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11-party TPP negotiations steam ahead with room for return of US

Despite the departure of the United States from the Trans-Pacific Partnership (TPP), the 11 remaining signatories to the free trade deal have reached a broad agreement on the pact in just half a year, proceeding at a fast pace in hopes of urging a change of heart in the administration of U.S. President Donald Trump, who has established an "America First" policy.

The TPP was originally agreed upon in February 2016 by 12 countries including the U.S., but Trump pulled out of the pact in January this year. The U.S. had accounted for roughly 65 percent of the gross domestic product (GDP) of the 12 original signatories, so after Washington's departure, emerging countries that had accepted unfavorable conditions in exchange for access to the U.S. market began to shy away from the deal.

Fearing that the agreement could completely dissolve, signatories including Japan and Australia agreed that they would seek a U.S. return to the pact, and in a meeting in Hanoi, Vietnam, in May, the 11 remaining parties -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam -- agreed they would maintain the TPP's framework on the premise of the U.S. opting back in.

After this, however, the countries faced difficulties aligning their positions. For example, the pact's Rules of Origin would eliminate tariffs only on textile products using yarn made in TPP nations. Vietnam, which is not a large producer of yarn and relies heavily on exports from China, strongly requested that this rule be frozen. But Mexico, a large cotton producer, and other countries argued that freezing the rule would limit their export chances. Japan, which led the negotiations between the 11 remaining signatories, stepped in to mediate in some instances.

By quickly moving to implement the pact, Japan is looking to sidestep pressure from the United States, which has expressed interest in bilateral free trade agreements. Japan had concerns that if it dealt directly with the Trump administration amid pressure to address its trade surplus with the U.S., then it could be leaned on to open up its agricultural and vehicle markets more than under the TPP. On the other hand, if the TPP were in effect, Japan could maintain that it could not negotiate beyond TPP standards, and could encourage the U.S. to return to the agreement, according to one Cabinet Office official.

Following a TPP ministerial meeting on Nov. 9, Toshimitsu Motegi, Japan's minister in charge of economic revitalization, told reporters, "If there is no 11-party TPP, then there is no future for a 12-party one. We've created a foundation enabling the U.S. to return. We would like to work with persistence to see the U.S. come back."

In the Asia-Pacific region, Japan is also negotiating a Regional Comprehensive Economic Partnership (RCEP) spanning 16 nations, including China and the 10 members of the Association of Southeast Asian Nations (ASEAN). In RCEP negotiations, a struggle for leadership has emerged between Japan, which wants a high degree of freedom in trade and concrete investment rules, and China, which prioritizes the creation of an economic zone that it is part of. By quickly implementing the 11-party TPP -- which includes a relaxation of foreign investment rules and regulations against favorable treatment of government-owned companies -- and creating a "standard" for trade and investment, Japan hopes to put the brakes on the creation of China-led standards.

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