Without US, 11 Asia-Pacific states to sign trade deal
Eleven Asia-Pacific nations on Thursday are to sign a slimmed-down trade pact to lower tariffs just as US President Donald Trump seeks to raise them after withdrawing from the deal last year.
The Trans-Pacific Partnership, which would have represented 40 per cent of the global economy and nearly one-quarter of its trade, was left for dead after Trump pulled out to pursue his "America First" agenda before the TPP could take effect.
But the revamped deal, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), is still a significant achievement that sends a message of openness, its supporters said ahead of the signing ceremony in Santiago, Chile.
The pact will include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, representing together 13.5 per cent of global gross domestic product.
The 11 states form a market of 500 million people, greater than that of the European Union`s single market.
"While taxes are going to be applied to certain products and there is a threat of a trade war, we are going to give a signal of openness," said Chilean Foreign Minister Heraldo Munoz.
"It`s the most important free trade agreement and the most rigorous that has been signed until now in the world."
The deal will be finalized in the same week that Trump has risked a global trade war over his decision to introduce tariffs on imported steel and aluminium.
Former president Barack Obama`s administration pushed for the TPP as a counterweight to growing Chinese commercial power. It not only cut tariffs but required members to comply with a high level of regulatory standards in areas like labour law and environmental protection.
Fernando Estenssoro, of Chile`s University of Santiago, says the revamped pact will be "a type of suicide" for the United States. Washington`s absence leaves an open path for China - which remains excluded from the deal - as it negotiates separately with Asian countries and New Zealand.
The CPTPP aims to slash tariffs among the 11 members and foster trade to boost growth.
Felipe Lopeandia, Chile`s top trade negotiator, said the deal will "send a political signal to the world and to the United States itself, that this is a global agreement."
It is one which remains hugely significant, said Ignacio Bartesaghi of the Catholic University of Uruguay`s business school.
"There is no trade agreement involving that number of countries, and one that has 30 chapters which deal with all the most modern topics of international trade," Bartesaghi told.
Most provisions of the original agreement remain, except those related to intellectual property originally inserted at the demand of US negotiators.
"The CPTPP will establish a new standard for other regional economic integration agreements, and even for future negotiations in the WTO (World Trade Organization) and in APEC (Asia-Pacific Economic Cooperation)," said Chile`s foreign ministry, which is hosting Thursday`s ceremony.
Chile said membership of the new pact will improve access to markets currently responsible for 17 per cent of its total exports.
Mexico and Peru will also get better entry to countries on the other side of the Pacific.
"It means an increase in our potential market and the possibility that our people can access more products," said Mario Mongilardi, head of Lima`s chamber of commerce.
The pact will come into force 60 days after it is fully ratified by six of the 11 members.