Donald Trump has begun his effort to dismantle Barack Obama’s legacy, formally scrapping a flagship trade deal with 11 countries in the Pacific rim.
President Trump has 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”.
The move also intensified speculation over the future of the 17-year-old North American Free Trade Agreement (Nafta). There were reports that Trump would sign an executive order to begin renegotiating terms with Canada and Mexico.
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.