Asia-Pacific's 11 Member Nations Trying To Revive TPP

Economy

Asia-Pacific's 11 Member Nations Trying To Revive TPP

- Trade ministers of TPP member countries, are huddling on the sidelines of APEC talks to discuss resurrecting the trade deal after Trump ditched it.

- Deborah Elms, executive director of the Asian Trade Centre, said negotiators may leave in dormant US-centric provisions to allow the country to re-enter TPP later

Trade ministers huddling on the sidelines of the Asia-Pacific Economic Co-operation talks in Hanoi, Vietnam, are faced with some tough challenges in resurrecting the TPP trade deal since US ditched it.

Aside from steering countries away from competing trade pacts, the architects of the Trans-Pacific Partnership must make it viable for the remaining 11 member nations, while keeping a door open to a future re-entry of the US, which accounted for 60% of the group's total gross domestic product (GDP).

That's a tall order, but Hanoi is set to provide a platform for the 11 to huddle up and possibly come up with Plan B. "The TPP is clearly diminished with the US out, but they will try and resurrect it," said Arup Raha, Chief Economist at CIMB. In an exclusive interview with CNBC, Japanese Prime Minister Shinzo Abe said his country wants US to return to the deal, but said the remaining members should stay united and not waste years of efforts.

"For Japan, this is a political move to neutralise China," said George Yeo, a former Singaporean trade and foreign minister. A free trade agreement between the US and Japan lay at "the heart of TPP," Yeo said. "Without the US, it is hard for Japan to give concessions on agriculture." Trade experts and diplomats, though, are confident the deal is worth pursuing without the Americans.

The core of TPP, according to officials, may not require going back to the drawing board if US-specific provisions are left "dormant" - an olive branch effectively allowing Washington access at a later stage. TPP's promoters are fighting against a backdrop of what some see as US disengagement on trade in the Asia-Pacific region, and a vacuum that's being filled by China.

Leading policymakers in TPP countries have expressed willingness to participate in the Regional Comprehensive Economic Partnership (RCEP), which is supported, but not led, by China. Opinion is divided. Some believe the agreements may combine in the future, while others see them as qualitatively different.

"RCEP competes with the TPP, but is a different animal," CIMB's Raha said. TPP is "more about tariff reduction" while India's participation in RCEP "is likely to be a bottleneck."