Asia Can Make TPP Work Without the U.S.
Donald Trump's grand tour of Asia will attract a lot of attention this week, but in one respect the fuss will be misleading. The president will be no more than a bystander when the region's leaders make a very big decision -- whether to go ahead with the Trans-Pacific Partnership, a deal that the U.S. designed and subsequently abandoned.
They can go ahead without the U.S., and they should.
True, the pact was designed to go into effect only if countries accounting for 85 percent of the region's output signed on. This bar is impossible to reach without the U.S. Also, countries such as Vietnam and Malaysia made concessions during the original talks in hopes of gaining access to the huge American market. Without that incentive, their interest in the deal is diminished -- and if the agreement were thrown wide open to take account of this, it might unravel altogether.
Yet the deal isn't dead. Negotiators have narrowed their differences, and it's possible agreement can be reached this week. They should seize the moment. Prolonging the talks raises the risk that political winds will shift again. (Last month's election in New Zealand nearly derailed the talks as negotiators sought further changes.)
It would have been far better to wrap up the initial negotiations sooner, so that the U.S. could have signed before Trump's election -- but it's too late for regrets on that score. Prompt action now can salvage a pact that's valuable even without the U.S.
This is partly because the deal's most far-reaching clauses aren't about tariffs, but aim to set new standards for the protection of intellectual property, data flows, labor and environmental conditions, and more. In the long run, this will serve the interests even of countries such as Vietnam that stood to gain most from increased trade with the U.S. Japan's government, for its part, rightly sees TPP's ambitions as a tool to push through structural changes that make sense in their own right, and which would be politically difficult otherwise.
Japan and others are also wary of U.S. pressure to negotiate a bilateral free-trade agreement instead of the TPP. Having a regional deal in hand would make it easier to engage with the U.S. on level terms.
Best of all, adopting the agreement largely as it stands would allow a future U.S. administration, with a clearer understanding of U.S. interests, to join without protracted new bargaining. With that in mind, negotiators have wisely decided to suspend and not eliminate certain clauses especially sought by the U.S., such as those dealing with "biologics." These could be easily reinstated.
The region's leaders shouldn't let this chance slip. Talks led by China on the Regional Comprehensive Economic Partnership are moving along, but that's almost certain to be a narrower deal, focused on tariff reductions rather than questions of greater concern to advanced economies such as Japan and Australia.
In stepping aside from TPP, Trump has let his country down. There's no reason other leaders should make the same mistake.
--Editors: Nisid Hajari, Clive Crook.
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at email@example.com .