What happens in Southeast Asia when Trump scraps the TPP?

With the surprise election of Donald Trump, the ratification of the Trans-Pacific Partnership looks unlikely, which could have profound economic effects in Southeast Asia

Logan Connor
November 17, 2016
What happens in Southeast Asia when Trump scraps the TPP?
A Japanese mother and her child plant rice at a family farm in Isumi city, Chiba prefecture, Japan, 11 May 2014. Photo: EPA/EVERETT KENNEDY BROWN

The future of the Trans-Pacific Partnership (TPP) looks grim under the leadership of US president-elect Donald Trump, who has blasted the free trade agreement as the bane of the US working class.
The unratified trade deal between the US and 11 other Pacific Rim nations, including Singapore, Malaysia and Vietnam, was ostensibly designed to deepen economic ties between signatories, cutting tariffs and fostering trade.

But like several free trade agreements, it has been criticised by US politicians from both major parties for harming manufacturing jobs in the US through outsourcing.

It appears all but dead under a Trump presidency. In June, the Republican called the existing North American Free Trade Agreement “the worst trade deal in the history of the country” and likened the TPP to a “rape” of the US economy.

“It’s a rape of our country. It’s a harsh word, but that’s what it is – rape of our country,” he told a crowd at a campaign rally in Ohio.

Masahito Ambashi, an economist at the Economic Research Institute for Asean and East Asia, said most countries involved with the TPP “envision their future development policies through free trade”. Ambashi said the collapse of the TPP would stoke unease in participating nations.

If the TPP were to go sour, he said, Southeast Asia would likely look to the Regional Comprehensive Economic Partnership (RCEP), an Asean-focused proposed free trade agreement that, unlike the TPP, would include cooperation with China.

Ambashi added that while the RCEP would also provide free-trade benefits to Southeast Asian countries, it probably would not include some of the more singular benefits of the TPP.
“The tariff reduction of RCEP will not be sufficient compared to TPP,” he said, “and all the more, RCEP does not include the stringent ‘rules’ such as [those on] intellectual property rights, environmental regulations and state-owned enterprises.”

The TPP was intended to be a hallmark of US President Barack Obama’s administration, but it has faced roadblocks in recent years.

Back-channel conversations between the White House and the US Congress were said to have been paving the way for a potential vote during Obama’s ‘lame duck’ period.
But following Trump’s surprise upset victory over Democratic presidential candidate Hillary Clinton, those talks have stalled, the Washington Post reports.

The bloc of countries that have signed onto the TPP, according to the New York Times, carries an annual gross domestic product of nearly $28 trillion that accounts for approximately 40% of global GDP and a third of world trade.

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