Trump sinks Asia trade pact, opening the way for China to lead

Tue Nov 22, 2016 12:54pm EST
 
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By Ami Miyazaki and Tom Westbrook

TOKYO/SYDNEY (Reuters) - An ambitious Asia-Pacific trade pact linking the United States and 11 countries lay in tatters on Tuesday after U.S. President-elect Donald Trump said he would kill the deal on his first day in office on Jan. 20.

Trump's statement appeared to open the way for China to assume the United States' leadership mantle on trade and diplomacy in Asia. The Republican termed the Trans Pacific Partnership (TPP) "a potential disaster for our country."

China, Japan and South Korea are already in the initial stages of discussing a trilateral trade deal, and Beijing has been pushing its own limited Asian regional trade pact that excludes Washington for the past five years.

Japan and Australia, Washington's closest allies in Asia, pledged after Trump's announcement to push ahead without the United States, although removing the largest market for goods and services would shrink it dramatically.

"Pushing them forward is the idea that, if they don't act, it will look like China's very weak trade deals are the only game in town," said Derek Scissors, a resident scholar at the American Enterprise Institute, where he focuses on Asian economies and trade.

Trump has pledged to redraw trade deals to win back American jobs, and has threatened Mexico and China with punitive tariffs in a move that some economists have warned could spark a trade war that threatens to roll back decades of liberalization.

Ending the TPP was a key election pledge of Trump's and was also the policy of his Democratic opponent, Hillary Clinton. The deal died in Congress after Trump's Nov. 8 election victory.

The Trans Pacific Partnership, a signature diplomatic initiative of Democratic President Barack Obama, was intended to lower tariff barriers in countries that accounted for 40 percent of the world economy, as well as providing a bulwark against China.   Continued...

 
U.S. President-elect Donald Trump is shown at his election night rally in Manhattan, New York, U.S., November 9, 2016. REUTERS/Jonathan Ernst