An Asian trade specialist says it is increasingly obvious the Trans Pacific Partnership (TPP) will not be enacted and the China-led Regional Comprehensive Economic Partnership (RCEP) will come to the fore.
That is despite Japanese Prime Minister Shinzo Abe, and Australian Prime Minister Malcolm Turnbull, jointly announcing they would pursue bringing the agreement into force within the next 12 to 18 months.
The TPP is a 12-country trading block that has been subject to negotiation in the last few years, and was expected to be ratified by all nations at the end of 2018.
But United States President-elect Donald Trump has vowed to tear up the TPP on his first day in office.
Academic Jeffrey Wilson said without the US on board, the TPP had little to offer a lot of the member countries.
Dr Wilson is a senior lecturer in international political economy and a Fellow of the Asia Research Centre at Murdoch University in Perth.
“The US alone was worth almost two thirds of the economic size of the bloc,” he said.
“If it is no longer a part of the TPP, the access to that critical market isn’t there, therefore neither is the reason many countries signed.”
Dr Wilson said TPP negotiations were driven by the US, and it was unlike traditional trading agreements in that it demanded non-trade concessions.
“Many countries in the region made concessions during the TPP negotiations, particularly around issues like environmental protection, labour rights, anti-corruption and transparency measures.
“If America isn’t in the deal, a many of those countries will see the opportunity to remove many of the elements they weren’t entirely comfortable agreeing to in the first place.”
RCEP the new trading-bloc on the block
Dr Wilson said the Regional Comprehensive Economic Partnership (RCEP), which is another trade agreement under negotiation right now would very likely be agreed to by the end of this year.
The 16 member bloc includes all 10 members of the Association of South East Asian Nations along with Australia, New Zealand, Japan, Korea, India and China.
Dr Wilson said it would be much the same economic size as the TPP, and with China pushing negotiations along in the wake of Donald Trump’s election, it was expected to be completed by the end of 2017.
“The primary aim of RCEP is very different ,” he said.
“Where the TPP tried to set regulation around investment and intellectual property and services, RCEP is focused on traditional matters like lowering barriers to trade, such as tariffs.”
He said that focus was expected to be of greater benefit to countries that exported textiles, such as Vietnam, rather than primary producers and exporters such as Australia.
“Agriculture is such a sensitive and controversial sector (in trade negotiations), particularly in countries like Indonesia and India.
“This means that the outcome will mean Australian farmers will get a much less favourable outcome than they would have under the TPP,” Dr Wilson said.