WHEN United States President Donald Trump issued the executive order to withdraw the US from the Trans-Pacific Partnership (TPP) Agreement a year ago, many analysts saw it as the end of the deal.
But one year on, TPP is back on track, coincidentally on the anniversary of Trump’s decision to pull out of the pact.
The 11 remaining TPP countries, now led by Japan, have agreed to move forward without the US.
In fact, March 8 is the deadline committed by the chief negotiators of the Pacific Rim economies to sign the accord in Chile after they held a two-day meeting in Tokyo last month to finalise the trade deal, especially on issues related to last-minute objections from Canada.
The Tokyo-meeting marks a breakthrough for the revival of the TPP, since the conclusion of the Asia-Pacific Economic Cooperation (Apec) Summit in Da Nang, Vietnam, at the end of last year.
Now the trade bloc is known as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).
Without the US, there are now five high-income economies in the CPTPP and six in the category of low/middle-income economies.
The CPTPP is still significant as it comprises almost 500 million people with a combined gross domestic product (GDP) of US$11 trillion (RM43.2 trillion), roughly about 15 per cent of world’s GDP. It also covers around 17 per cent of total global trade.
Based on a study conducted by the Canada West Foundation entitled “The Art of the Trade Deal: Quantifying the Benefits of a TPP without the United States”, CPTPP member countries are expected to reap trade gains of some 2.4 per cent in intra-regional exports alone.
In the context of Malaysia, CPTPP is consistent and in line with the government’s National Transformation Policy (NTP) and the bottom-up narrative of the Transformasi Nasional 2050 (TN50).
Besides the expected benefits of improvements in growth, income and jobs creation, CPTPP will essentially set the course for improving good governance, institutions and the legal framework, among other things.
These are crucial variables for Malaysia to truly transform its economy, and not just increase its growth rate, but bring about inclusive and sustainable development that benefits all Malaysians directly.
There is still room for the US to be brought back to rejoin the pact once it takes effect.
Recently, the United Kingdom has shown keen interest in joining the pact to gain new export markets after Brexit. If this materialises, UK will be the first CPTPP member country which does not border the Pacific Ocean or the South China Sea.
From the geo-political standpoint, it is evident that the world’s economic centre of gravity is gradually shifting towards Asia. A new world order is emerging as US hegemony wanes. For example, China’s Belt and Road Initiative is seen as a new grand strategy by China to “rewrite the rules of the game”.
DR IRWAN SHAH ZAINAL ABIDIN
Director, Asian Research Institute of Banking and Finance, Universiti Utara Malaysia.