Trump signs executive order withdrawing US from TPP trade deal

tppUS President Donald Trump signed an executive order to formally pull US out of the negotiating process of the Trans-Pacific Partnership (TPP), a mega trade deal of 12 Pacific Rim countries. TPP was one of the major international trade initiatives of his predecessor Barack Obama aimed to set trade rules for the 21st century and bind US allies against growing Chinese economic clout. During the Presidential election campaign, Trump had vowed to withdraw the US from the TPP which he argued was harmful to American workers and manufacturing.


President Trump signed an executive order formally withdrawing the U.S. from the Trans-Pacific Partnership trade deal, an order establishing a federal hiring freeze, and a third order reinstating the “Mexico City policy,” on Jan. 23 at the White House.

TPP’s Impact on U.S

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  • If the TPP were approved, according to US think tank Brookings Institution, the US would have stood to gain $77 billion annually, while Japan would have clinched an even larger $105 billion.
  • The deal also included labor, environmental and intellectual property protections sought by businesses and other groups.
  • With the 11 remaining signatories now deciding whether to move on without the US, or abandon the agreement completely, attention is focusing on China’s rival deal.
  • It creates a strategic opportunities for China’s own regional trade agreement, which it is pursuing with 15 other Asian countries, including Japan. A deal between just China and Japan could jeopardize $5 billion in U.S. exports and millions of American jobs.
  • The TPP have pointed to recent reports of Beijing’s weapons buildup on islands in the South China Sea as evidence of the country’s emboldened posture.

TPP’s Impact on India

It might have led to market share losses for certain categories of India’s exports due to preference erosion. It could have indirectly impacted exports in several industrial sectors such as textiles, leather, clothing, plastics, cotton and yarn. Even India’s pharmaceutical sector might had suffered due to higher standards compared WTO norms, including on IPR and ever-greening of patents.

About Trans-Pacific Partnership (TPP)

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  • The TPP is a trade agreement under negotiation among 12 Pacific Rim nations accounting for 40% of the world economy. It was promoted by US and signed by 12 countries in 2015.
  • 12 members are Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US and Vietnam. India was not part of TPP.
  • The aimed to ease the flow of goods, services and investments among member countries and set trade rules for 21st century especially on labour standards, environmental issues, origin criteria and intellectual property.
  • The mega trade deal was considered as counterweight to growing global economic clout of China, the largest economy in the Pacific Rim.

About Regional Comprehensive Economic Partnership (RCEP)

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  • Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).
  • RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia. RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP) trade agreement, which excludes China and India and includes several nations of the Americas.
  • In 2016, prospective RCEP member states accounted for a population of 3.4 billion people with a total Gross Domestic Product (GDP) of $21.4 trillion, approximately 30 percent of the world’s GDP.
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