United States President-elect Donald Trump has announced that the U.S. will withdraw from the Trans-Pacific Partnership (TPP) free trade deal. He said he will notify the parties to the pact of his decision on Jan. 20, 2017, when he is to be sworn in. This would make implementing the TPP, aimed at establishing a broad free trade zone across much of the Pacific and which presently includes Japan and the U.S., essentially hopeless.
Protectionist Trump has suggested that the U.S. will launch negotiations with other countries on bilateral trade accords under his presidency, instead of sticking with the TPP agreement. Trump is pursuing a principle of "America First" and prioritizes benefits for the U.S., but his approach would stagnate world trade and be of no great profit to the U.S.
During the presidential election campaign, Trump criticized the TPP saying the accord would cost the U.S. many jobs, and he pledged to "bring jobs and industry back onto American shores" through bilateral trade deals.
Twelve countries participated in the TPP talks, and emerging countries cooperated to counter U.S. demands for liberalization. Trump could demand that Japan and other countries sign free trade agreements (FTAs) with Washington, believing that his country can take advantage of its economic clout to negotiate terms lopsided in favor of the U.S.
Under an ordinary FTA, the countries concerned open up their respective markets and help increase bilateral trade, eventually benefiting both countries.
During his election campaign, however, Trump declared that the U.S. would levy high import tariffs on Japanese cars as well as Mexican and Chinese products. Considering his America First principle, concerns remain that Washington could unilaterally demand that Tokyo open its domestic market, while implementing protectionist policies itself.
Even if Trump were to attempt to protect U.S. domestic industry through bilateral negotiations, it would not be effective enough.
Washington demanded Japan open up its domestic car market and restrain its car exports to the U.S. during automobile trade friction between the two countries in the 1980s and 1990s. Tokyo complied, but the U.S. car industry continued to decline. This is because the U.S. car industry's moves to restore international competitiveness on its own did not gain momentum.
The TPP accord is designed to set comprehensive rules between many countries with the aim of achieving high-level liberalization of trade and investment in the Asia-Pacific region. The TPP area would account for some 40 percent of global economic activity, and the parties could share in the fruits of growth across the entire region.
The government of President Barack Obama has promoted the TPP because the administration deemed that the country would benefit more than it would lose from trade liberalization. The TPP could help expand the exports of information technology, at which the U.S. excels, and other products, thereby accelerating economic growth.
The leaders of the 12 TPP parties including the U.S. agreed at a summit meeting in Peru on the importance of the agreement coming into force at an early date. Prime Minister Shinzo Abe even said the TPP agreement would be meaningless without the American participation.
Japan has promoted the TPP along with the U.S. The prospects are now dim that the agreement will come into effect. Still, Tokyo should play a leading role in strengthening the alliance between the parties in patiently trying to persuade Trump to reconsider his decision.