U.S. President Donald Trump has started early in fulfilling his campaign promises. On Monday he signed three executive orders one of which was withdrawing the United States from the Trans-Pacific Partnership (TPP), a cornerstone of former U.S. President Barack Obama’s pivot to Asia.
This has come as little surprise to anyone as Trump was very vocal of his desire to pull out of the TPP all throughout his campaign, but the sting will still be felt across much of Asia for those countries who stood to gain from the trade agreement.
So who will the winners and losers be in the fallout of Trump’s decision?
LOSERS
According to a 2016 study by the Peterson Institute for International Economics, Malaysia stood to make significant gains from the TPP. An estimated 7.6 percent rise in gross domestic product (GDP) was anticipated by 2030 as the pact would open up access to protected foreign markets as well as stimulate domestic reform. A major benefit of the pact was the access to the U.S. to sell their palm oil exports.
SEE ALSO: Malaysia: TPPA trade pact cannot proceed without the US, says minister
Vietnam stood to gain the most from the agreement with an anticipated 8.1 percent rise in GDP by 2030, with some estimates going as high as 11 percent. The access to foreign markets would have had a significant impact, especially given Vietnam’s strained relationship with China, its largest trading partner, over the South China Sea dispute.
Apparel, footwear and seafood industries, some of Vietnam’s biggest export industries, would have benefitted from reduced or eliminated import tariffs. And the number of companies moving factories to Vietnam was expected to rise, causing exports to soar by 28 percent according to the Eurasia Group.
As a country that relies heavily on trade and as home to one of the biggest ports in the region, Singapore’s benefits of the TPP would have been tangible. Despite being part of a number of free trade agreements already, the increase in trade in the newly liberalised region would benefit Singapore. The pact would also open up the previously untapped markets of Canada and Mexico.
Japan gains were also projected to be significant, with projected benefits including an acceleration of market advances by services companies into Southeast Asia as well as access to foreign markets. Included in this would be the liberalisation of auto imports in markets other than the United States.
SEE ALSO: Singapore’s prime minister says America’s credibility on the line over TPP
WINNERS
The big winners from Trump’s decision will likely be those countries that didn’t sign up to the agreement.
Chinese President Xi Jinping attends the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 17, 2017. Source: REUTERS/Ruben Sprich
South Korea is probably feeling reassured by Monday’s decision as the TPP threatened to erode the country’s advantage in U.S. markets that are currently supported by their own trade agreement, KORUS.
Others, including Thailand and India, will also be relieved as they are in direct competition with TPP members for TPP markets.
China stands to be the major winner from the United States’ backpedalling.
SEE ALSO: From Obama’s pivot to Trump’s bashing: What today’s inauguration means for Asia
Xi Jinping has already been laying the groundwork to take the United States’ place and expand China’s influence in the region. His talk at the World Economic Forum reinforced China’s commitment to free trade and let the world know that they are very much open for business.
Reuters reported that works are already underway for Asian members to salvage the trade deal, with Australia and New Zealand saying on Tuesday that they hoped to encourage China and other Asian nations to join the pact.
“Losing the United States from the TPP is a big loss, there is no question about that,” Australian Prime Minister Malcolm Turnbull told reporters in Canberra on Tuesday. “But we are not about to walk away … certainly there is potential for China to join the TPP.”
Despite Obama’s pitch for the TPP to counter China’s growing influence in the region, it appears that this latest development for the long disputed trade pact may well result in the opposite occurring.
