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Trans-Pacific Partnership (TPP)
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US President Donald J. Trump signs the last of three Executive Orders in the Oval Office of the White House in Washington, DC, on Monday. They concerned the withdrawal of the United States from the Trans-Pacific Partnership (TPP), a US Government hiring freeze for all departments but the military, and a ban on federal funding of abortions overseas. Photo: EPA

US trading partners Australia and Chile swiftly woo China after Trump pulls out of Trans-Pacific Partnership

US trading partners Australia and Chile have signalled to China that they are open for business, after Donald Trump signed an order that the US will not join the Trans-Pacific Partnership trade deal on Monday.

The Australian government said it would push ahead with the TPP without the United States and i was open to Indonesia and China seeking to join the agreement.

Fellow TPP member Chile, meanwhile, announced that it planned to seek bilateral trade deals with China in the wake of Trump’s decision.

The TPP was originally formulated as a deal binding the US, Australia, Canada, Japan, Vietnam and seven other allies against growing Chinese economic clout. Together, TPP members would have represented 40 per cent of the world economy.

The Australian trade minister Steven Ciobo made the call for countries to push ahead with a so-called TPP 12-minus-one agreement. On Monday evening, the prime minister, Malcolm Turnbull, reportedly confirmed Australia’s commitment to the TPP in a phone conversation with Japan’s prime minister, Shinzo Abe.
Japan's Prime Minister Shinzo Abe (left) speaks as Australia's Prime Minister Malcolm Turnbull looks on during a press conference at Kirribilli House in Sydney, Australia, on January 14. Photo: EPA

On Tuesday Ciobo told ABC’s AM that a TPP with the US “can’t go ahead unless the US was to change its mind” but Japan, Australia and others wanted to hold onto the gains negotiated so far under the deal.

He said Australia has had talks with Canada, Mexico, Japan, New Zealand, Singapore, Malaysia, Chile and Peru to salvage the deal without US involvement.

Asked about China joining in the US’s stead, Ciobo said the original architecture enabled other countries to join.

“Certainly I know Indonesia has expressed a possible interest and there would be scope for China, if we’re able to reformulate it, to be a TPP 12 minus one [country] ... [and] for countries like Indonesia or China, or indeed other countries, to consider joining.”

Ciobo said there were a number of “competing factors” that would complicate a TPP 12 minus one agreement, including that Mexico and Canada may first have to deal with Trump attempting to renegotiate the North American Free Trade Agreement.

“It’s a moving space but it’s an important space – we must continue to pursue giving Aussie exporters the best chance, to get preferential access for Australian exports.”

Ciobo confirmed the Australian government had not done modelling about the possible size of benefits under a TPP 12-minus-one agreement, because it had been a “hypothetical” until Trump signed the order.
Chile's Foreign Minister Heraldo Munoz says Chile will try to strike bilateral trade deals with China and South Korea. Photo: Reuters

He said the agreement was good for Australia because it improved access to markets like Canada and Mexico and lowered compliance costs.

Asked whether the Turnbull government would push for parliament to ratify the TPP despite the US withdrawal, Ciobo said it would “keep that option alive”.

“We’re not going to be like [opposition leader] Bill Shorten and the Labor Party and walk away from this deal because it requires a little bit of elbow grease.”

Labor supports the TPP in principle but has said it is pointless to consider it in parliament given the US’s withdrawal. It has come under pressure from its union backers to reject the deal outright.

On Tuesday Labor’s trade spokesman, Jason Clare, said Trump’s executive order “put the final nail in the coffin of the TPP”, declaring the deal “officially dead”.

Chile, meanwhile, will pursue bilateral trade deals, Foreign Minister Heraldo Munoz told journalists on Monday.

The South American country has proposed meetings with TPP members as well as China and South Korea and has had positive reactions at a high level, Munoz said at a press conference.

Former US president Barack Obama’s administration had touted the TPP as a strategic counterweight to China.

Trump’s Republican ally John McCain described the new president’s decision as a “serious mistake that will have lasting consequences for America’s economy and our strategic position in the Asia-Pacific region.”

“It will create an opening for China to rewrite the economic rules of the road at the expense of American workers. And it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it.”

According to a Petersen Institute analysis, the United States stood to be the biggest beneficiary from TPP, with an annual increase in exports of $357 billion.

Additional reporting by Agence France-Presse and Reuters

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