What does US withdrawal mean for the TPP? Members should also be quite clear that Trump will not change his mind on participation. There is no renegotiation of the agreement that will satisfy him. There is no way to reopen the deal, rename it, repackage the commitments and get it past his desk. But this is—ironically—good news for the remaining TPP members. It provides clarity on the agreement. The United States is out. We are not in a situation of endless tweaking, negotiating revisions and waiting for possible approval. Such a condition might have lasted for months or even years and left companies sitting on the sidelines forever. Instead, with the Americans clearly out under Trump, the remaining 11 can now decide what comes next.
Moving Ahead with the TPP11
Many have assumed that the TPP absent American participation is no longer worthwhile. From the perspective of the remaining parties in the agreement, this is a flawed assessment. A careful review of the TPP shows that the benefits of the TPP remain—whether or not the United States ever joins the deal. Why? Because the United States is already a relatively open market, most of the other 11 TPP parties already have decent access to the American market whether or not the TPP includes the United States. There is not a great deal of need for new preferential access to the US market, outside of a few sectors. The US therefore is already in alignment with most of the TPP rules—whether or not it signs the agreement—in areas like standards or e-commerce. As a result, for most firms trying to access American markets from TPP member countries, whether the United States in included or not in the deal is not especially critical. Thus, from the point of view of the TPP11, moving ahead with the agreement makes a great deal of sense. Little is actually lost. It will be deeply damaging to American companies and US interests, but this is, frankly, America’s problem.
Brexit Means a Free Trade Agreement
But from our perspective, one key outcome of her speech is the announcement that the UK will seek to replace its current situation with an FTA and not with some sort of association or associate membership status. Many are likely to cheer this news—not least because it brings some clarity after months of uncertainty over objectives. But, frankly, from the perspective of companies operating in or out of the UK, it should be viewed with some alarm. Why? Because it means the UK will have to negotiate the most amazing FTA that has ever been negotiated with a very green, untested team up against one of the very best, most seasoned team of officials with the deepest bench of staff members on the planet.
The Response from China
So, what happens when President Donald Trump, urged on by his equally enthusiastic advisors, significantly ramps up enforcement efforts against China? Or moves beyond standard measures like anti-dumping lawsuits and does impose tariffs or starts to block trade? These are critically important questions that ought to be asked and answered prior to American actions. The response matters not just to the United States and China or to American and Chinese companies but much more broadly to Asia and, potentially, to the wider world.
What Does 2017 Mean for the WTO?
Last year ended with a whimper for the World Trade Organization (WTO). The multilateral trade institution had hoped for several big announcements that would show the organization could do more than just fight trade disputes. But as the last day fell in 2016, the countdown on the number of countries that have ratified with Bali Trade Facilitation Agreement (TFA) remained stubbornly stuck. For the agreement to come into force, 108 members have to ratify it. The countdown has now been changed to show that only six more ratifications are needed before TFA comes into force.