President Trump Withdraws The U.S. from TPP
President Trump signed an executive order withdrawing the United States from the Trans-Pacific Partnership (TPP). Although the TPP had been negotiated under President Obama, Congress had not ratified it. This trade deal would have included 11 Pacific Rim countries that according to the World Bank make up 40% of global GDP and 20% of global trade.
Reviewing existing trade deals is a key issue for President Trump as explained on the White House website Trade Deals Working For All Americans: "international trade can be used to grow our economy, return millions of jobs to America's shores, and revitalize our nation's suffering communities. This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers".
What Does This Mean?
Without the United States anchoring the TPP, the TPP cannot enter into force. US withdrawal from the TPP provides new impetus to negotiations on the Regional Comprehensive Economic Partnership (RCEP). The RCEP would comprise Japan, China, India and 11 other Asian countries, plus Australia and New Zealand, and has been under negotiation since 2013. Should the RCEP enter into force, the US will forfeit the opportunity to rewrite modern trade rules and, will sit on the sidelines as China, India, et. al. define the new rules.
The following statement is the reaction from Australia’s Trade Minister.
One of the first actions the newly sworn-in President Trump took was to make sure the world knew he had no intention the US being part of the Trans-Pacific Partnership (TPP).
A recent statement from the White House pledges a US exit from the trade pact in describing a strategy intended to “put American workers and businesses first when it comes to trade”.
“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the statement said. In spite of the world’s largest economy withdrawing from the pact, Australian Trade Minister Steven Ciobo has said he and the Government would continue to push for ratification of the agreement, or something similar.
“President Trump’s decision not to ratify the TPP at this time is disappointing, although not unexpected,” Minister Ciobo said. “The TPP is too important as a driver of the creation of more Australian jobs not to do all we can to see the agreement enter into force.” He said the TPP is an agreement of “unprecedented scope and ambition” and promises new export opportunities for Australian farmers, services suppliers and goods exporters.
“I have been speaking at length with my TPP counterparts on ways to lock in the benefits from the TPP, without the United States if need be,” Minister Ciobo said. “This week at the World Economic Forum I met with Japan, Canada, Mexico, Singapore, New Zealand and Malaysia to discuss alternatives.” The shape the agreement takes is to be the subject of discussion over the coming months, the Minister said. “A number of options are available to us and there is a strong desire to ensure the benefits of the TPP are not lost.” China still Australia’s biggest trading partner.
China topped the list of Australia’s merchandise trading partners in 2015-16, accounting for more than a quarter of total trade (26.5%), according to the Department of Foreign Affairs and Trade’s publication Composition of Trade Australia 2015-16. Two-way trade between the countries was worth a total of $136.67bn over the year. Exports to China were $75.2bn, or 30.8% of Australia’s total exports by value for the year. Not surprisingly iron ores and concentrates were the number one export to China in 2015-16 (worth $75.4bn), followed by coal ($5.6bn) and gold ($3.5bn).
Exports of “edible products and preparations” saw a year-on-year increase in value of 224.5% to $966m in 2015-16. Imports from China were worth $61.5bn, or 22.6% of the year’s total imports. The top three most valuable merchandise imports from China were telecom equipment and parts; computers; and furniture, mattresses and cushions.
Japan was Australia’s second-biggest trading partner over 2015-16, accounting for 10.7% of the total value of Australian two-way trade, or $55bn. Aussie exports to Japan were worth $35.8bn over the year, or 14.7% of Australia’s total exports.
The three most valuable exports from Australia to Japan in 2015-16 included coal (worth $11.2bn), iron ores and concentrates ($4.7bn), and beef ($1.8bn).
While imports from Japan were worth $19bn, 7.1% of total imports to Australia. Top imports from Japan were passenger motor vehicles ($6.6bn), refined petroleum ($2.6bn) and goods vehicles ($1.4bn). And, coming in at the number three most valuable trading partner was the US – trade between the two countries was worth $46.2bn over the past financial year, or 9% of Australia’s total. The US was Australia’s second-largest source of imports, which were worth $32.5bn, or 12% of total imports into the country.
The US was a major source of passenger motor vehicles, with imports of cars into Australia totalling $2.4bn for the period. Aircraft parts and telecom equipment were also valuable imports. Exports to the States had a value of $13.7bn, or 5.6% of Australia’s total exports.