Loss of Pacific trade deal is China’s gain

With a stroke of a pen, US president Donald Trump withdrew America from the Trans Pacific Partnership (TPP). Trump argues it will benefit US companies and workers. In fact, the decision will have adverse effect. And he made is clear that he is not going to deviate from his protectionists promises.
Trump pat his back after signing an executive order to withdraw US from TPP, saying it was great thing for American workers. Actually he made it more difficult for American companies to compete. In the name of benefitting US labor, he compromised the interests of the American workers.
The TPP, a 12-country deal that sought to liberalize trade between the US and Pacific Rim nations including Japan, Mexico and Singapore, was a signature piece of former President Barack Obama’s attempt to pivot US global strategy to focus on the fast-growing economies of Asia.
TPP constituted the core of Obama’s strategy to reassert American in influence in Asia and blunt the strategic mover of resurgent China. Although, the pact talked about the reduced tariff, but it would have made the countries to comply with the international standards on labor and intellectual property rights.
The new US President has failed to understand that the technology caused the bulk of job loss. The business groups had lobbied for the passage of the pacific trade deal, touting the deal as an engine of growth and an economic bulwark against rising China. Notably, since Trump’s election, the Philippines, Singapore and Malaysia have already shifted towards China’s proposed Regional Comprehensive Economic Partnership.
Trump’s move upended the United States’ historic role as a guarantor of stability and prosperity for a large swath of Asia.
Trump’s trade focus fulfills a campaign promise to rewrite America’s trade policy during his first days as president. By scrapping the Trans-Pacific Partnership accord, Trump might have succeeded in appeasing many of his most fervent supporters as well as a good many Democrats. But it has created an economic vacuum in Asia that China is eager to fill.
The TPP would’ve ensured that China didn’t set the rules of the game when it comes to international trade. The China-led Regional Comprehensive Economic Partnership, which includes India but not the US—might streamline manufacturing supply chains. But it will not be able to force domestic reform within its member countries.
Trump TPP move will benefit China much more than possible competitors. China, which is already the manufacturing hub of the world, would like to see trade deals that entrench it in that position even as its domestic costs of producing inexorably increase.
What distinguished the pact was that it truly brought trade negotiations into the 21st century. It sought a delicate balance between the demands of multiple interest groups while simultaneously ensuring that new patterns of trade were given the opportunity to emerge.
Trump’s interest in bilateral agreements instead of multi-national ones isn’t promising. Striking a best bargain on a country-by-country basis doesn’t necessarily mean any less dependence on principles that might not work in the long run.
It’s now up to the remaining 11 TPP countries, and those across Asia who aspired to join the pact, to ensure that its principles become the norm. But one thing is clear that Trump, by killing TPP, already has given China a big win.