Captain Japan and Kid Kiwi work to rescue TPP
Like free-trade superheroes, Japan and New Zealand are spearheading efforts to make the Trans-Pacific Partnership a reality without the United States.
Though the U.S. accounted for the lion's share of the bloc's gross domestic product (GDP) at 60 percent, trade ministers from the two countries say that hasn't tarnished the deal's main selling point: Slashing regional tariffs and improving market access in the fast-growing Asia-Pacific region.
"In our TPP, we had addressed the issue of digital trade, intellectual property, as well as customs procedures and trade facilitation," said Japan's Minister for Economy, Trade and Industry, Hiroshige Seko, in a First on CNBC interview. "Even with 11, very good free trade can flow as a result of it."
The bolder language and the promise of action marks a new chapter in the tortuous saga of this landmark trade deal. Japan was a latecomer to the agreement and when U.S. President Donald Trump said after being elected he would pull the U.S. out of the deal, Prime Minister Shinzo Abe said, "The TPP would be meaningless without the United States." It's a sentiment the Japanese side repeated in January after Trump signed an executive order formally withdrawing the U.S. from the pact.
Keeping it alive
But New Zealand, alongside Australia, sought to keep TPP 11 moving. New Zealand Trade Minister Todd McClay has spent much of this year on the road, selling the plan to keep the agreement alive to partners who worried the absence of the U.S. wouldn't make the pact worthwhile.
"The value of TPP is just not about the economics," said McClay in an interview with CNBC on Sunday. "It's a common set of very high quality rules that stretch from countries in North America to Asia across the Pacific. It's a great achievement and it means that many barriers that our exporters, our businesses face when trying to trade across borders will be, over time, removed."
There's a lot at stake for New Zealand, which had roughly $70 billion in trade in 2016, approximately what it spent on government services.
No going back
U.S. trade envoy Robert Lighthizer said there was no going back on President Trump's withdrawal from the TPP. "The United States pulled out of the TPP and it's not going to change that decision," Lighthizer told a media conference on Sunday.
Still Japan's Hiroshige Seko, in his interview with CNBC, echoed the comments of his counterparts that the door would always be open should the U.S. decide to return.
Convincing the public of the merits of what some may see as a watered-down deal may pose a challenge, particularly with looming elections in some TPP member states.
"I would challenge any future government of New Zealand to make the case of why they'd want to turn their back on the best access that New Zealand has ever has to the Asia Pacific," asserted McClay.
Australia's Minister for Trade, Tourism and Investment, Steven Ciobo, also a TPP 11 champion, said he's confident that opposition to the deal, either domestically or within the group, would be overcome.
"Any trade deal, of course, has its critics," he said on Sunday. "From the government's perspective, we are unashamedly pro-trade."
Past trade agreements, Ciobo argued, "helped to ensure that there were job opportunities for many Australians."
McClay and Ciobo met their counterparts in the TPP 11 for a breakfast meeting in Hanoi on Sunday ahead of the start of the second day of the APEC summit. In a statement, the group said they agreed to start a process to look at ways to bring the agreement into force .
Ministers have tasked their respective teams with assessing the viability of the deal ahead of the next high-level APEC meeting in Vietnam in November. That means more meetings for senior trade officials, with the first expected in Japan in July.
Should trade negotiators successfully revive the TPP, the recalibrated deal would have to go before 11 legislatures for final approval. The next step, according to the ministers, would be to invite other nations to participate.
"It should be available for others to join when they want," said McClay. "But they would have to meet the standards that have been agreed amongst us."
