Trade experts and diplomats, though, are confident the deal is worth pursuing without the Americans.
Deborah Elms, founder and executive director of the Asian Trade Centre, said though access to the U.S. market won’t be tariff-free, the outright level is “generally very low.” The real benefit of the TPP lies in market access to countries within the framework of the deal “where tariffs fall to zero,” Elms explained. “It’s a win-win for the 11. Services and investment access is amazing.”
But selling that message to domestic audiences will be challenging when even free trade champions such as New Zealand appear divided on the TPP’s merits.
“It’s really razor-thin benefits,” New Zealand’s Green Party trade spokesperson Barry Coates told TVNZ1.
TPP’s backers may have to wield the red pen. Peru is understood to be pushing for provisions related to the pharmaceutical sector, while “there’s a whole lot of rules” Vietnam wants changed on the garment sector, the Asian Trade Centre’s Elms said.
Does this imply minor tweaks or root and branch changes?
The core of TPP, according to Elms, may not require going back to the drawing board if U.S.-specific provisions are left “dormant” – an olive branch effectively allowing Washington access at a later stage. “That’s the big debate. Do we leave it as it is or remove them outright?”
Japan wants the U.S. provisions to stay, Elms said. “Crucially, Japan doesn’t have to go back to the Diet and re-ratify it” if U.S. choses to re-enter the TPP down the road.
TPP’s promoters are fighting against a backdrop of what some see as U.S. disengagement on trade in the Asia-Pacific region, and a vacuum that’s being filled by China, which has been positioning itself as a defender of globalization.
“Momentum on market integration and trade is being tested in ways we have not seen since these forces transformed the Asia-Pacific into the engine of the world economy,” said Alan Bollard, Executive Director of the APEC Secretariat, in a statement.
Leading policymakers in the TPP countries have expressed a willingness to participate in the Regional Comprehensive Economic Partnership, or RCEP, which is supported, but not led, by China. Opinion is divided. Some believe the agreements may combine in the future, while others see them as qualitatively different.
“The RCEP competes with the TPP, but is a different animal,” CIMB’s Raha said. TPP is “more about tariff reduction” while India’s participation in RCEP “is likely to be a bottleneck.”