The renewed attempt by Japan, Australia, and New Zealand to activate the Trans-Pacific Partnership (TPP) without the United States is poised to fail and bring down other mega trade deals in the Asia-Pacific region.
As the so-called TPP-11 countries meet in Tokyo for the third time after the US withdrawal early this year, geopolitical divisions run deeper than ever in regards to the possible changes to the TPP text without the US. In fact, some governments only agreed to such disadvantageous US proposals as increased monopolies on medicines, copyright extensions, and investor-state dispute settlements in order to gain access to the US market.
The previous TPP-11 meeting in August in Sydney produced no substantial outcome other than the scattered identification of about 50 items to freeze until the US ever decided to come back to the TPP table. However, the TPP-11 countries could only agree to suspend the three-year extension of pharmaceutical data protection originally demanded by the US. Other more controversial issues thus remain highly visible on the table, in particular the provisions on investor rights, government procurement, state-owned enterprises, and intellectual property.
Tinkering with the TPS unlikely to work
Even the buoyant Australian Trade Minister Steven Ciobo had to admit reluctantly that, “If we suddenly start unpicking all aspects of the agreement, it’s going to quickly get much more difficult.” Before the Sydney meeting, the liberal economies of the trading bloc — Japan, Australia, New Zealand and to some extent Singapore — expressed optimistic, or some may say delusional, expectations of resuscitating the TPP without the US only with minimal changes.
Nevertheless, ahead of the TPP-11 leaders’ summit in November, it is now clear that this is not going to be the case. From one side Australia, New Zealand and Japan are pushing hard to keep the TPP terms as they were negotiated with the US, while on the opposite side Malaysia and Vietnam seek to reopen the Pandora’s box of negotiations more widely, as they do not want to keep unpopular terms that were accepted only to gain US market access.
In the middle ground, Canada and Mexico, in essence, prefer to keep the TPP entirely on ice, as they are focusing on the renegotiation of the North American Free Trade Agreement with the US and will be careful to avoid any diplomatic misstep with the TPP-11.
Domestic politics overshadow a TPP revival
The prospects for the TPP-11 are not rosy either at the various levels of domestic politics. Beside the fact that Vietnam is weighing the deal’s worth before pursuing any reform, elections are close on the horizon in Japan, Malaysia, and New Zealand. As emerging studies are authoritatively disproving the purported economic benefits of the TPP for local consumer and labor markets, incumbent governments will be further discouraged from taking any steps on the TPP revival that may become an election-campaign issue.
The likely diplomatic failure to activate the TPP-11 is poised to carry over to the other multilateral trade deals that these countries jilted by the US are negotiating with other governments in the Asia-Pacific region, including the ASEAN-led Regional Comprehensive Economic Partnership (RCEP) and the Trade in Services Agreement (TiSA).
This would cause a major blow to the geopolitical credentials of the liberal Asian order heralded by Japan, Australia and New Zealand. An immediate backlash in these countries would be the rethinking of free-trade strategy away from broader regional engagement and toward narrower bilateral partnerships with geo-economically compatible partners.
Dr Giovanni Di Lieto lectures international trade law in the International Business program at Monash University in Melbourne. His early professional career developed in the logistics industry in the US, Europe and China. His research interests focus on the global governance of cross-border socio-economic relations and its repercussions on the international regulation of trade and labour markets. He is the author of ‘Migrant Labour Law: Unfolding Justice at Work for Migrants’, published by The Federation Press in Sydney and winner of the inaugural Holt Prize for best legal manuscript in 2016. He is a council member of the Australian Institute of International Affairs (Victoria State) and a commissioning editor of its online publication, Australian Outlook. He regularly expresses technical views on international economics in media, professional and government outlets.