Less than a year after it looked dead and buried, the trade deal formerly known as the Trans-Pacific Partnership (TPP) has moved closer to reality.
After some last-minute drama and plenty of last-ditch wrangling, the 11 remaining countries made a tentative agreement in Da Nang, Vietnam over the weekend, with the final details set to be signed in the new year, after which the deal will move to the respective parliaments and assemblies for ratification.
It was almost a very different outcome: Canadian Prime Minister Justin Trudeau shocked his counterparts by failing to show for a round of negotiations on Friday, which sparked fears that an agreement was far from certain.
Speaking from the sidelines of the APEC Summit in Da Nang, one trade lobbyist described the turn of events as “a soap opera” and told GTR that “Canada appears to have killed things”.
As it was, negotiations resumed on Saturday and at 11am came the announcement that a broad agreement had been reached, with the core elements of a deal in place.
There are, we understand, four areas outstanding, but leaders are confident that a deal will be finalised.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) – as it has been rebranded – will be completed without the US, which pushed hard for its negotiation and conclusion in its former guise, under the previous administration of Barack Obama.
That it is moving forward with a new name and structure without Trump’s America is symbolic – as is the fact that Canada insisted on the name change. Canada would appear to be in the driving seat now, replacing its larger North American neighbour as arguably the most influential member of this agreement.
The symbolism has not been lost on US trade watchers, who have remarked en masse upon the US’ isolation. As the 11 remaining members were busy thrashing out the bones of a new deal, Trump spent his time in Vietnam lashing out at the multilateral trading system.
Under his watch, the US will not enter “large agreements that tie our hands, surrender our sovereignty and make meaningful enforcement practically impossible”, Trump told Asia Pacific governments.
He pledged to negotiate bilateral deals that put “America first”, but will be leaving Asia this week without anything concrete to show, in trade policy terms. A raft of agreements and memoranda were announced on Trump’s visits to China, Japan and South Korea, but many of these were already in place and rather than firm transactions, represent notional commitments.
The US government claims these are worth US$250bn to its economy, but few expect them to be so substantial in reality.
New Zealand had presented the last crisis for TPP negotiators after the new government of Jacinda Ardern threatened to scupper a deal over an investor protection clause. As it was, they came back to the table and Kiwi business leaders welcomed their participation.
“Our new government has succeeded with CPTPP, not only in preserving essential elements of the original agreement, particularly in terms of improved market access to Japan, Canada and other markets, but has also softened its impact in areas that were previously contentious in New Zealand,” says NZ International Business Forum executive director, Stephen Jacobi.
Other trade experts, however, were critical of the watered-down agreement, which, without the US, is without its biggest member by far.
“It is not comprehensive, progressive or even truly Trans-Pacific. Moreover, the nature and substance of the agreement have been transformed – with the change in the composition of the membership,” says Matthew Rimmer, a law professor at the Queensland University of Technology in Brisbane.
Rimmer adds that Trudeau’s government capitalised on the desperation to get a deal over the line to negotiate some last minute carve-outs for the Canadian economy.
He says: “The astute Trudeau relied upon Mexico to counteract the influence of Japan and China. He also sought to send a signal to President Trump that he would be no pushover in the negotiations over the North American Free Trade Agreement. As a result of its powerplay, Canada was able to extract significant concessions on intellectual property, investor-state dispute settlement, cultural exceptions, and the auto sector.”
No fixed date has been set for the deal to be concluded, but it appears to be only a matter of time before it happens.