No longer up in the air, a new Trans-Pacific Partnership has been signed and the United States isn’t included.
On Thursday, the 11 remaining TPP nations gathered in Santiago, Chile to sign the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in a move many say puts Asia at the lead in free trade while the U.S. appears headed in the opposite direction.
President Trump pulled the U.S. from TPP as one of his first orders of business in the Oval Office, and though he’s since alluded to the U.S. rejoining the sweeping trade deal provided he could get “a much better deal,” the U.S., for now, remains still out. What’s more Trump’s move Thursday to formally order tariffs on foreign steel and aluminum likely won’t bode well for U.S. trade relations, as more than a few countries have promised retaliation measures.
But the TPP partners won’t be held up while the U.S. takes a divergent path on trade.
The final text of the CPTPP agreement was released last month, and it will remove more than 98 percent of tariffs between members of the new trade bloc, which include: Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.
Together, the 11 left standing account for more than 13 percent of global GDP, or $13.7 trillion, making it the third largest trade zone after the European Union and NAFTA in terms of size, but its scope pales in comparison to the nearly 40 percent of global GDP the bloc would have commanded with the U.S. on board.
That’s why some in the bloc are still keen to get the U.S. back in on the deal, but a senior Canadian official reportedly said this week that the U.S. wouldn’t receive any fast-track access or preferential treatment if it settles on squeezing back in. In the meantime, CPTPP members have expressed interest in having new members join the bloc, and the U.K., the Philippines, Taiwan, Thailand, South Korea and Sri Lanka are reportedly on the target list.
“The signing is a significant moment for open markets, free trade and the rules-based international system,” Australian Trade Minister Steven Ciobo said in a statement Thursday. “It sends an important message to the world that prosperity is achieved through breaking down trade barriers, not building them.”
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Meanwhile, building them may be the United States’ present M.O.
Richard N. Haass, president of the Council on Foreign Relations, said on Twitter Thursday, “Truly a sad and bad day for the United States, as TPP comes into force without us while US deciding on which countries to apply unwarranted and ill-advised tariffs. Abdication of 3/4 of a century of promoting a trade order that has served US eco and strategic interests.”
Now that the U.S. will officially add a 25 percent tariff on foreign steel imports and 10 percent on aluminum, the country could end up in an even worse position on trade. For one, the E.U. has threatened levying a 25 percent tariff on Levi’s jeans coming from the U.S.—and the region isn’t alone in its line of thinking.
“These tariffs aren’t quite as high as tariffs on the fashion industry, which can reach 32 percent on some products. However, we know these tariffs will be catastrophic for the U.S. economy and jobs,” the United States Fashion Industry Association said in a statement following the tariff announcement Thursday. “We’re not being partisan or subjective; it’s Trade Policy 101—and we can expect widespread net job loss in the United States as a result, according to early studies, not to mention regressive taxes on American consumers. This is not the way to support American companies and jobs, and definitely not the way to participate in the global economy.”