Date posted: 07/02/2017 4 min read

Australia, the TPP and US engagement in Asia-Pacific

What are the implications for economic development in the Asia Pacific following the US' withdrawal from the TPP?

In brief

  • By turning his back on the TPP, President Trump turned US economic and strategic engagement in the Asia-Pacific on its head
  • Australia and Japan want to see a strong and reliable Washington play a leadership role in the Asia-Pacific
  • It’s in Australia’s interests to ensure the Asia-Pacific region fleshes out robust trade and investment standards

At his recent inauguration, US President Donald Trump declared that, “from this day forward, it’s going to be only America first”, referencing the protectionist and isolationist platform on which he won the 2016 presidential election.

President Trump wasted no time in animating his ‘America First’ campaign rhetoric as administration policy. On his first full day on the job, the 45th President of the United States signed an executive order to withdraw his country from the Trans-Pacific Partnership (TPP), the 12-nation trade deal championed by his predecessor, Barack Obama.

The agreement had long been in Trump’s sights. At one point during the election campaign, he ramped up the rhetoric to claim that the TPP would “rape” the United States. The product of nine years of negotiations and a great degree of political capital was gone with one jagged signature.

By turning his back on the TPP, Trump turned US economic and strategic engagement in the Asia-Pacific on its head and dented the global leadership role Washington has played for the last 70 years. And while not unexpected, the official rejection of the TPP instantly complicated Australia’s calculations.

Since the US backed away from the deal, Australia has scrambled to pick up the pieces. Australia’s Trade Minister Steve Ciobo initially called for parliament to ratify the TPP as an unequivocal sign that Australia supports the deal and rejects resurgent protectionism. In the days that followed, the minister spoke of the TPP’s 12-minus-1 format, and mooted the possibility that other countries could fill the US-shaped hole in the deal.

The Trump administration has undermined Washington’s ability to positively shape these elements of the Asia-Pacific’s trade and investment environment.

Ciobo noted Indonesia’s “possible interest” in becoming a TPP member, and Australian Prime Minister Malcolm Turnbull later spoke of the “potential for China to join” a reformulated pact.

But as the Australian National University’s Shiro Armstrong pointed out in The Financial Review, the TPP without Washington doesn’t have much appeal, given that “many of the 11 members signed on because of the preferential access they'd gain in the US market”.

Indeed, Japanese Prime Minister Shinzo Abe has said that a "TPP without the United States is meaningless," with deputy cabinet secretary Koichi Hagiuda noting that “the fundamental balance of interests is lost without the U.S.”. After stoically ratifying the TPP in the Japanese parliament last month, Tokyo has said it will continue to plough effort into persuading Washington to come back on board.

Regional uncertainty

Australia has joined Japan in the mission to lock down US support for trade liberalisation. Australia and Japan are treaty allies of the US; both want to see a strong and reliable Washington continue to play a leadership role in the Asia Pacific.

The TPP, of course, was the economic arm of the Obama administration’s ‘pivot’ to the Asia Pacific. Obama’s Asia policy, later known as the ‘rebalance’, leaned on economic, diplomatic, security and institution-building levers to refocus Washington’s gaze on a region of growing consequence. While the military initiative was tangible and well-resourced, the whole enterprise ultimately lacked political firepower.

So the demise of the TPP has Washington’s allies and partners in the Asia-Pacific grappling with uncertainty around the shape of America’s Asian engagement in 2017.

Throughout the campaign Trump stated his preference for bilateral negotiations over multi-party agreements. That move chimes with his self-styled image as a dealmaker who seeks to extract maximum value for the United States – he will win, others will lose.

In pursuing that strategy in the Asia Pacific, Trump stands to cede economic leadership to Beijing. After his obstinate rejection of the TPP, the only Asian trade deal in play is the Regional Comprehensive Economic Partnership, a 16-nation effort involving 10 ASEAN members, China, Japan, South Korea, India, New Zealand and Australia. China leads those negotiations, having now strengthened its hand in formulating the region’s dominant economic framework.

Undermining US’ influence in Asia Pacific

It’s in Australia’s interests to ensure that the region fleshes out a robust collection of high quality trade and investment rules and standards which address crucial concerns such as the environment, labour rights, regulatory transparency and intellectual property.

In walking away from the TPP, the Trump administration has undermined Washington’s ability to positively shape these elements of the Asia Pacific’s trade and investment environment. It has also damaged its own strategic posture, one which has supported the stable, open and prosperous regional order in which we live.

While Trump might paint his TPP rejection as, “a great thing for the American worker”, we should understand that the move portends poorly for US strategic and economic leadership in the Asia Pacific. Canberra is right to be concerned as it launches headlong into the time of Trump; we should be looking for every opportunity to deepen our economic engagement with Asia and to reinforce Washington’s involvement in our region’s affairs.

David Lang is an analyst and the managing editor of The Strategist at the Australian Strategic Policy Institute.

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