining the proposed Trans-Pacific Partnership (TPP) trade agreement, it …

Image copyright Getty Images Image caption CPTPP negotiators are due to meet on Thursday for the second and final round of talks

If China succeeds in joining the proposed Trans-Pacific Partnership (TPP) trade agreement, it would boost global economic integration at a time when trade frictions are increasing.

But it would also make it harder for the U.S. to withdraw from the pact and would likely jeopardise a similar future with countries including Australia, New Zealand and Japan.

Some analysts, however, say China is opting to lose the battle and win the war.

They point out that while the United States is bowing out, a dwindling number of American voters support a trade deal with China.

A win would make it much harder for the Trump administration to assert its sovereignty and win foreign support for its “America First” policy, said Li Mingjiang, a professor of international relations at the Foreign Studies University of China in Beijing.

“China’s cooperation with the nations that form the TPP became a bargaining chip in exchange for its improving [accession] process, so its exit from TPP would make it even more difficult for the Trump administration to cling to China,” he told the BBC.

International business groups are also growing increasingly concerned about the consequences of the U.S. walkout, as the larger TPP community negotiates a new trade deal that could take America out of the agreement and put it at odds with other Asian nations.

“One only needs to look at China’s policies in Hong Kong and Taiwan to see the vital importance of a free and open economy for this area,” said Alison Clements, head of international trade at the British-Australian Chamber of Commerce.

China would also be guilty of making it harder for the U.S. to forge a better trade relationship with Europe and other parts of the world, she added.

Growth for China

By choosing to join a trade pact at the risk of damaging it, the U.S. is signaling its moves could spiral out of control.

Image copyright Getty Images Image caption Any trade deal with China could come with stringent conditions

The potential fallout from the deal’s collapse has even been predicted by the Trump administration itself.

“TPP is not dead. It’s a bad deal for Americans and must be killed,” a spokesperson for the U.S. Trade Representative office said in a statement.

Indeed, any trade deal with China would likely come with tough terms.

After all, a senior official in Australia’s free trade department, told the BBC, “China will hold all the cards.”

As it stands, analysts agree that a China-led trade deal in the future would be a compromise, particularly with Japan and New Zealand.

The future CPTPP

Discussions about whether to include China in the proposed Trans-Pacific Partnership (TPP) trade pact entered their second and final round in Vietnam on Thursday.

The current TPP also includes nations which are part of the TPP, such as Australia, New Zealand, Peru, Chile, Malaysia, Brunei, Singapore and Vietnam.

However, they will still be difficult to finalise.

Image copyright Getty Images Image caption Canada has raised objections to the addition of China to the negotiations

If the U.S. walks away, Canada is likely to raise objections to how the agreement should handle issues related to China.

“Clearly, the U.S. will not be a party to the final agreement, but if the 11 [is] not completed, this will not solve all the problems facing the world or the multilateral trading system,” said Stephen Cornish, director of consulting at the Asia Pacific Foundation of Canada.

“I don’t think the TPP is the right vehicle for [going] to China,” he added.

That’s because TPP deals on a country-by-country basis, rather than a regional level, which could make it more difficult for China to participate in the agreement without everyone else in its group complaining.

“It’s in no-one’s interest for the American exit to be widely perceived as the default option for the rest of the world,” Mr Cornish told the BBC.

“That is not good for the multilateral trading system,” he added.

Leave a Comment