US President Donald Trump signed on Monday an executive order to withdraw his nation from the negotiating process of the Trans-Pacific Partnership (TPP), wiping out six-year-long efforts of the Obama administration.
Former president Barack Obama first put forward the Pacific trade pact idea during the 2010 APEC summit. Together with the US, 12 countries representing roughly 40 percent of the world’s economic output have since signed up for the TPP.
The pact aimed to deepen economic ties between the nations, slashing tariffs and fostering trade to boost growth.
TPP has set high thresholds in terms of opening up domestic markets, removing tariffs, improving legal framework and even free speech, effectively excluding China as the Asian giant would have to make huge compromises in order to participate.
The pact was, therefore, seen by some as an effort by the US and the West to put pressure on China, which has been accused of failing to open its markets as promised when it joined the WTO in 2001.
If TPP succeeds, Chinese exports will suffer a heavy blow as the 12 nations would have closer economic and trade ties with almost zero tariff and integrated market access.
Now that the US is pulling out, TPP is suddenly left without a leader and an anchor member.
As a result, both Australia and New Zealand said they hope to salvage the TPP by encouraging China and other Asian nations to join the trade pact by reformulating the accord.
If so, China could replace US as the leader in the trade pact.
Trump’s push for protectionism and isolationism might end up handing Beijing a golden opportunity to play a bigger role in global economy.
This article appeared in the Hong Kong Economic Journal on Jan. 27
Translation by Julie Zhu
[Chinese version 中文版]
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