Australia striving for ‘TPP minus 1’ after Trump withdraws

Bloomberg

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Australia will push the case for a Pacific trade deal without the U.S. at a meeting with other potential members in Chile next month, Trade Minister Steven Ciobo said.

The Trans-Pacific Partnership remains “absolutely” relevant without the U.S. and the text of the accord would only need minor tweaking to allow for America’s withdrawal, Ciobo said Wednesday.

“There were a lot of hard-fought gains that were achieved over intense negotiations over many years in relation to the TPP,” Ciobo said. “I don’t want, and I know a number of other countries don’t want, those gains to slip through our fingers.”

The 12-nation pact was thrown into disarray after President Donald Trump pulled the U.S. out of the accord in one of his administration’s first acts. More broadly, Trump has lambasted free trade deals and signaled a protectionist U.S. under his watch. In Asia, he has criticized the trade policies of Japan, China and South Korea, having threatened to start a trade war with Beijing.

While Prime Minister Malcolm Turnbull has discussed the deal with Japanese counterpart Shinzo Abe and held talks with the leaders of New Zealand and Singapore, some parties have signaled their reluctance to try and proceed without the largest economy.

The TPP also stipulates that to take effect it needs to be ratified by at least six states, which together account for 85 percent of the combined gross domestic product of all 12 original signatories. Under that requirement it legally doesn’t work without U.S. involvement.

“There would need to be some minor tweaking” to the text for the accord to proceed without the U.S., Ciobo said when asked about the 85 percent rule.

“If we can get in-principle agreement that we want to take this TPP agreement forward without the U.S., well that’s a relatively straight forward process,” he said. “We could make some minor changes to the text to allow for the exclusion of the U.S.”

Ciobo said he’s held talks about proceeding on a “TPP minus one” with countries including Japan, Canada, Mexico, Malaysia, Singapore and New Zealand.

Some countries have indicated they will now seek to negotiate directly with the U.S. on trade. Australia already has a bilateral pact with America, as do countries including South Korea and Singapore.

The difficulties facing the TPP have opened the way for the Regional Comprehensive Economic Partnership, a separate 16-nation deal that includes China and India. The next round of talks on that pact are scheduled for late February in Japan.