KOTRA Released Report on US’ Withdrawal from TPP

The Korea Trade-Investment Promotion Agency (KOTRA) said on February 7 that Japan is likely to work with Australia and New Zealand in order to prevent the United States from withdrawing from the Trans-Pacific Partnership (TPP) and is likely to emphasize the advantages of it at the summit talks with the United States scheduled for February 10.

“The Japanese government is desperate to maintain the TPP and it is expected to emphasize Japanese companies’ contribution to employment and investment in the U.S. via the TPP and suggest public pension fund investment in infrastructure in the U.S.,” the KOTRA explained, adding, “Still, these efforts are likely to be in vain in that U.S. President Donald Trump has already promised over and over to withdraw from the TPP.”

According to the KOTRA, Japan, Canada and Mexico are currently predicting that the TPP will die away in the end in that the U.S. accounts for more than 60% of the total GDP of the countries supposed to participate in it. Australia and New Zealand, in the meantime, are trying to push ahead with it by replacing the U.S. with China, Indonesia, etc. Most of the other countries are opposed to the plan of Australia and New Zealand.

Under the circumstances, China and the EU are expected to increase their presence in global trade environments. Countries that have moved ahead with the TPP and the Regional Comprehensive Economic Partnership (RCEP) at the same time, such as Malaysia, Vietnam and Singapore, are likely to focus on the establishment of the RCEP led by China. Latin American countries such as Chile and Peru have signaled that they would sign FTAs with RCEP member countries, reduce the ratio of their trade with the U.S. and form closer trade relations with China.

Japan and Vietnam are forecast to concentrate on deals with the EU once the TPP does founder. The same applies to Pacific Alliance member countries.

Certain countries are looking to sign bilateral FTAs with their major trade partners and potential TPP members as alternatives to the TPP. For example, Canada has signaled individual FTAs with Japan, China, India and so on as is the case with Mexico and Peru.