Sunday, November 27, 2016

Future of Trans-Pacific Partnership (TPP) is in Limbo

Trans-Pacific Partnership (TPP) was a deal to create an American led trade coalition in Pacific rim. By the way, the deal excluded China. China may get an invitation later (may be once the rules are created). Well, China didn’t sit idle, she went on creating numerous other coalitions like Silk Road, Maritime Silk routes, Development Banks, Trade groups etc. As if it's not enough, China even started building islands in Sea.

12 nation group of TPP was almost a done deal until American presidential election fever kicked in. Final proposal was signed on Feb 2016 in Auckland.  This was after 7 years long negotiations. Now the deal must be ratified by participating nations.

Election of Donald Trump as next US president may put the deal in coffin. After all, he promised during and after elections, that US will pull out from TPP on his first day in office. By the way, it is very much possible that he may take a leaf or two from Mulayam Singh Yadav's play book and took an immediate U turn.

What I can say as of now is,

a.       Without US, the deal may not work. Japan, Vietnam and many other countries were ready for concessions because of the promised access to US markets. If US is not going to be there, then there is little incentive for them to do so.

b.       Another important point is abandoning TPP may be a blow for US allies in Pacific. It will give a signal that, US is not going to be there all the time. Those who were more afraid of Chinese hegemony may be willing to accept it and be more receptive of what China preaches. This will be a clear win for China.

c.       Nations can’t build good military relations without having a strong foundation of economic ties. Hence, in the long run US is going to lose control of affairs in this part of the world.

d.       Another possibility is rest of the nations may go ahead and conclude the deal.

Let's see whether Thrump will do what he preaches; or whether his promises will remain as promises forever. Only time can tell.


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