Published: Wed 1st February 2017
Read Time: 3 minutes
Trump Abandons TPP: What Next?
One of the key pledges Trump made during his campaign was to put an end to the Trans-Pacific Partnership (TPP). Not surprisingly, this fits in with his patriotic ‘Putting American Citizens First’ political agenda.
What Is TPP?
TPP was a trade deal consisting of 12 countries designed to deepen economic ties between the nations it consists of, who are already responsible for 40% of world trade. Many have said that Obama’s interest in the deal was due to China’s growing economic power within Asia. One of Trump’s key pledges during his campaign was to reduce trade deficits and reduce reliance on imports. Therefore, exiting the TPP would significantly help him in achieving this goal.
In order for TPP to be put into place, it had to be ratified by all 12 nations – in line with their governing procedures. The Trump administration, from the start, had been critics of the TPP and once Trump entered office, the US had officially exited the agreement.
This has led to uncertainty for many multinational corporations based in the US, as the TPP would have significantly boosted business for such firms – due to most of their sales revenue coming from outside of the US. One of the criticisms of TPP was that it favours big corporations, rather than the American citizens – which some saw as an opportunity for jobs to be shifted from the US to other, cheaper countries within TPP.
With Trump’s policies towards bi-lateral trade looking very grim, Asia and in particular, the other 11 countries that form part of the TPP may need to look elsewhere – to perhaps form a smaller agreement by themselves, or look towards Europe. Such ideas and agreements take time and thus, any sort of agreement that we may foresee in the future is potentially very far away. Only time will tell whether these 11 nations can recuperate any of the political capital they have invested into the TPP through a similar agreement.