China Could Lead The New Pacific Trade Deal For TPP Countries

Economy

China Could Lead The New Pacific Trade Deal For TPP Countries

Countries that signed up for the failed trade pact known as the Trans-Pacific Partnership (TPP) will meet in Chile next week, seeking a way forward on a regional deal.

Representatives from the 12 countries that formed the TPP, plus China and South Korea, will meet for the first time since US President Donald Trump pulled the United States out of the TPP in January, effectively killing the accord in its current form. The Chile meeting is a sign efforts to find an alternative Asia-Pacific trade pact are moving ahead, with China now likely leading the talks after the US dropped out.

Chile has accomplished its first goal of getting everyone together and will seek commitments for further meetings to evaluate alternatives, said Chile's official trade representative. "The objective is to confirm if the strategy of growth and openness of recent years is what we believe to be correct. Do we need to include other issues? Do we need to implement policies that complement the opening of trade or not? It is still premature to say what the future roadmap would look like," the official said.

Likely options could be to build on the base of pre-existing agreements - such as Latin America's four-country Pacific Alliance, or the proposed Southeast Asian-backed Regional Comprehensive Economic Partnership (RCEP). Countries including Australia, New Zealand and Canada had a "similar commercial approach" to the Pacific Alliance and had signaled an interest in joining or negotiating as a bloc. Others evidently feel more comfortable with the RCEP model and they could open a door to let others in.

China, which is part of RCEP talks, has argued the TPP was too complex and political rather than purely trade-based. Critics of the RCEP - including the former Obama administration - warned it would not include strong protections for workers, the environment or intellectual property. With the election of Mr Trump and the demise of the TPP, eyes have been on Beijing to take the lead on future trade talks.

Pacific Alliance trade bloc seeks to deepen financial ties

The four nations of the Pacific Alliance, one of Latin America's major trade blocs, has agreed to deepen financial integration in the lead-up to a regional conference in Chile designed to counter creeping global protectionism. The finance ministers of Chile, Colombia, Mexico and Peru, meeting in Santiago, Chile's capital, told journalists they had agreed on next steps in areas such as the flow of investment capital across borders.

"We want to create a passport for (investment) funds so that when they are registered with any one of our respective authorities, they can market and distribute in the four countries," Colombian Finance Minister Mauricio Cardenas said. "This already exists in the European Union ... and we want to make it a reality here," he added.

The Pacific Alliance countries are among the keenest proponents of free trade in the Americas. At the recent ministers' meeting, Chile, Colombia and Peru gave their backing to Mexico. By far the most exposed to trade with the United States of the four, Mexico is facing a threat of tariffs and the possible end of the North American Free Trade Agreement, which also includes Canada. "Mexico is going through a challenging period and we three countries want to give it all the support we can," said Chilean Finance Minister Rodrigo Valdes.