China-led trade pact will not fill void left by TPP

I refer to the report “China eyes December talks to fill trade void as Trump kills TPP” (Nov 24).

Abandoning the Trans-Pacific Partnership (TPP) will have many consequences. It weakens the United States’ pivot to Asia and leaves a gap in the Asian economy.

The proposed Regional Comprehensive Economic Partnership (RCEP), which is led by China, can in some way fill the void.

But if China at the same time becomes more assertive over the South China Sea territories dispute, while the new administration under Mr Donald Trump gives little weight to Asia, countries in the Asia-Pacific will become more vulnerable to conflict where trade and sovereignty are concerned.

The TPP is not just about tariffs; it also covers intellectual property, environment and labour rights. The TPP removes investment restrictions and barriers in government procurement and sets a benchmark for future trade deals.

The current global economy has affected Asian exports and the TPP would have helped expand global trade, which is crucial for poorer and trade-dependent countries. Without the US in the picture, some countries, such as Japan, might be less incentivised to remain part of the pact as they would no longer have access to the US market.

Without the TPP, countries such as Vietnam and Japan would also be unable to use the deal to pressure sluggish companies and sectors of the economy into shaping up and increasing productivity and competitiveness.

Even if the RCEP materialises, the economies of the countries involved covers 33 per cent of the world trade, compared with 40 per cent under the TPP.

As for the proposed Free Trade Area of the Asia-Pacific (FTAAP), which involves 21 Pacific Rim nations that are part of the Asia-Pacific Economic Cooperation, it is possible this will not come into fruition, as discussions had included the US.

Since the incoming US administration does not favour the TPP, there must be doubts about the realisation of the FTAAP as well.

A weak RCEP is not a replacement for the TPP.