World trade goes on as TPP is signed in Chile
07 March 2018
The Trans Pacific Trade deal is set to be signed by 11 nations tomorrow in a ceremony in Chile - though a 12th nation is notably absent.
The USA famously pulled out of the deal last year following President Trump’s election win, which was built on a protectionist agenda. It is perhaps particularly notable that this deal is being signed following a week of protectionist threats and actions from President Trump, including a proposal to raise tariffs on aluminium and steel - potentially starting trade wars with its key trade partners.
The 11 remaining nations finalised the revised ‘Comprehensive and Progressive Agreement for Trans-Pacific Partnership’ (CPTPP) in January. The 11 member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The countries represent 13% of global GDP – a total of $10 trillion. Had the USA also signed, this figure would have been 40%. The success of the deal, despite the USA’s high profile withdrawal, is being touted as a refutation of growing US protectionism.
“CPTPP has become more important because of the growing threats to the effective operation of the World Trade Organization rules,” New Zealand Trade Minister David Parker said on Wednesday.
Chile and Japan lead the way
Since the USA’s withdrawal, Japan, as the largest remaining economy in the pact, has been a major force in getting the new deal secured. The location of Chile for signing of the deal, however, is no accident.
Chile has taken the lead in trade and economic integration in Latin America over the last two decades – according to the research blog ‘The Global Americans’. Chile has negotiated 26 FTAs with 64 countries, representing over 85% of global GDP and 60% of the world’s population.
According to Anders Beal, Program Assistant at the Wilson Centre’s Latin American Program, and Benjamin N. Gedan, a former South America director on the National Security Council and a fellow at the Woodrow Wilson International Centre for Scholars and the Council on Foreign Relations:
“Following President Trump’s election on a protectionist platform and his executive order to withdraw from the (then named) Trans Pacific Partnership (TPP) last January, Chile launched an uncharacteristic diplomatic blitz to rescue the agreement. The centrepiece was a global summit in Viña del Mar only months after the U.S.-TPP reversal. The summit was designed to keep the remaining 11 TPP members in negotiations despite the U.S. withdrawal from the deal, and to discuss trade issues and economic integration for Pacific countries”
With Argentina’s pro trade President Mauricio Macri also calling for more integrated and open trading relationships in the region, you could say that the future development of the globalised economy is being led by emerging markets in Latin America rather than the former trade stalwart of the USA.