In a dramatic move that will have multiple ramifications on global trade, the United States under President Donald Trump withdrew from the multilateral Trans Pacific Partnership (TPP) deal on Monday. The latest decision became one of the first executive orders signed by the newly-inaugurated president. It is to be noted that Trump during his electoral campaign had promised to scrap the deal on the first day of him taking office.
"Great thing for the American worker, what we just did," Trump told reporters on Monday after he signed the order.
— China Xinhua News (@XHNews) January 24, 2017
The TPP deal was finalised by Trump's predecessor Barack Obama who intended to strengthen United States' trade relations with countries in the Pacific region — Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. Several Republicans and Democrats had been supportive of the deal, with Obama taking the help of House Speaker Paul Ryan to pass the legislation in House of Representatives. However, many others like Democrat Bernie Sanders opposed it, noted The Independent.
The publication added that the bill legitimising the deal is expected to be rejected by the Senate due to the controversy it has created among the working class Americans. Reacting to the scrapping of the contentious deal, Sanders, known for his socialist leanings, welcomed the move and was quoted by the publicaiton as saying, "Now is the time to develop a new trade policy that helps working families, not just multi-national corporations."
Sanders has reportedly also offered to work with Trump on economic issues. Sanders' statement on the TTP assumes significance as critics have been dismissing the deal as "Nafta on steroids". signifying it as the ill product of rampant globalisation. Opposition to the deal stems from the fact that TPP would have helped US multinationals get cheaper labour in low wage countries of Asia and South America- Vietnam and Peru; in the process shifting the country's manufacturing sector base to the other signatory nations of the deal, which critics feel, will take away jobs from workers in the United States. This is also the reason given by Trump, during his presidential campaign.
Here is an excerpt of what he said during one of his campaign speech condemning the deal:
"The Trans-Pacific Partnership will undermine our economy, and it will undermine our independence. The TPP creates a new international commission that makes decisions the American people can't veto, making it easier for our trading competitors to ship cheap subsidised goods into US markets — while allowing foreign countries to continue putting barriers in front of our exports."
Even Democratic Party presidential candidate, Hillary Clinton, who once called the deal a "Gold Standard", did a complete volte-face and promised to reverse the deal if voted to power. Probably, the candidates were pandering to the anti-TPP sentiments among the working class Americans.
Will be meeting at 9:00 with top automobile executives concerning jobs in America. I want new plants to be built here for cars sold here!
— Donald J. Trump (@realDonaldTrump) January 24, 2017
While political opposition to the deal revolves around its effect on workers and the US economy in general, some anti-globalisation activists look at a larger picture.
Writing for The Huffington Post, Dana Geffner of the Fair World Project, opined that while the TPP reportedly helps the agriculture sector, it is the large industry-level agriculturists and not the small ones who would be benefited by the now-defunct deal. Geffner also added that even many medical professionals oppose TPP as it could keep affordable drugs out of the hands of the poor on acocunt of stricter patent laws.
However, every story has a flip story to it. Supporters state geo-politics and the new economic opportunities that the deal opens up for a country rising from a slowdown as reasons to implement the TPP. With the TPP deal dead, Trump baiters feel that China has won an easy victory, which will help Beijing assert its dominance over the Pacific region.
The US, on the other hand, will gradually lose its grip over the region, were Obama intended to 'pivot' to Asia to counter a resurgent China.
With the Trump adminsitration reportedly taking an inward-looking stance on economic and domestic policy, the scrapping of TPP is just the beginning of the shift in US's policy. Many believe Nafta, the flagship trade deal signed by Bill Clinton in 1993, which also includes Mexico and Canada, is next in the list of Trump's plan to overhaul the economic trajectory of the country. Also, the Trans-Atlantic Trade and Investment Partnership (TTIP), which involves the European Union, is also on Trump's radar.
However, while India is not a signatory to the multilateral agreement, does it have any impact on our country? According to Dhruva Jaishankar, senior foreign policy analyst at Brookings India, the demise of the deal might slow down the negotiations to create a Regional Comprehensive Economic Partnership (RCEP) with the help of China. Economically, however, it won't have a major impact on india, with India losing only two to six billion dollar or just 0.1 percent of GDP by 2030.
Trump's latest action is significant as the world's biggest economy is all set to break the general trend of globally integrated trade and commerce and adopt a more protectionist approach. This might have a long term impact on global economy as many other countries might follow suit.
Published Date: Jan 25, 2017 13:03 PM | Updated Date: Jan 25, 2017 13:03 PM