TPP Signatories Consider Next Steps Following US Withdrawal

9 February 2017

Various meetings between ministers from the Trans-Pacific Partnership (TPP) countries are on the docket in the coming weeks, as the remaining signatories of the Pacific Rim accord weigh their next steps after the US’ withdrawal from the pact.

US President Donald Trump issued a presidential memorandum last month confirming that the United States would no longer be a TPP signatory and would prioritise bilateral trade deals under his administration. María Pagán, the Acting US Trade Representative (USTR), subsequently circulated a letter to New Zealand as the TPP depositary on 30 January confirming that “the United States does not intend to become a party” to the deal. (See Bridges Weekly, 26 January 2017)

While the US move was expected, in light of Trump’s repeated campaign trail promises on the subject, the confirmation that Washington would indeed be withdrawing after having played such an active role in the TPP’s development has raised questions over what might be salvaged from the multi-country effort.

The TPP negotiations were concluded in late 2015, with the deal signed by the 12 participating countries in February of the following year. (See Bridges Weekly, 11 February 2016)

Ciobo: TPP minus one?

In the wake of the US’ withdrawal, officials from the remaining TPP signatories have issued differing assessments over whether the trade accord can move forward in some form without the US.

Australia, for example, has been among those calling for the group to consider a so-called “TPP 12 minus one” in light of the US decision.

“What it comes down to is this, there were a lot of hard fought gains that were achieved through intense negotiations over many years, in relation to the TPP. I don’t want, and I know a number of other countries don’t want to let those gains slip through our fingers,” said Australian Trade Minister Steven Ciobo in an interview on 8 February with Bloomberg Daybreak, according to a transcript provided by his office.

Ciobo added that he would be pursuing a “minimalist approach” aiming to keep in place the advances negotiated under the TPP and “apply it to as many member states as possible that are willing to sign up to those terms, less the United States.”

He suggested, however, that if participants want to do more than just change the existing rules over the minimum threshold of original signatories that must ratify the deal, then the process would become more complicated. Even so, he mentioned that he has already held some initial discussions with fellow TPP ministers, with more talks forthcoming.

“I'm not going to rattle off any particular countries indicating their support or otherwise, but if we were able to do something with Canada, Mexico, Peru, Chile, New Zealand, Singapore, and Japan for example, well that would be a great outcome,” said Ciobo.

However, Canadian officials have been among those suggesting in recent weeks that moving forward without the US would be difficult, given the way the accord was designed.

“This agreement was so constructed that it can only enter into force with the United States as a ratifying country,” said Canadian Foreign Minister Chrystia Freeland last month in a briefing for reporters.

Whether Japan would be willing to be part of a “TPP minus one” approach also remains unclear, though other domestic officials have also suggested that the Asian economic giant first wishes to discuss the trade deal further with Trump.

New Zealand trade minister visiting TPP counterparts

Other officials have already made known their own early assessments on where the TPP could go from here. New Zealand Trade Minister Todd McClay met with Ciobo earlier this week to discuss the next steps for the trade deal, with McClay planning trips to Mexico, Japan, and Singapore as well.

“Despite the United States’ recent decision to pull out of the agreement, a number of other TPP signatories – including Australia – have expressed a strong commitment to continuing with TPP. This meeting will be an important opportunity to understand Australia’s ambitions in this area,” said the New Zealand trade official, according to a press release issued by his office.

He also said that it would be “too early to say” whether the TPP could still be revived, but that Wellington is currently interested in exploring and attempting it. In a separate statement, McClay confirmed that the meetings with his Japanese and Singaporean counterparts this week would also allow for discussions on the deal’s future.

Meanwhile, Mexican officials have reportedly suggested that they will be looking to codify the TPP’s gains into bilateral deals with any TPP signatories with whom they do not already have an existing free trade accord. Discussions between Mexican Economy Secretary Ildefonso Guajardo Villareal and New Zealand Trade Minister Todd McClay later this month are expected to include the subject of a possible bilateral deal, along with the TPP’s future.

Separately, Japanese Prime Minister Shinzo Abe is due to meet with Trump this week, with trade expected to be high on the agenda. While initial reports of their 10 February summit in Washington indicated that the Japanese leader might push for discussions of a bilateral trade pact with the US, some officials are now suggesting that this topic may no longer be on the docket. (See Bridges Weekly, 2 February 2017)

“Abe is going to talk about how we can widen the importance and value of the TPP to the Asia-Pacific region in the economic talks with the US. I don’t think an FTA will be discussed,” said Yautoshi Nishimua in an interview with Bloomberg earlier this week.

Chile meeting to “canvas options”

Along with the various bilateral meetings scheduled for February, coming up next month will be a summit hosted in Chile among ministers from various countries to discuss collectively the possible next steps for the TPP.

The gathering will be held in the coastal city of Viña del Mar on 14-15 March, and Chile has reportedly invited all TPP signatories as well as China and South Korea, according to multiple news reports. The final list of attendees has yet to be confirmed publicly at this stage.

However, some officials have already suggested that bringing the group together could be a useful opportunity to “canvas options” for the possible road ahead, both in terms of how to harvest the deal’s gains and whether adding on new members could be an option.

“In many respects these are questions that are best answered after March,” said Ciobo in response to questions as to whether China might formally be asked to join the TPP in light of the US’ withdrawal. “The reason I say that is because in March we’ll have the opportunity in Chile to meet and discuss, as the TPP countries, what we see as the path forward.”

ICTSD reporting; “Trade ministers on TPP rescue mission,” RADIO NEW ZEALAND, 5 February 2017; “Chile quiere salvar lo que quad del TPP e invita a China a pláticas,” EL ECONOMISTA, 3 February 2017; “Australia still seeking TPP deal,” SKYNEWS, 24 January 2017; “Mexico pushes for trade deal with NZ,” THE NEW ZEALAND HERALD, 7 February 2017; “Mexico pushes for free trade deal with New Zealand,” 3 February 2017; “TPP trade deal dead without US: Canada,” REUTERS, 25 January 2017; “Tokyo turns down Australian proposal for TPP without U.S., vows to keep pushing trump,” THE JAPAN Times, 24 January 2017; “Australia opens door to China in push to save TPP,” AFP, 24 January 2017; “U.S.-Japan Trade Deal Unlikely Topic at Summit, Abe Adviser Says,” BLOOMBERG, 7 February 2017.

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