TPP: 11 nations agree on preparation deadline

• May 22, 2017

ASIA has been warned many times against creating a “spaghetti bowl” of conflicting trade agreements, and with trade chiefs from three major powers pushing their own ideas at a series of weekend meetings in Hanoi, the prospects for general agreement on an Asia-wide accord remained highly uncertain.

During the two-day gathering, Japan succeeded in putting the Trans-Pacific Partnership (TPP) back on the table despite the fact that US President Donald Trump has said he will have no part of it, while Japan also agreed with Washington that a bilateral trade accord could be discussed.

China, meanwhile, continued to recommend that the Regional Cooperative Economic Partnership (RCEP) be the centrepiece of a regional trade agreement in order to bring more countries (including itself) to the table. RCEP will be the subject of a further meeting on Monday in Hanoi.

There seemed to be something for everyone at the meetings of the 21-nation Asia-Pacific Economic Cooperation (Apec) forum in the Vietnamese capital and on the sideline meeting of trade ministers from the 11 remaining countries in the TPP (after the United States’ withdrawal early this year).

But some observers said the meetings served to illustrate the increasing divide among Asia-Pacific powers, with the US striving for bilateral trade accords while Japan seeks leadership by holding the TPP together and also tries to prevent China from taking the lead via RCEP.

This divide was also underlined as Apec issued what a Bloomberg report from Hanoi described as a diluted “actions” statement agreeing to remove barriers to trade, while omitting a pledge from late-2016 to combat protectionism.

The statement came after a dispute over wording, particularly whether to include language arguing against protectionism. “We call on officials to accelerate work to deepen Apec’s structural reform agenda to remove barriers to trade and investment,” the statement said.

Meanwhile, ministers from 11 TPP countries (including Singapore) agreed on Sunday to complete preparatory work by November to put the free trade pact quickly into force, taking a step closer to implementing the deal without the US, Kyodo New reported from Hanoi.

But some members, including Vietnam and Malaysia, are unwilling to move ahead without the participation of the US, and the 11 agreed to leave the way open for the US to return to the TPP. “We are in a different group from Japan,” a senior Malaysian official was quoted as saying.

Mexico and Canada are believed to be reluctant to antagonise Mr Trump by joining the 11-party TPP, as they have been urged by Washington to renegotiate the trilateral North American Free Trade Agreement, according to some reports.

“The ministers asked senior trade officials to to take forward the preparation” of assessments of options to achieve a comprehensive and high-quality deal, a statement released after their meeting in Hanoi said.

They aim to finish the work before they meet on the margins of the Apec summit in Vietnam in November. Japan has been anxious to implement the “high-level” rules agreed on by the original 12 TPP member countries. Japan and New Zealand are the only two countries to have ratified the TPP so far.

“Singapore supports the joint efforts by the 11 to sustain the TPP,” said Minister for Trade and Industry (Trade) Lim Hng Kiang. “It is important that we keep up momentum. Singapore will participate constructively in this collective process to harvest the TPP’s benefits.”

Japan’s TPP minister Nobuteru Ishihara said at a press conference that chief negotiators from the 11 members would meet in Tokyo in July. The 11 ministers said they “underlined their vision for the TPP to expand to include other economies that can accept the high standards of the TPP”.

The TPP was signed in February 2016 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam – covering around 40 per cent of the global economy.

Under current rules, the TPP requires ratification by nations accounting for 85 per cent of the combined gross domestic product (GDP) of the 12 countries. The deal effectively died following the withdrawal of the US, which represents over 60 per cent of the trade bloc’s GDP.

US and Japanese trade heads meanwhile agreed on Saturday during their first talks that Washington and Tokyo would establish “high-level” standards to promote bilateral trade and bolster economic growth, Japanese Trade Minister Hiroshige Seko said.

“We have agreed that the two countries will work together to promote mutually beneficial trade, tackle trade barriers and trade-distorting measures, and create high-level standards,” Mr Seko said after a conversation with US Trade Representative Robert Lighthizer.

During the meeting on the sidelines of the Apec ministerial gathering, they also shared concerns over “unfair trade practices by a third nation”, Mr Seko added. This was generally assumed to refer to China even though Mr Seko did not say so specifically.

Underlining the problems in achieving regional harmony, Vietnamese Prime Minister Nguyen Xuan Phuc said in a speech that Apec’s goals “might fail to turn into reality when we lack trust, political determination and coordination the flow of goods in the region”.

Source: http://www.businesstimes.com.sg/government-economy/tpp-11-nations-agree-on-preparation-deadline