By THE EDITORS / Pic By BLOOMBERG
In the space of a few hours on Tuesday, what had been increasingly obvious became all but official — the US is no longer leading the world economy.
The US withdrawal is signalled by the announcement of new tariffs on solar panels and washing machines by President Donald Trump’s administration. Dispiriting as this choice may be — not to mention bad for US workers and consumers — it’s good news that the 11 remaining members of the Trans-Pacific Partnership (TPP) have stepped into the resulting void.
With their agreement to move forward without the US, they are serving their own interests and the world’s. The new pact is valuable for the rest of the group, and with luck will be a model for trade liberalisation more broadly.
The agreement had been in doubt until this week. It was originally intended to take effect only if countries accounting for 85% of the region’s output signed on — a thresh- old impossible to reach without the US, the plan’s main architect.
In November, after Washington dropped out, the remaining members said they hoped to go ahead regardless, but Canada, among others, expressed reservations, and sticking points remained. Talks in Tokyo have apparently resolved those issues, or at any rate set them aside.
Canadian Prime Minister Justin Trudeau (picture) saluted the agreement as “the right deal”.
The partnership matters because, by US design, it is a new kind of trade deal. Its main provisions aren’t about tariffs but concentrate instead on protecting intellectual property, promoting data-based commerce, and maintaining high standards of labour and environmental protection.
The goal, in short, is to facilitate new kinds of trade.
A revived TPP should increase the members’ bargaining power and make it easier for them to resist any further US lurches toward protectionism. And it needn’t stop here.
South Korea, Taiwan, Thailand, Indonesia and the Philippines aren’t members but have expressed interest.
According to the Peterson Institute for International Economics, this larger TPP would yield gains of roughly US$500 billion (RM1.95 trillion) a year for its members — more than the original deal. The partners should make it clear to China that it would be welcome to take part as well, so long as it’s willing to abide by the pact’s rules.
It’s sad that US trade policy, for now, is no longer guided by enlightened ambition. But a Pacific partnership that keeps moving forward can hope to eventually welcome America, under new management, back into the fold.
In the meantime, its members can exercise the leadership on trade that the US no longer cares to. — Bloomberg