Trump's Rejection Of TPP Paves Way For China To Strike Asian Trade Deals
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President-elect Donald Trump has doubled down on a campaign pledge. He says he will pull the U.S. out of a massive Asian-Pacific trade deal initiated by the Obama administration. The Trans-Pacific Partnership, or TPP, was devised to link the economies of the U.S. and other Pacific nations. The U.S. withdrawal would open the way for China to strike its own deals across Asia. NPR's Jackie Northam reports.
JACKIE NORTHAM, BYLINE: President-elect Trump never lost an opportunity to bash the TPP while he was on the campaign trail. On Monday night, Trump released a video laying out what he plans to do once he's in the Oval Office. And the TPP was at the top of his list.
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DONALD TRUMP: On trade, I am going to issue our notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country.
NORTHAM: Trump's declaration effectively brings to a halt five years of hard-fought negotiations between the U.S. and 11 Pacific-Rim nations, from Australia to Vietnam to Chile. The TPP was the economic underpinning of the Obama administration's re-engagement with Asia, a region containing some of the world's fastest-growing economies. Wendy Cutler is a former trade representative and worked on the TPP. She says the decision to pull out damages U.S. credibility in the region.
WENDY CUTLER: A lot of other TPP countries in this negotiation responded to many U.S. requests and did a lot of heavy lifting to embrace what the U.S. wanted in this deal. So by us now declaring that we're going to withdraw from it, they're kind of left hanging now. And I suspect many are now actively figuring out their plan B.
NORTHAM: That plan B could involve trade deals with China, says Meredith Sumpter, an Asia specialist at the Eurasia Group.
MEREDITH SUMPTER: You can sense that there is already a shift of Asian economies moving towards China because they perceive that the U.S. under a Trump administration is turning away from leading trade and investments across the region.
NORTHAM: Sumpter says it's a situation Beijing could take full advantage of. China wasn't a part of the TPP. But it is already leading another free-trade deal called the Regional Comprehensive Economic Partnership, or RCEP, involving 10 Asian countries. About half of the countries involved in the TPP are signaling interest in that deal.
SUMPTER: Moving toward the RCEP would be an easy answer to trying to find something to replace the TPP. However, the RCEP is actually a much lower-quality trade pact than the TPP.
NORTHAM: The TPP was touted as the gold standard of trade pacts because of its stringent rules and protections for things such as labor, the environment and intellectual property - not so with the China-led trade deal, which just focuses on lowering tariffs. Still, Wendy Cutler, now with the Asia Society Policy Institute, says even a flawed Chinese deal is better than nothing for many Pacific-Rim nations that were involved in the TPP.
CUTLER: They want to grow their economies and find new opportunities for job growth, economic growth and economic reform and economic opening. So, in other words, these other countries don't want to stand still just because we're standing still. They're going to move forward.
NORTHAM: In the meantime, Trump says he'll do a series of bilateral deals across Asia rather than buy into one major trade pact. And instead of lowering import tariffs envisioned in the TPP, he's threatened to raise them, fueling concern about a trade war. Jackie Northam, NPR News. Transcript provided by NPR, Copyright NPR.