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WALL STREET JOURNAL
Pacific-Rim Countries Move Closer to TPP Deal Without U.S.
Ministers agree on ‘core elements’ of revised trade pact;
Canada’s reservations prevent final deal at APEC summit
By Ben Otto in Da Nang, Vietnam and Paul Vieira in Ottawa, Canada
Eleven Pacific-Rim nations said on Saturday that they had made
significant progress toward reaching a major trade pact 10 months after
President Donald Trump withdrew the U.S., but disagreements from Canada
prevented a final deal.
Trade ministers said they had agreed on “core elements” of a revised
version of the Trans-Pacific Partnership without America, a deal that
still brings together Japan, Mexico and Australia and a host of other
countries with a combined GDP of more than $10 trillion.
An agreement would be a win for countries advocating a multilateral
trading order at a time when Mr. Trump is pushing for bilateral deals
and protectionism is rising globally. It would also provide a
counterweight to rising Chinese influence in Asia and give the
participants greater bargaining power in seeking other trade deals.
Trade experts say that even without the U.S., the income gains could
total more than $150 billion annually for members. Negotiators say they
have left the door open for the U.S. to re-enter the pact at a later
date, if desired.
The effort to salvage the TPP has been the most-watched event at this
year’s Asia-Pacific Economic Cooperation summit, an annual gathering of
leaders from 21 nations including the U.S., China and Japan. The
announcement comes a day after Mr. Trump gave a speech outlining U.S.
rejection of a multilateral trade order and pushing for bilateral deals.
The inability to complete the deal at the weekend’s APEC summit was a
lesser outcome than nations such as Japan had hoped after months of
talks. Japan had taken over as a driving force behind the negotiations
after Mr. Trump pulled the U.S. out of the pact in his first days in
office.
Ministers gathered in the seaside city of Da Nang said they agreed to
suspend 20 provisions of the original deal reached with the U.S. under
the Obama administration, which had championed it, in February 2016.
Disagreements among the remaining 11 countries
continue over rules for state-owned enterprises, dispute settlement and
cultural exceptions, among others. Ministers didn’t set a
timetable for completion.
Canadian Trade Minister François-Philippe Champagne confirmed Saturday
that the automotive sector and cultural
exemptions were among the sticking points. “What we have achieved
is progress, but we also identified what work needs to be done,” he
said.
Canada surprised negotiators twice during the closing stages of the
talks this week. Ministers said they had a deal late Thursday night,
only for Mr. Champagne to object shortly afterward in a tweet.
The next day, Japan gathered leaders at a hotel with hopes of reaching a
deal. Instead, Canadian Prime Minister Justin Trudeau was a no-show,
leaving Japanese Prime Minister Shinzo Abe to break up a meeting where
leaders had been waiting around a table. Canada attributed Mr. Trudeau’s
absence to a scheduling misunderstanding, but Mr. Trudeau told reporters
Saturday that as leaders assembled he had been in a meeting with Mr. Abe
that “went long,” and discussions made it clear they would have to
postpone the TPP gathering. “There is more work to do, and that was my
message,” he said. He cited the auto sector and the cultural sector
without elaborating.
A person briefed on the TPP talks said Canada was concerned that the new
TPP would disrupt the North American supply chain. The Canadian Vehicle
Manufacturers’ Association on Friday lauded Ottawa for not rushing into
a deal, with the group’s president, Mark Nantais, saying the TPP first
needed to “address export market access issues to the Asia-Pacific
marketplace.”
The TPP, as originally designed with the U.S., would have become the
world’s largest trading bloc, accounting for more than a quarter of
global trade.
Without the U.S., trade experts say, the pact
remains significant and offers a counterweight to China’s growing
influence through its “One Belt, One Road” initiative.
Researchers from the Peterson Institute for International Economics, a
Washington-based think tank that favors free trade, said the pact could
generate income gains of $157 billion annually for its members by 2030,
“mainly by increasing trade in machinery and
agricultural products as well as through higher levels of investment.”
If the pact were to expand to include five nations that have expressed
interest in joining—Indonesia, South Korea, the Philippines, Thailand
and Taiwan—those gains could rise to $486 billion annually, Peterson
researchers said, exceeding the potential value of the original deal
with the U.S.
“The TPP-11 will be good for the multilateral trading system, for the
incomes of member countries and for their bargaining positions against
China and the United States,” said Peter Petri, a professor of
international finance at Brandeis University and a visiting fellow at
Peterson.
On Sunday, Mustapa Mohamed, minister for international trade in
Malaysia, said that his Southeast Asian country is committed to going
ahead with TPP.
“Our hope is that discussion in the next few weeks and months will come
to a productive end,’’ Mr. Mustapa said in Manila, ahead of another
regional summit. “Although we’re short of one country, we think TPP-11
is a good compromise.”
The Manila summit, a series of annual meetings under the umbrella of the
10-member Association of Southeast Asian Nations, includes the United
States, China, Japan and other regional powers. The focus is broader and
expected to focus more on security issues, though the Asean ministers
signed a free-trade deal Sunday with Hong Kong.
Edward Yau, Hong Kong’s commerce and economic development secretary,
said in a speech that deal sent a message for free trade, “loud and
clear.”
Trade experts pointed to the deal as a hopeful sign to thwart a rising
tide of global protectionism. On Friday, Mr. Trump gave a speech in Da
Nang that laid out a vision of redefined American economic engagement
with Asia built on bilateral trade deals.
APEC has long pushed for increasing regional integration through a host
of multilateral trade deals, but U.S. trade officials have recently
sought to change the forum’s focus, people with knowledge of meetings
said. In meetings this week, the U.S. objectedto customary references
to opposing protectionism and supporting a multilateral trading system,
they said.
Such objections delayed a normally routine statement by ministers here
for two days. When it was released early Saturday, it was devoid of
support for a multilateral trading order and had watered-down language
against protectionism.
—Natasha Khan in Da Nang contributed to this article |