Japan and Canada joined the group of eleven nations for signing a landmark Indo-Pacific trade agreement leaving the United States, signalling a powerful message against protectionism and trade wars in the changing geoeconomics of the Indo-Pacific.
CPTPP (Comprehensive and progressive Agreement for Trans-Pacific Partnership) came as U.S. President Trump vowed earlier in the day to continue with the plan to impose tariffs on steel & aluminium imports, a move that other geoeconomic exerts and IMF (International Monetary Fund) said could initiate a global trade war.
CPTPP will minimise tariffs in countries that together amount to more than 13 percent of the global economy – a total of $10 trillion in the gross domestic product. With the United States, it would have drawn 40 percent.
“Today, we can proudly conclude this process, sending a strong message to the international community that open markets, economic integration and international cooperation are the best tools for creating economic opportunities and prosperity,” said Chilean President Michelle Bachelet.
Heraldo Munoz, Chile’s minister of foreign affairs, said he presumed Chile’s trade with China, its top trading partner, to recommence expanding alongside trade with CPTPP member states.
Even without the US, the deal will span a market of approximately 500 million people, making it one of the world’s largest trade agreements, according to Canadian & Chilean trade statistics.
The remaining eleven nations finalised a revised trade pact in January 2018. That agreement will become effective when at least six member nations have completed domestic procedures to ratify it, possibly before the end of the year.
“We are very hopeful like others that we will see the CPTPP coming into effect about the end of the year or shortly thereafter,” said Australian Trade Minister Steven Ciobo.
The re-drafted agreement leaves behind few of its requirements of the original TPP demanded by the US policymakers, including rules to ramp up intellectual property protection of pharmaceuticals. Governments and activists of other member states worry the changes will raise the costs of medicine.
The final draft of the agreement was released in New Zealand on Feb 21 this year. The member states are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
“We’re proud … to show the world that progressive trade is the way forward, that fair, balanced, and principled trade is the way forward, and that putting citizens first is the way forward for the world when it comes to trade,” Canadian Trade Minister Francois-Phillippe Champagne said.
In January, Trump, who also has warned to pull the US out of the NAFTA (North American Free Trade Agreement), told the WEF (World Economic Forum) in Switzerland that it was possible Washington might re-join the TPP pact if it got a better-revised deal. However, New Zealand’s trade minister said that was near impossible in the near term, while Japan has said altering the agreement on the conditions set by Washington now would be very difficult.
On Thursday, Munoz clarified CPTPP was not an agreement against any particular nation and several member states expressed their will to join.
Trump vowed on Thursday to impose a 25 percent tariff on steel imports and 10 percent tariff on aluminium imports, however, he said there would be exemptions for NAFTA partners Mexico & Canada. Trump announced the plan for tariffs last week, shaking the market all over.
Mexican Economy Minister Ildefonso Guajardo, in Santiago, Chile for the CPTPP signing, said he would not allow the United States to force the tariffs to in the NAFTA talks.
The Kootneeti Team - Indo-Pacific Desk