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Mar 8, 2018 | 19:22 GMT

4 mins read

How a Trans-Pacific Trade Deal Got Made Without Trump

Trade ministers and representatives attend a meeting on the Trans-Pacific Partnership (TPP) in Singapore.
(ROSLAN RAHMAN/AFP/Getty Images)

The trade deal once touted as a hallmark of U.S. efforts to check China's rise has at last crossed the finish line — without its one-time leader. On March 8, the 11 remaining members of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), the rebranded and scaled back version of TPP, signed the deal in Chile.

This deal has brought to fruition a decadelong process that saw the United States first try to build a regional trade architecture excluding China then abruptly abandon it under U.S. President Donald Trump. Since that time, Japan — China's main regional rival — has championed the bill, persevering despite repeated setbacks. Though sweeping in scope, the resurrected CPTPP is a remnant of what it was originally intended to be.

Built on the foundations of the 2006 Brunei-Chile-Singapore-New Zealand Trans-Pacific Strategic Economic Partnership Agreement (TPSEP), the logic behind TPP was to use access to the massive U.S. consumer market as a lure to incentivize deep economic, financial and labor reforms. These would, in U.S. eyes, open up economies and force them to compete on a level playing field. Washington hoped to fundamentally remake existing regional trade architecture, slowly adding new partners into its orbit as the U.S.-centric bloc gradually expanded. The United States sought to enlist strongly pro-free trade Australia, New Zealand and Singapore. An initially reluctant Japan shifted to become a strong advocate for the deal, which Tokyo perceives as a way to enhance its role in regional trade.

Malaysia and Vietnam were to serve as the proving ground for the type of deep reforms the original TPP hoped to normalize across the region, particularly among rising economies in Southeast Asia. Such reforms, Washington intended, would either rule-out Beijing or force China to fundamentally change its economy.

With the exit of the United States, CPTPP lost 65 percent of its total gross domestic product (GDP) and access to the world's largest market. Its final form reflects the removal of the U.S. market lure: Canada, Brunei, Vietnam and Malaysia all sought exceptions to address concerns previously silenced by the prospect of U.S. market access. Some of the areas of focus include key requests by the United States when it had been part of the negotiations — intellectual property, pharmaceuticals and investment in particular.

Even without the United States, the CPTPP bloc is still formidable. It accounts for 13 percent of world GDP ($10.2 trillion) and its members carry out 27 percent of global trade. In addition, trade among CPTPP countries is substantial and likely to increase in the coming years. Yet, regardless of the deal, the United States and China will continue to be the center of the Pacific trade architecture. The CPTPP countries will present enticing opportunities for outreach, though this is unlikely to take the form of a grand trade deal (as imagined in TPP).

Now withdrawn from the TPP, Washington is focusing on bilateral trade talks with an eye toward U.S. domestic issues. And, while Australia and Japan are pushing hard for a U.S. return to CPTPP, such a move is unlikely under the current U.S. administration. The United States has instead resorted to other means to check Beijing's regional rise — methods that don't involve massive free trade initiatives. Such measures include outreach to powers that could balance against China, such as Indonesia and Vietnam, as well as a broader emphasis on coordination across the Indo-Pacific. One of Washington's strategies has evolved into the nascent Quadrilateral Security Dialogue, which enlists three of the original TPP members — the United States, Australia and Japan — with the addition of India, and emphasizes security cooperation. There are also efforts underway by these countries to add an infrastructure component to provide a counterweight to China's Belt and Road Initiative.

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