SANTIAGO,Chile The revised Trans-Pacific Partnership trade pact was signed on March 8 in Chile's capital. The deal is positioned to serve as a critical bastion against the U.S. administration's protectionist policies as the pact is set to take effect this year, and welcome new members soon.
The members of the original agreement other than the U.S. reached the deal for the "TPP 11," which retains most provisions of the initial trade pact signed in 2016. The 11 nations, which together account for roughly 15% of global trade, aim to bring the pact into force within the year, rather than in 2019 as originally planned.
The U.S. withdrew from the TPP in January 2017, shortly after President Donald Trump took office.
The new agreement will take effect 60 days after at least six members ratify the deal. Chile, Peru, New Zealand, Japan and Mexico are eager to complete that process this year. "Vietnam could do so as well," a Japanese government source said.
TPP 11 appears "extremely timely," coming as it does amid "protectionist pressures and pressures that could end up in what nobody wants, which is a trade war," said Heraldo Munoz, Chile's foreign minister. Trump authorized sweeping tariffs on steel and aluminum the same day the pact was signed.
Tran Tuan Anh, Vietnam's minister of trade and industry, said the signatories would oppose protectionism, and he predicted other nations will join the pact.
U.S. President Donald Trump celebrates after slapping tariffs on steel and aluminum Thursday.
© Reuters
Ministers representing the TPP members said they "welcome the interest shown by a number of other economies wishing to accede to the agreement." At least five Asian economies -- South Korea, Thailand, Indonesia, the Philippines and Taiwan -- have expressed interest, in addition to Colombia and the U.K.
South Korea is as eager to counter this protectionist trend, fearing that American tariffs will hurt its steel industry. The country seeks additional trade ties to provide a buffer as it renegotiates its bilateral trade deal with the U.S. The Chosun Ilbo newspaper, in an article published online, urged Seoul to move toward joining the TPP in order to protect national interests.
The Philippines sees joining the agreement as a way to avoid falling behind Vietnam, a TPP member that has reached a trade deal with the European Union. Indonesian President Joko Widodo has expressed hope of joining the TPP as well.
Colombia, a member of the Pacific Alliance trade bloc, may be the most viable 12th member. All other members of that group -- Chile, Mexico and Peru -- are part of the TPP.
More than 20 U.S. senators from Trump's Republican Party, including Finance Committee Chairman Orrin Hatch, sent a letter to the president in February urging him to rejoin the TPP. Major farming regions are traditionally Republican strongholds, and producers of rice, wheat and pork could lose out.
The American dairy industry also could feel a pinch as TPP members start importing goods such as cheese and butter from Australia and New Zealand. And beef from New Zealand, Canada and elsewhere could pose a greater challenge to exports from the U.S.
Ripple effects from Trump's metal tariffs could intensify the overall economic pain. U.S. steel sheet prices are already 20-30% higher than the global average. Though the planned tariffs are projected to add 30,000 jobs in the metals sector, they also will raise materials costs and crimp earnings in industries such as automobiles and construction, costing the U.S. about 146,000 jobs on balance, according to the consultancy The Trade Partnership.
Retaliatory measures from U.S. trading partners and a possible all-out trade war would bump the price of Trump's "America first" approach even higher.
