As Trump vows TPP withdrawal, Japam, China Stepping in

Even as U.S. President-elect Donald Trump said in a video message that his administration will pull out of the trade deal, Japan on Tuesday reaffirmed its commitment to the Trans Pacific Partnership (TPP).

The trade pact was meant to solidify the U.S.’s presence in what is considered by many American companies as the most economically dynamic part in the world and was a centerpiece of the Obama administration’s “pivot” towards Asia.

“I’m going to issue a notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country. Instead, we will negotiate fair bilateral trade deals that bring jobs and industry back onto American shores,” said Trump.

The partnership would be “meaningless” without the U.S., said Japanese Prime Minister Shinzo Abe in Buenos Aires on Monday and Trump’s announcement came even as these comments were made by the Japanese Prime Minister.

The country (Japan) plans to lobby other signatories to the pact. He added that he had no comments on Trump’s statement, Japan’s chief cabinet secretary Yoshihide Suga told a news conference in Tokyo on Tuesday. He added that he had no comments on Trump’s statement.

He Weiwen, vice president of think tank Center for China and Globalization suggested that a good opportunity for China to push its own deals such as the Regional Comprehensive Economic Partnership (RCEP) has been provided by a refusal by the U.S. to join the TPP.

“We have been spending efforts for years to get (RCEO) done by end of this year or next. It is an important pathway to the larger arrangement of the FTAAP (Free Trade Area of the Asia-Pacific),” he told the media, even as he stressed the important of consultation and stability between the U.S. and China.

President Xi Jinping renewed calls for the FTAAP pact over the weekend at the APEC CEO Summit in Peru as Beijing pushed the FTAAP in 2014 as a framework for liberalizing Pacific Rim trade.

Ian Bremmer, president at Eurasia Group said that “China is the only game in town” for Asian countries even though RCEP’s standards are lower than those of TPP’s, that the U.S. was unable to get things done from one administration to the next.

Other soft power initiatives such as Xi’s global One Belt, One Road infrastructure plan and the Beijing-led Asian Infrastructure Investment Bank, which were aimed at cementing the country’s economic influence and China’s efforts to push trade pacts coincide with these soft power initiatives.

And as Xi indicated over the weekend in Peru, this meant that Communist China was now the flag-bearer for global free trade.

“This was not the shrinking violet ‘oh we are too poor, we don’t want to lead’ (China). This was China saying the U.S. is abdicating and we are prepared to do more in terms of international trade, in terms of infrastructure, writing checks,” said Bremmer, who was at the weekend APEC event.

(Adapted from Bloomberg)

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Categories: Economy & Finance, Geopolitics, Strategy

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