SANTIAGO: Eleven nations signed a slimmed-down version of the Trans-Pacific Partnership (TPP) trade agreement on Thursday, moving to lower tariffs just as US President Donald Trump seeks to raise them after withdrawing from the deal.
The foreign ministers of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam officially created what is now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a market representing half a billion people and 13.5% of the global economy.
The Trans-Pacific Partnership, which would have represented 40% of the global economy and nearly one-quarter of its trade, was left for dead after Trump pulled out to pursue his “America First” agenda before the TPP could take effect.
But the revamped deal is still a significant achievement that sends a message of openness, its supporters said ahead of the signing ceremony in Santiago, Chile.
The 11 states form a market of 500 million people, greater than that of the European Union’s single market.
“International trade is very much a live, despite what some people think,” said Chilean Foreign Minister Heraldo Munoz.
The deal was finalised in the same week that Trump has risked a global trade war over his decision to introduce tariffs on imported steel and aluminium.
Former president Barack Obama’s administration pushed for the TPP as a counterweight to growing Chinese commercial power. It not only cut tariffs but required members to comply with a high level of regulatory standards in areas like labour law and environmental protection.
Fernando Estenssoro, of Chile’s University of Santiago, says snubbing the pact is “a type of suicide” for the United States.
Ahead of the official signing ceremony, Canada, Chile and New Zealand signed two side deals on spreading the benefits of free trade to all their citizens and resolving investor disputes.
They used the occasion to hammer home their message on trade.
“We’re very proud to stand with our colleagues from Chile and New Zealand to show the world that progressive trade is the way forward,” said Canadian Trade Minister Francois-Philippe Champagne.
‘A new standard’
Washington’s absence leaves an open path for China – which remains excluded from the deal – as it negotiates separately with Asian countries and New Zealand.
The CPTPP aims to slash tariffs among the 11 members and foster trade to boost growth.
Felipe Lopeandia, Chile’s top trade negotiator, said the deal will “send a political signal to the world and to the United States itself, that this is a global agreement.”
It is one which remains hugely significant, said Ignacio Bartesaghi of the Catholic University of Uruguay’s business school.
“There is no trade agreement involving that number of countries, and one that has 30 chapters which deal with all the most modern topics of international trade,” Bartesaghi said.
Most provisions of the original agreement remain, except those related to intellectual property originally inserted at the demand of US negotiators.
“The CPTPP will establish a new standard for other regional economic integration agreements, and even for future negotiations in the WTO (World Trade Organisation) and in Ape (Asia-Pacific Economic Cooperation),” said Chile’s Foreign Ministry, which is hosting Thursday’s ceremony.
Chile said membership of the new pact will improve access to markets currently responsible for 17% of its total exports.
Mexico and Peru will also get better entry to countries on the other side of the Pacific.
“It means an increase in our potential market and the possibility that our people can access more products,” said Mario Mongilardi, head of Lima’s chamber of commerce.
The pact will come into force 60 days after it is fully ratified by six of the 11 members.