A couple of days after Trump’s inauguration as the 45th President of the United States, he decided to quit the talks related to the creation of the so-called Trans-Pacific Partnership (TPP). This agreement would create an environment of lower duties and better regulation of the trade relations between 12 countries, including the USA, other states from North and South Americas, South-Eastern Asia, and Japan.
For those of you who don’t know, Trump promised to quit this agreement during the election campaign in 2016. He assumes that the TPP could have become disaster for Washington. Now when the USA doesn’t belong to the TPP anymore, China is the one benefitting most from this. China may well increase its role as a regional giant.
At the same time, some experts say that Donald Trump happens to be the victim of his own election pledges. To be more specific, he keeps on promising to move the outsourced production lines back to the USA and quit the agreements that aren’t beneficial for the USA. The TPP is a good thing for exporting economies like China. China produced half of the products consumed by the world. As for Trump, he has been focused on fulfilling his promises to make America great again, which, to his mind, includes getting millions of jobs back. Experts say that he is really willing to sacrifice America’s strategic interests for the sake of turning his promises into a reality. It’s obvious that after the USA created some vacuum by quitting the TPP, China is inevitably going to fill in the space. Beijing is currently working on expanding the free trade zone with other nations
At the same time, other experts say that the rest of the TPP participants will have to revise the agreement since making it take effect requires at least 6 participants voting for it (there joint GDP share should make up for 85% of the total GDP of all the participating economies). After the USA quit the TPP, triggering the process became impossible the way it is now. But it doesn’t mean that the TPP is going down.
At the same time, after quitting the TPP, the USA, which is the world’s biggest consumer, is probably going to take some serious steps to defend the domestic market, which is a part of the protectionist approach. Even if the USA hadn’t left the agreement, it would still be questioned now. The thing is, that even Canada has been questioning the benefits of participating in the TPP. The Canadian Prime Minister said that the Liberals are not going to support the ideas put forward by the previous government of the Conservatives.
As the USA is going to revise some other international trade agreements, this means that China may become even stronger as a major player in the international trade. Moreover, China is probably thinking about joining the TPP instead of the USA.
