China Launches Answer to Dying TPP Pact

Perhaps the most profound policy change in the near future following President-Elect Donald Trump’s surprise victory is that trade pacts will be few and far between and existing ones may well be up for review.

The United States has used its market as leverage for years—trading access to domestic markets for favors that were arguably as geopolitical as they were economic at times. The Trans-Pacific Partnership (TPP) was supposedly aimed to isolate China while opening emerging Asia-Pacific markets. The idea was to blunt China’s influence in the region with a trade pact that pulled countries away from Beijing.

If ever there was a plan that backfired, it would be the TPP. Its slow death, capped off by Trump’s successful campaign, which included promises to shut down the deal that included 11 other nations and already faced much opposition even if Hillary Clinton had won as expected, gave China plenty of time to react. A version of a Chinese-led Regional Comprehensive Economic Partnership (or RCEP) that favors it and excludes the U.S. has appeared suddenly. A key difference is that China need not go through an approval process or much public debate to get it up-and-running. TPP members like Malaysia and Australia have already hinted at interested in joining onto the RCEP if the Trump victory completely derails the long discussed trade pact, as is expected.

- Chris Kuehl, Ph.D., NACM economist and co-founder of Armada Corporate Intelligence

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