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11 TPP states eye new framework to implement pact without US
TPP without US

11 TPP states eye new framework to implement pact without US

HAKONE: The chief negotiators of the 11 Trans-Pacific Partnership countries agreed Thursday to aim to put the regional free trade deal into force under a new framework, following the withdrawal of the United States.

“The TPP was originally signed by 12 members so for the pact to come into effect with 11 countries, we need a new international agreement,” Japan’s chief negotiator Kazuyoshi Umemoto told reporters after chairing a two-day meeting at a hot spring resort southwest of Tokyo.

“We now have an image of how that agreement will be shaped.”

But it remains unclear how smoothly discussions will go, with the 11 countries remaining divided over issues such as how much to revise the original text.

Umemoto said they only agreed not to lower the level of the high-standard trade rules contained in the original treaty.

The countries need to decide in what form the new scheme will be set up — whether it will be a treaty, a protocol or something else — and will have to discuss whether to modify rules on trade and investment from the original text, Umemoto said, adding the changes would need to be ratified by each member country.

A Japanese government source said working-level officials will start work on the substance of the envisioned framework based on guidelines presented by the chief negotiators.

The chief negotiators will meet again in Australia in late August or early September to advance their talks on the implementation of the deal before November, when their leaders will gather for an Asia-Pacific Economic Cooperation forum summit in Vietnam.

Following a meeting of the 11 countries’ trade ministers in Hanoi in May, the negotiators have the task of drawing up options to bring the pact into force at an early date and to facilitate the possible return of the United States to the multilateral framework.

One issue that needs to be addressed is a clause stating that the TPP pact can only come into force after six countries that account for 85 percent or more of the original 12 signatories’ combined gross domestic product complete domestic procedures. So far, just Japan and New Zealand have ratified the TPP.

As the United States alone represents more than 60 percent of the initial members’ GDP, it is impossible for the pact to come into effect under the present terms.

Japan, the largest economy among the 11, hopes to reach an agreement to change the requirements for bringing the TPP into effect without revisiting the content of the pact, given that it took years of negotiations before countries signed it in February 2016.

But some countries may call for fresh negotiations on the content, including tariffs and rules on trade and investment, given that the United States is no longer involved.

Vietnam and Malaysia, which agreed to ease domestic regulations and open their markets in return for access to the huge U.S. market, are believed to be reluctant to go ahead with the agreement without the United States.

Japan, along with New Zealand and Australia, is pushing for an early implementation of the pact even without the United States.

The outlook for the TPP has been clouded since U.S. President Donald Trump announced the country was pulling out soon after he took office in January, saying the multilateral pact hurts American jobs and that he prefers bilateral trade negotiations.

The announcement came as a rejection of predecessor Barack Obama’s promotion of the deal as a centerpiece of his pivot-to-Asia policy. It also dealt a blow to Japan, which viewed the pact as a strategically important way to counter the rise of China in the region.

Japanese officials say they hope to inject fresh momentum into the TPP talks after the country and the European Union sealed a broad free trade deal last week following more than four years of negotiations.

Japan has said that deal, creating a market of 640 million people and covering nearly a third of the world’s economy, sends a strong message on the importance of free trade.

The TPP was signed by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam — covering around 40 percent of the global economy.