Global trade landscape set to undergo changes

With US President-elect Donald Trump vowing on Tuesday to scrap the
12-nation Trans-Pacific Partnership (TPP), the deal’s future hangs in the balance. Japan’s Prime Minister Shinzo Abe pointed out that TPP without the US would be “meaningless”. The US and Japan are the core members of TPP that encompasses 40% of the global economy.
Trump’s announcement to abandon TPP came after US President Barack Obama told participants at the 21-member Asia-Pacific Economic Cooperation (APEC) meeting in Lima that world leaders wanted to move forward with the US on TPP. Following Trump’s statement that he would withdraw from TPP “on day one”, Abe underlined that it was impossible to renegotiate it, and “it would destabilize the basic balance of interests”. The Japanese PM sounded the virtual death of TPP in not so many words. The TPP was the economic plank of Obama’s pivot to Asia and included countries like Singapore, Vietnam, Brunei, Australia, Malaysia and New Zealand.
In an era where protectionist sentiments are reigning, the global trade landscape will see a massive change. Small scale deals between emerging economies will crop up. And the role of world trade bodies in forging accords will assume more significance. “The result of having the US and Europe turn inward is that Asia will focus on regional agreements,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore. According to an APEC study, 145 trade deals existed between the group’s members as of December 2015, at least 30 of which were sealed since 2008. Interestingly, it was just after the global financial crisis that many Asian countries went for intra-Asian trade liberalization initiatives. Japan and India have moved forward on a slew of bilateral business pacts. China, South Korea, Vietnam, Myanmar, Thailand and Malaysia have also come closer while enhancing trade ties. The Philippines is looking to China and Japan, after turning away from the US.
China and Japan are also expanding their trade footprint in Africa and South America. On Monday, China signed new 18 trade deals with Peru. China also plans to invest in a railway link in Brazil and Bolivia. The Asian giant has invested or committed $125 billion in South America alone in the last decade. As Chinese President Xi Jinping met his Peruvian counterpart Pedro Pablo Kuczynski, Japan’s PM Abe met Argentine President Mauricio Macri in Buenos Aires. Japan wishes to multiply investment in Argentina over three years to $3 billion a year.
Global economy can’t flourish without trade integration. The bilateral deals that are signed today will become the foundation of the future trade. Economies around the world will have to aim at global coordination and remove trade
irritants. Today, social responsibility in trade is required more than ever. Business has to be done on a level-playing field which provides a win-win situation.
Coming back to TPP. The deal may have loopholes, but these can be removed by the countries who enter it. As for the US, the trade sceptics should remember that the poorest 10% of Americans gain 62% of their purchasing power from trade. Hence, the focus should be on setting the wrong right by harmonizing the regulations and following standards. The problem with TPP can be solved only through partnership. And that applies to every trade deal. Trust is the name of the game!