DONALD Trump yesterday announced his intention to withdraw the United States from the Trans-Pacific Partnership.
“On trade, I am going to issue our notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country,” he said.
“Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores.”
The TPP would have been the largest trade pact in world history. It was originally comprised of 12 countries across the Asia-Pacific region, including Australia.
Speaking with the ABC this morning, Trade Minister Steve Ciobo insisted the pact would have been a good deal for Australia.
He conceded technically there was no pact without the US because it needed to ratify the TPP for it to come into effect.
But there were other avenues.
“We have the option of making some small changes to the agreement to make it come into effect excluding the United States if that was the prevailing mood,” he told ABC TV.
“Likewise, we could look at other countries like Indonesia or China, for example, if they chose to become involved in the TPP, wanting to harness its benefits as well.”
But analysts believe the collapse of the Trans-Pacific Partnership won’t actually have a drastic impact on Australia.
Adam Lockyer, senior lecturer in Security Studies at Macquarie University, said the loss of the TPP would mean business as usual for the nation, noting we already have important bilateral agreements in place.
“Australia has free trade agreements in place with some of the larger countries that made up the TPP,” Dr Lockyer explained. These include the US, Japan and New Zealand.
He said the advantage with such arrangements is that they’re easier to push through and maintain than multilateral agreements like the TPP, where the terms require the consent of all parties and can enter murky territory due to conflicting interests.
Following Mr Trump’s announcement, China looked set to assertively push its own Asia trade deal, the Regional Comprehensive Economic Partnership (RCEP), which would consist of 16 countries including Australia.
But Weihuan Zhou, a law lecturer at UNSW, said this is unlikely to happen if the TPP is dead and buried.
“But China is only so active in pushing the RCEP because of the TPP, because of Japan’s role in the TPP,” Dr Zhou explained. “If the US withdraws from the TPP and the pact dies, China likely won’t continue pushing for the RCEP.”
Regardless, he said, Australia will continue to explore other FTA options including ongoing negotiations with India and Indonesia and under the RCEP, and negotiations under its existing FTAs with countries like Singapore and China using the built-in review mechanisms.
However, Dr Zhou made the important point that the TPP isn’t dead and buried just because Mr Trump says it is.
“The TPP hasn’t died yet,” he told news.com.au. “Just because Donald Trump says he won’t push for it — that doesn’t mean anything. It’s actually quite likely the TPP could survive if the US is able to push for negotiations and outcomes that satisfy the current leadership. There are just a lot of uncertainties over the price.”
He referred to an analysis from the World Bank provided earlier this year, which stated that highly-developed nations like Australia stood to gain very little from the pact.
The study found Australia is already fairly free of trade restrictions, or else reliant on other factors for their economic growth.
The study found that while some countries stood to make substantial gains, Australia’s economy was projected to boost by just 0.7 per cent by the year 2030 through the TPP.
America’s projected gains were even lower, at just 0.4 per cent.
“The only reason Trump said he would kill (the TPP) is because that’s what he repeated during his election campaign,” said Dr Zhou. “But as President, he can still come back with a reason to say we need it.”