Both The Economist and the Financial Times report that “America has abandoned TPP, in effect killing the trade pact that was a decade in the works and nearly complete,” and “Donald Trump has said he plans to begin pulling out of the 12-country Pacific trade deal championed by the Obama administration on his first day in office.”
The two journals take a similar view: “TPP’s collapse removes the main economic plank of Barack Obama’s much-hyped, largely abortive “pivot” to Asia,” The Economist says, and “It leaves a gaping hole in the architecture of Asian commerce. And it adds to the strong headwinds that are buffeting global trade,” and the FT says that while “Some Asian signatories had expressed hope they could move forward with the pact — which excludes China but includes close US allies such as Japan, Canada and Australia — without Washington … Shinzo Abe, the Japanese prime minister, poured cold water on such ambitions, saying TPP “has no meaning” without the largest participant.“
There was, always, one serious economic flaw in the TPP: America wanted to demonstrate that it, alone, “could set Asia’s economic agenda,” as The Economist suggests by excluding China until “America had written “the rules of the road”, as its negotiators liked to say.” That was an interesting but, in my opinion, quite wrong headed ambition.
As The Economist notes there are three proposed and overlapping trade deals in the works:
- The Trans Pacific Partnership (TPP) ~from which President elect Trump has vowed to withdraw;
- The Free Trade Area of the Asia-Pacific (FTAAP) ~ which includes Canada and the USA and Russia, too; and
- The Regional Comprehensive Economic Partnership (RCEP) ~ which includes China but not Canada or the USA and which China now wants to push as its alternative to the TPP. The Fortune article (linked in this bullet) says that, “Tan Jian, a senior member of China’s delegation at the summit, said more countries are now seeking to join its 16-member bloc, including Peru and Chile, and that current members want to reach a deal as soon as possible to counter rising protectionism.” If the RCEP can be opened to Latin American states then, presumably, Canada might be able to join too.
It appears that both Australian Prime Minister Malcolm Turnbull and New Zealand Prime Minister John Key believe that some ways, perhaps a few “cosmetic changes” to the agreement, could be found to allow Mr Trump to stay in the TPP without losing face. I doubt that can happen; I think that President elect Trump wants to keep those “first day” promises.
It seems to me that, given his stated aim “to increase Canada’s trade and attract job-creating investment to Canada, focusing on expanding trade with large fast-growing markets, including China and India, and deepening our trade links with traditional partners,” the best, and easiest to accomplish, course for Prime Minister Trudeau includes:
- Refocusing Canada’s trade efforts by extracting the Minister of International Trade from the Foreign Affairs team and making it a separate, stand alone ministry, equal to Foreign Affairs and Industry Canada and having responsibility for both domestic, inter-provincial and foreign trade and with a mandate that stresses national and global free(er) trade;
- Appointing a very strong minister to lead this ~ someone, perhaps, like Treasury Board President Scott Brison; and
- Seeking to join the RCEP as a high priority goal.