It is widely reported that, following the US Presidential election, the TPP is ‘dead, buried and cremated’. The declaration of death may be premature.
At the Asia-Pacific Economic Cooperation (APEC) Leaders’ meeting in Peru in November 2016, the TPP countries have indicated that they are contemplating a conclusion of the TPP without the US. As it currently stands, the TPP needs US participation to come into effect. So this will require an amendment but is not impossible. It is also reported that the remaining countries might then invite either or both of Indonesia and China to join the TPP.
The US position on the TPP might in any event not be as firm as the public believed. In a press conference, the US State Department spokesperson was pressed to answer questions on the new US Government’s position vis-à-vis the TPP. Rather than stating outright that a US involvement in the TPP was off the table, the spokesperson sought to avoid the topic of what the new administration was going to do.
In that context, it is worth pointing out that the Regional Comprehensive Economic Partnership (RCEP), which includes China, is close to being finalised. The 16 RCEP participating countries account for almost half of the world’s population, almost 30 per cent of global GDP and over a quarter of world exports.
The next round of RCEP negotiations will be on 2-10 December 2016 in Indonesia. This is a good opportunity to speak about the TPP as well. A TPP without the US would require some restructuring, and this would take some time to agree. It is more likely that the RCEP will be agreed before that can happen, but there will be an incentive for the remaining countries to salvage what they can of the TPP.
A US decision not to join the TPP will also increase the interest in achieving the broader APEC goal (developed well before the US events) of a Free Trade Area of the Asia Pacific.
Rather than giving up on the TPP, it may very well be that there is still some life in it!
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© Herbert Smith Freehills 2021