Despite President-elect Trump’s statement that he will file a notification of intent to withdraw from the Trans-Pacific Partnership (TPP), the Upper House of Japan’s parliament completed the approval process for ratification of the trade deal on Friday, December 9. The approval for ratification comes about a month after Japan’s Prime Minister Abe met with U.S. President-elect Trump in New York City.
At the meeting, Abe said he was confident that Trump is a “trustworthy leader” and reported that the meeting was positive. Japan’s National Diet also passed amendments to existing laws, which will implement the TPP however, these implementing amendments will not go into effect until the TPP enters into force.
The move also comes after Abe said the TPP is “meaningless” without the United States’ participation. In order for the TPP to enter into force, Article 30.5 of the agreement requires both the United States and Japan to ratify it, which is necessary to meet the 85% GDP threshold requirement. Japan is not alone in forging ahead with the deal. Australia, New Zealand and Singapore are some of the TPP parties also moving forward with it and undeterred by President-elect Trump’s statement.
At the same time, Japan is preparing to host the next round of negotiations in February 2017 for the Regional Comprehensive Economic Partnership (RCEP). RCEP was originally launched by ASEAN leaders and consists of the 10 ASEAN nations that include Brunei, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Vietnam as well as Australian, China, India, Japan, Republic of Korea and New Zealand. The 16 member RCEP accounts for nearly 30% of world trade and is viewed as the competing trade deal to the TPP because it includes China but not the United States.
RCEP negotiations have been closed door, however leaked information reveals that it likely will not include some of the more robust chapters of the TPP such as the labour and environment provisions. Not to mention that in light of China’s recent cybersecurity laws, it will be interesting to see how the RCEP will address e-commerce and digital trade.
As the TPP has languished due to President-elect Trump’s position and statements regarding the United States’ future involvement in the deal, the RCEP is gaining momentum and attention as progress was made during last week’s negotiations in Indonesia and efforts are being stepped up to conclude the deal in 2017.
For Japan and the other parties, completion of the RCEP has now become more of a priority. It is clear that Asia Pacific is moving forward with freer trade, with or without the United States. How President-elect Trump and his new cabinet plan to engage in free trade in the Asia Pacific region is still to be determined but, for the moment, RCEP is the winner among the mega-regional trade deals.