SYDNEY: It was billed as the world’s biggest trade deal, a feather in the cap of globalisation advocates that promised to re-write the rules for 21st century commerce.
But the Trans-Pacific Partnership was tossed into disarray in early 2017 after President Donald Trump pulled the US from the pact, the opening salvo in his winner-takes-all, “America first” trade policy.
American allies were stunned and they scrambled to cobble together what was left of years of negotiations to bind Pacific countries closer together and counter China’s growing economic might.
On Wednesday, Australia ratified the deal, meaning more than half the remaining 11 countries had now done so, allowing it to go into force on Dec 30.
Here are some key questions about the pact and its prospects.
What is the TPP?
Even without America’s inclusion, the Trans-Pacific Partnership is one of the most ambitious free trade pacts ever negotiated.
Initially, it brought together 12 Pacific Ocean economies – the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Before the abrupt exit of the deal’s largest partner – the United States – the signatories accounted for a whopping 40% of the global economy.
Without the US, that figure is closer to 14%, or a collective GDP of US$10.6 trillion (RM44.3 trillion).
Supporters said it would scrap barriers to the free flow of goods, services and investment capital.
Dubbed a “high quality” trade deal, it goes deeper than other free trade agreements in terms of terms of labour regulations, environmental rules, intellectual property protections and other requirements.
Without the TPP, there are no other “high quality” deals on the table for signatories.
Why did Trump junk it?
Scrapping the TPP was an oft-repeated Trump campaign promise, and the first major move on trade he took after taking office.
He called the deal a “rape” of American interests and blamed free trade pacts like the TPP for the loss of American jobs, though most experts agree automation is behind a decline in the industrial workforce.
Trump trade officials have called for “fair” trade deals, vowing to plough efforts into bilateral pacts instead of multilateral deals, including with countries in the Asia-Pacific region.
Many economists disagreed with Trump’s characterisation of the trade deal, saying it would generate new jobs and growth for signatories.
So how did the deal survive?
Frantic behind-the-scenes, Japanese-led diplomacy kept alive a slimmed-down version of the pact called the CPTPP – the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Remaining members hope that Washington will have a change of heart – or government – and will eventually join.
Most industrialised economies within the pact have now ratified it: Australia, Canada, Japan, Mexico, New Zealand and Singapore.
Brunei, Chile, Malaysia, Peru and Vietnam have yet to do so.
For those countries – rising economies with often heavily protected industries and poor labour laws – much of the draw of TPP was access to the world’s biggest market, the US.
Washington’s departure has made the deal less attractive but it does still give smaller economies like Vietnam greater access to big economies such as Japan’s.
New Zealand’s trade minister said he expected most of the remaining countries to come on board once the first round of tariff cuts come in after 30 December.
Plus the door remains open for the United States – and other countries like South Korea and Colombia which have expressed interest – to join.
What does China think?
Under former US president Barack Obama the pact was sold to American allies as a unique opportunity to seize the initiative on worldwide trade – and ensure China does not get to dictate global terms of commerce.
The world’s second largest economy is unlikely to welcome its revival.
China also has its own trade pact – the Regional Comprehensive Economic Partnership (RCEP) – currently under negotiation.
That deal brings together the 10 Southeast Asian countries of Asean, as well as China, India, Japan, South Korea, Australia and New Zealand.
Something of a mirror image to TPP, it is now the largest trade pact in negotiation but it does not include the US and is less ambitious on issues like employment and environmental protection.
RCEP members are meeting in Singapore next month on the sidelines of an Asean summit and are pushing to have the deal largely sewn up by the end of the year.