Trump pulls US out of TPP, leaves Asian allies in the lurch

24 January 2017

The United States formally withdrew from the Trans-Pacific Partnership (TPP) with President Donald Trump signing an executive order in the Oval Office on Monday, fulfilling another campaign pledge.

The 12-nation TPP was negotiated by Barack Obama but never approved by Congress, and Trump's executive order distances America from its Asian allies, leaving it to China to take the initiative for a fresh trade deal.

Trump, who wants to retrieve America's manufacturing edge, had said he would seek one-on-one trade deals rather than get involved in the 2015 pact.

Trump said he would prefer to deal with countries in a manner that the United States can quickly terminate the deal in 30 days "if somebody misbehaves".

Trump knows very well that the US cannot compete with low-cost economies in manufacturing and the better option is to go for cutting-edge technology and product sophistication.

"We're going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country," the Republican President said as he met with union leaders in the White House's Roosevelt Room.

The TPP accord, negotiated by Barack Obama's administration, excluded China from the trade pact in an effort to set new trade rules for Asia and establish US economic leadership in the region as part of his "pivot to Asia". It had the full backing of US business as well.

Trump's action of blocking a trade deal has left America's Asian allies, including Japan, Australia and New Zealand, to fend for themselves or join a trade block sponsored by China.

China, which is opposed to the TPP, has proposed a Free Trade Area of the Asia Pacific and has also championed the Southeast Asian-backed Regional Comprehensive Economic Partnership (RCEP).

Trump's stance emanating from a general feeling in the United States that it is losing both market and jobs due to trade deals that favour low-cost economies.

Australia now hopes to salvage the Trans-Pacific Partnership by encouraging China and other Asian nations into the agreement in the wake of US pulling out of it, its trade minister said today.

New Zealand's trade minister said ministers from the remaining TPP countries would meet in the next few months to discuss how to save the trade deal, which was seen in Asia as a counterbalance to China's rising influence.

TPP member Australia said China and Indonesia could join in the vacuum left by the United Sates. The TPP had yet to come into force with many countries still to ratify it.

"The original architecture was to enable other countries to join," Australian trade minister Steven Ciobo told the Australian Broadcasting Corporation.

"Certainly I know that Indonesia has expressed interest and there would be scope for China if we are able to reformulate it," said Ciobo.

The remaining 11 TPP nations are Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, Vietnam, Australia and New Zealand.

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