The TPP in Asia
This week Singapore is holding the latest round of Trans-Pacific Partnership free trade negotiations. Attended by more than 600 delegates from its 11 member countries, these negotiations are expected to conclude by October 2013. The TPP, currently consists of 11 members of APEC, accounts for more than half of total GDP of APEC member countries and is still expected to enlarge. Singapore has a strong interest in furthering the negotiations as the TPP would expand the country’s market access to Canada and Mexico, two countries with which Singapore has no FTAs as yet. Moreover, if the TPP does eventually include all APEC members, it would cover more than half of the world’s GDP. This expansion, however, is overly optimistic as the current TPP noticeably excludes China, the second largest economy in the world. Unsurprisingly, the partnership is seen as a part of Obama’s ‘Asia pivot’ strategy to contain China.
Nevertheless, the benefit of the membership is not as obvious for Indonesia. Considering the scope—the TPP would cover areas “usually excluded from trade agreements, including government procurement, and labor, environment and intellectual property standards”— and the remaining hurdles, the country prefers to focus on more feasible projects: that is, advancing the establishment of ASEAN Economic Community by 2015 and bilateral free trade agreements with South Korea.
Meanwhile, Japan has shown interest in joining the TPP. The membership is strongly opposed by Japan’s agricultural sector, which is protected by high tariffs. The recent meeting between the Japanese PM Shinzo Abe and Obama produced a joint statement saying: ‘The two Governments confirm that should Japan participate in the TPP negotiations, all goods would be subject to negotiation’ and that ‘as the final outcome will be determined during the negotiations, it is not required to make a prior commitment to unilaterally eliminate all tariffs upon joining the TPP negotiations’. Clyde Prestowitz argues that allowing Japan not to commit on tariff removal would ultimately weaken the “21st-century agreement.” However, the statement can also be interpreted as Abe’s tactics to remove domestic political obstacle since “there never was a requirement for participants in the TPP talks to make a prior commitment to unilaterally eliminate all tariffs.” In any case, Abe is expected to express formal announcement of entry into the TPP next week.