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TPP Moving Ahead Without US As Trump Fooled By “Warm” Welcome In Asia

Courtesy of ZeroHedge. View original post here.

In his speech (see here) at the Asia Pacific Economic Cooperation Summit (APEC) on Friday, Trump slammed China, the WTO and his predecessor’s Trans Pacific Partnership (TPP) trade agreement as issues holding back his America-first “Indo-Pacific dream”. Without referencing it specifically, Trump criticised the TPP which he said would “tie our hands, surrender our sovereignty and make meaningful enforcement (of WTO rules) practically impossible”. Trump stated that the US would conduct trade with Asian nations based on bilateral agreements. Over the weekend, Japan – the largest remaining member of the TPP and traditionally subservient to US wishes – and a host of other nations announced that they would move forward with a revised TPP, regardless of US withdrawal. According to the FT.

A weekend move by Japan and 10 other Pacific nations to press ahead with a vast regional trade agreement without the US has prompted fresh criticism that Donald Trump’s “America First” trade policy is leaving Washington increasingly isolated. The 11 remaining members of the Trans-Pacific Partnership, which the Obama administration spent years negotiating and Mr Trump pulled out of on his third day in office, announced on Saturday that they had reached agreement on the “core elements” of a deal to proceed without the US. The group still has work to do, as Canada, Malaysia and Vietnam seek changes to an agreement they have rebadged — at Canada’s request — as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

In his APEC speech, Trump emphasised the need for “reciprocity” on several occasions and lashed out at the “audacious theft of intellectual property”, which he said the US would no longer tolerate. As a further brazen rebuff to Trump the 11 Asian nations have stripped out. As the FT notes.

…a swath of intellectual property protections and other contentious measures previously advocated by Washington…Toshimitsu Motegi, the Japanese economy minister, said the new agreement would suspend provisions covering 20 items of the original TPP, 11 of which had to do with intellectual property. “The substance is something all the 11 countries can agree,” Mr Motegi said. “This will send out a very strong message to the US and to other Asia-Pacific countries.”

The unfortunately titled “Comprehensive and Progressive Agreement for Trans-Pacific Partnership”, or CPTPP, is expected to be finalised in early 2018. It will encompass about 500 million people and 10 trillion of GDP across eleven nations. Following the agreement, about 95% of trade between the nations will be free of tariffs.

After landing in Vietnam, Trump’s policy looked even more detached from Asian nations as he  criticised his latest hosts for unfair trade practices. The FT reported.

During a weekend meeting with his Vietnamese counterpart the US president complained about “a very substantial trade imbalance with Vietnam”. “We want to get that straightened out very quickly,” Mr Trump said. A joint statement issued on Sunday after the meeting appeared to point to limited gains for the US, however. It hailed a Vietnamese move to allow access for US distillers grains and mentioned continuing discussions on the trade in products and services including shrimp, mangoes and electronic payments.

While the White House is trying to spin Trump’s Asian trip in a positive light, we suspect that the (apparent) warm welcome was interpreted.

The president and the White House were pointing to the way his Asia trip had been celebrated in China, Japan and other stops along the way. But critics charge that, on the trade front at least, the administration looks increasingly like it is being outmanoeuvred by Beijing and others. “I think everyone was polite to him and they want to make him think that they are all chummy and willing to do things with him. But I have to think in some ways they are laughing behind his back, and certainly the Chinese are,” one US business lobbyist told the Financial Times on Sunday. “I don’t think any of them have any intention of getting into a deal with him, certainly not on the terms that he wants.” Michael Froman, who led the US TPP negotiations under the Obama administration, said that the renewed agreement “shows how our allies and partners continue to see the value of putting in place high standards and tearing down trade barriers across the region. Clearly, as the US retreats, the rest of the world is moving on”.

Indeed, after his stop-off in Japan, we expressed our doubt that much had been achieved on the trade front.

We have a strong sense that Trump’s efforts at persuasion will have little impact on the US trade deficit with Japan. Indeed, we suspect that Abe is following the traditional Japanese approach of listening carefully, responding politely and carrying on regardless.


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