Australia and New Zealand said yesterday they hoped to salvage the Trans-Pacific Partnership (TPP) by encouraging China and other Asian nations to join the trade pact after US President Donald Trump kept his promise to pull out of the accord.
The TPP, which the US had signed but not ratified, was a pillar of former US president Barack Obama’s policy to pivot to Asia.
Japanese Prime Minister Shinzo Abe has touted it as an engine of economic reform, as well as a counter-weight to a rising China, which is not a TPP member.
Fulfilling a campaign pledge, Trump signed an executive order in the Oval Office on Monday pulling the US out of the 2015 TPP agreement and distancing the US from its Asian allies.
Australian Prime Minister Malcolm Turnbull said he had held discussions with Abe, New Zealand Prime Minister Bill English and Singaporean Prime Minister Lee Hsien Loong overnight about the possibility of proceeding with the TPP without the US.
“Losing the US from the TPP is a big loss, there is no question about that,” Turnbull told reporters in Canberra yesterday. “But we are not about to walk away ... certainly there is potential for China to join the TPP.”
Obama had framed TPP without China in an effort to write Asia’s trade rules before Beijing could, establishing US economic leadership in the region as part of his “pivot to Asia”.
China has proposed a counter pact, the Free Trade Area of the Asia Pacific (FTAAP) and has championed the Southeast Asian-backed Regional Comprehensive Economic Partnership (RCEP).
New Zealand’s English said the US was ceding influence to China and the region’s focus could switch to alternative trade deals.
Malaysia’s Trade Minister said negotiators from the remaining TPP countries would be in “constant communication” to decide the best way forward.
“Notwithstanding the current position of the new US administration on (TPP), we will continue to engage with our American colleagues to strengthen our bilateral trade and economic relations, given the US’s importance as our third-largest trading partner and a major source of investment,” Mustapa Mohamed said in a statement.
The TTP, which has been five years in the making, requires ratification by at least six countries accounting for 85 per cent of the combined GDP of the member nations.
Australia held open the possibility of China, the world’s top exporter, joining a revised deal.
“The original architecture was to enable other countries to join,” Australian Trade Minister Steven Ciobo told the Australian Broadcasting Corporation yesterday.
“Certainly I know that Indonesia has expressed interest and there would be scope for China if we are able to reformulate it.”
Japan has led the push for the partnership, which also includes Brunei, Canada, Chile, Malaysia, Mexico, Peru and Vietnam.
“There is no change to our view that free trade is the source of economic growth,” Japanese Economy Minister Nobuteru Ishihara told reporters.
Japanese Deputy Chief Cabinet Secretary Koichi Hagiuda said separately that Japan was not considering moves with other TPP members based on a lack of US involvement.
“As Prime Minister Abe has made clear, TPP without the US is meaningless and the balance of interests would crumble,” he said, adding Tokyo would keep explaining the benefits of the pact for America.