The first executive order undertaken by the newly sworn US President Donald Trump was to scrapeout the long-negotiated Trans-Pacific Partnership (TPP) on 23 January. For many countries, his action was not sudden and uncommon,whichwas anticipated during the election campaign. Yet, many countries were not prepared to absorb the “Trump’s shock”.
The pact was negotiated among 12 countries, namely: United States, Canada, Mexico, Peru, Chile, Japan, Vietnam, Malaysia, Singapore, Brunei, Australia, and New Zealand. The pact aimed at free trade and open markets across the Asia-Pacific nations. Trump found that under the TPP, America will lose more jobs and its industry will further suffer. Cheap labour and unfair business tactics of these countries would ruin the US economy, Trump feared.
The bloc specifically targeted China by excluding it. President Obama wanted to block China as a trading nation in the Asia-Pacific over the past eight years in office. For him, the TPP was the most effective way of countering China’s response along with other nations. The joint containment of China, however, has failed. The decision might be the re-opening of China in the region where it might cultivate strong trading ties.
Japan was in the lead to take over under the TPP. It was an ardent supporter of the pact and was supposed to take the lead in many trading sectors. It had completed the TPP ratification process before Trump decided to withdraw from the pact. Japan was the only country that first ratified the pact finding it beneficial for Japanese auto manufacturers and other industries.
It is a significant diplomatic setbackfor Japan and its commitment to the United States. Japan did its best to convince Trump not to scrap the TPP. Now Japan wants Trump to revise his decision. The United States, Japan’s close ally, was the leading player of the TPP and after its exclusion, the bloc is virtually dead. It is a setback to Japan and other ten countries – the first “Trump shock” that came within three days during his office.
Japan officially admitted that without the United States, the pact would be”meaningless” as it reacted to Australian proposal to continue the pact without the United States.For Australians, all is not lost after the American exit. For Japan, all is lost after the US decision. Some confusions are still lingering on the diplomatic and political horizons of Japan. It also raised its voice in countries that had signed the pact.
Japan is, however, reluctant to invite China into the fold of the TPP as proposed by Australia, which Japan thinks would enhance Beijing clout in the region. The difference of opinion now also exists among TPP members as for how to save the pact. For them, the United States used many of these capitals to raise the political stand against China and now it withdrew from the campaign, leaving them in thelurch.
For them, the Unites States’ withdrawal from the pact would create anuncertain situation for them in the region. Japan and Vietnam are primarily worried about the American retreat and the rising threat of China. The US exit gave them a ‘’strategic disadvantage’’ at a time when they have much conflicted with China. These two countries were yielding on US support against China.
Some countries are even anticipating China to lead the TPP after the American exit. They think that would deepen China’s ties with the Asia-Pacific nations. Japan and Australia are still trying to save the pactbut in their own ways, knowing that it is dead after the American exclusion.
China would not be a market,unlike the United States. China may take benefits, but it may not offer benefits to others as the US market could do for exporters. China might not be interested in the short-term benefits provided under the TPP. China looks at the long-term benefits. Therefore, it is yet premature to anticipate China’s option on the TPP. China, on the contrary,has the capacity to fill the vacuum in the TPP and give it a new breath.
The dream of the Asia-Pacific economic freedom, making 40 percent of world’s GDP, came to an end. Many of these nations were banking on tariff reductions and markets offered under the pact, mostly in the United States. There are conflicting economic parameters drawn in favour and against of member countries. They were market driven rather than genuine economic analyses. This created confusion. Willthe remaining TPP members devise the new free trading strategy, is still to be worked out.The alternative Regional Competitive Economic Partnership (RCEP), all from Asian countries and some of the TPP signatories, has not made up its face yet. China could easily dominate the RCEP, but no decision has been taken in Beijing so far.
Does US TPP exit also mean that it is no longer interested in the Asia-Pacific trading negotiations and its re-balance approachand to China’s counterweight that are costly to American economic interests? For many critics of Trump, he gave a free ride to China’s rise in the Asia-Pacific. China’s next trading move in the region would actually determine the future strategy among the Asia-Pacific countries.
The writer is a Senior Research Fellow at the Institute of Strategic Studies Islamabad. He writes on China, Japan, and East Asian affairs