ONE of the first and saddest acts United States President Donald Trump did upon assuming office a year ago was to have his country drop out of the Trans-Pacific Partnership Agreement (TPPA) with 11 other countries spread over Asia and the Pacific, including Malaysia. The TPPA was painstakingly hammered out over many years by officials and ministers from all 12 countries and the US was, as usual, taking the lead in what was supposed to be a path-setting, high-quality trade agreement for the 21st century.
As with any historically unprecedented multilateral trade agreements, the TPPA’s still-birth meant we may never know what exactly we missed since, as in most things, the real test was not so much in any dryly worded international agreement but in the real eating — as in how economic numbers actually got crunched and benefits started flowing through each economy. But, analysts had mostly surmised that fast developing countries and TPPA signatories, such as Malaysia and Vietnam, stood to gain the most from it, owing — in no small part — to the fact that these are among the most open economies and free traders.
However, it has now been shown that while the catalyst for the TPPA might have been a persistently plodding and cajoling US convincing all countries involved that they all, without exception, stood to gain from the agreement, the absence of that catalyst now need not be fatal for the TPPA.
Led by Japan in the absence of the US, the TPPA has morphed anew into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was unveiled after the latest round of meetings in Tokyo last week. Kudos to International Trade and Industry Minister Datuk Seri Mustapa Mohamed and his officials for the tireless work to seal the new deal and holding firm to carve-outs Malaysia has always viewed as particularly sacrosanct, such as over state-owned enterprises.
As Mustapa pointed out, CPTPP represents a combined gross domestic product (GDP) worth US$11 trillion (RM50.3 trillion) — 13 per cent of the global total — a population of 476 million and a 15 per cent share of global trade volume. Perhaps, more important than this new agreement itself, however, is the signal it sends out to the rest of the world that a new standard in global trading rule is being set and that new countries (including most assuredly the US and even China, the current global economic heavyweights) are welcome to accede to it.
Despite the election of Trump and populist pressures confronting elected leaders in the West over trade policies, globalisation and trade liberalisation are an unalloyed benefit to everyone and all countries as global economic growth lifts all boats. Selected areas within Western countries may naturally suffer from globalisation as old industries are unable to compete against more nimble players from elsewhere in the world.
But, if today’s biggest beneficiaries of free trade, such as Malaysia, see their own collective pockets swell and new middle classes join the ranks of the global economically enfranchised, these will increasingly be after the high-quality, high-end products purveyed by Western companies. Germany is not losing out in today’s globalising era because its government instituted clear and effective industrial policies and labour practices that stand the country in good stead to compete with the newly industrialising countries, especially here in Asia.
Decrying how the global trading rules are somehow stacked against individual countries will be as much a loser’s game for today’s advanced countries as they always have been for poorer countries unwilling to adapt and up their economic game. The US may still be the world’s biggest economy, and hence, its biggest market, but not for much longer. It, therefore, hardly needs repeating that it will be in America’s own best interests to still be in the game for leading in making new rules or adapting to old ones, at least economically, while it still can.
An inward-looking US may only prove over time to be its own worst enemy. As the sealing of CPTPP almost exactly a year after Trump junked it shows that the world will not just wait for the US to come back to its economic senses. China and, now, Japan show that they have what it takes to pick up the global trading pieces where America leaves them. The rest of the world is too much invested in the globalisation train to want to get off, and if the US shows any such inclination, it does so at its own peril
JOHN TEO views developments in the nation, the region and the wider world from his vantage point in Kuching, Sarawak