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Where is TPP heading?

Mar 20 , 2017
  • Chen Youjun

    senior research fellow, Shanghai Institutes for Int'l Studies

Early in his presidency, President Trump signed a presidential memorandum announcing America’s withdrawal from TPP. But TPP survived the setback, and people are still referring to TPP as an embodiment of the shape of things to come in global trade and investment development. So it begs the question: Is TPP is alive? Dead? Or just suspended?

First, for Trump to dismiss TPP carries the anti-Obama symbolism, but TPP in and of itself does have considerable popular support. While TPP was largely devised and fostered during the Obama presidency, it was not the brainchild of Obama administration alone. More accurately, it represents the vision and expectations of the American elite for the future shape of global trade and investment rules, and a modern interpretation of the global free trade concept of American society. From this perspective, TPP carried much weight and the fallout of US withdrawal will continue to reverberate. Admittedly, TPP cannot hide the divided views in the American society regarding global trade and investment rules and different interest groups, such as tobacco, agriculture, finance and insurance (or Wall Street), find TPP in its current form inadequate. That probably gives some legitimacy and justification to Trump’s decision to quit TPP.

While the Trump administration has announced withdrawal from TPP, in favor of bilateral economic cooperation and negotiation to protect US interests, it does not necessarily mean the US has given up its dominancy in global trade rule-making. To the contrary, the Trump administration only made a technical retreat to set the stage for broad strategic gains.

Trade has been front and center of the Trump economic and trade agenda. In the US government, trade involves primarily the Commerce Department, USTR and ITC, etc., with the energy and environmental agencies playing a marginal role. In order to strengthen presidential oversight of trade issues, Trump announced the establishment of the National Trade Council, through which the White House could also wield direct ideological influence on trade policy-making.

Second, other TPP signatories, including Japan, Australia, New Zealand and Canada, are not willing to let the deal fall by the wayside. They are planning a TPP without the US. Japan, for example, has invested heavily in TPP and that is behind Japan’s reluctance to drop the deal. What’s more, Japan wants to replicate some of the TPP provisions in the RCEP and China-Japan-ROK economic cooperation framework, which may complicate efforts on these fronts. Also, some voices in Japan are arguing that even though the US is leaving TPP, Japan should go on with its own pursuit of a high-standard multilateral trade and investment cooperation framework. An FTA between Japan and the US may be a viable option. But even in that scenario, Japan may be wary of demands to further open up its agriculture market beyond the TPP standards.

In sum, TPP is very much up in the air, and we will have to wait and see where it goes.

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