US Commerce Secretary Wilbur Ross said last week that the US is in trade talks with Asian nations to replace the now defunct Trans Pacific Partnership (TPP) with a new trade partnership which is bigger than the original TPP.
What does this mean?
How will it affect the rakyat?
What is the TPP?
The TPP was a trade agreement led by the US together with 11 other countries which are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
The TPP which took seven years of negotiations was aimed at boosting trade between member countries as well as eliminating tax and provide jobs for all.
However, the TPP did not materialise when Donald Trump became US President in January this year and he signed an executive order to withdraw from the TPP on his very first day in office.
What is the US motive?
Economists said the about turn by the US is a surprise as it signals a U-turn by the superpower.
Most experts agree that this could be a face saving measure by the US as it now realises that it needs to do trade with other countries to survive.
The US cannot survive on its own and it needs to do trade with others.
Sunway University Business School Professor of Economic Dr Yeah Kim Leng said under the new TPP, the US has to establish trade agreements with as many countries as possible or risk being left all alone.
The US has a lot of convincing to do
Most countries would be cautious right now if there is a new TPP because this is against Trump’s election campaigns.
Countries would be suspicious with the US motive and why would the superpower change its mind now.
Does Trump have a new political agenda?
Further more, the original TPP took seven years to negotiate and how would this new TPP differ from the old one?
What’s in it for member countries this time around?
The new TPP is to counter China’s One Belt One Road initiative
The US is aware of China’s growing economic influence in Asia and the world.
One of the initiatives embarked by China is called the One Belt One Road initiative or OBOR.
The OBOR is China’s plan to boost trade with other countries by providing infrastructure such as ports, railways and expressways.
The OBOR initiative grows in six different directions or also known as corridors.
The corridors from China include China to East Russia and to West Russia, Pakistan and Mediterranean.
For Malaysia, the corridor will start from Southern China along the Indo-China penisular and all the way to Peninsular Malaysia and Singapore.
The US cannot allow China to grow and that is why there is a new TPP
Realizing that China is getting stronger through economic activities such as OBOR, the US will have no choice but to replace the TPP with a new one.
The US need to do this to maintain its position as the world’s number one economy and to do that, the US needs to establish trade partnerships with other countries in the world which include Asia.
The new TPP could include China?
It is not known just yet but the new TPP could include China as the US just signed a trade deal with China recently.
Trump also plans to visit the region soon signalling closer partnership and greater engagement between the two countries.
US Commerce Secretary Wilbur Ross told the South China Morning Post on June 20 that Trump’s Asia trade strategy can be a win-win for US and China.
This is because the US and China are the world’s top two economies in the world respectively and both countries should work together rather than compete with each other.
Japan wants to join the new TPP
Japan which is the world’s third largest economy has already expressed its interest to join the new TPP.
Wilbur Ross told reporters at the annual SelectUSA Investment conference in Washington that the US is willing to hold bilateral talks with Japan on a trade agreement.
Ross said some other countries also expressed interest to join.
He however declined to reveal who the countries are.
Regardless of what happens, Malaysia should join new TPP
Regardless of what happens, new TPP or old TPP, Malaysia should join the TPP as our country needs to do trade to survive.
Malaysia is already one of the world’s top 20 trading nations and it needs to join the new TPP to ensure trade activities continue.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed said, 40 percent of Malaysia’s economy is driven by trade which The Star reported on February 8 totalled more than RM1.4 trillion in 2016.
According to David Dodwell, executive director of the Hong Kong-Apec Trade Policy Group, if the US joins the new TPP, the TPP would be an important market for Malaysia as it account 38 percent of the world’s gross domestic product and 26 percent of world trade.
TPP will live on even without the US
Even if the US will not join the TPP, the 11-member countries have agreed that they will continue to work together on trade such as signing bilateral trade agreements.
South China Morning Post said business leaders from as far as Japan, Vietnam and Australia agree that even without the US, their trade agreements should continue.
The TPP will benefit the rakyat
Rakyat Malaysia should support the TPP no matter what.
This is because we are a small trading nation and we need to take a pragmatic approach.
The TPP promotes economic growth, support the creation of jobs, enhance innovation, productivity and competitiveness, raise living standards, reduce poverty, promote transparency, improve good governance and enhance labor and environmental protection.
In the end, the rakyat’s economy will improve and they will be able to help the country become developed and succesful.