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DAVOS, Jan 26 — American President Donald Trump has for the first time opened the door to the US rejoining the Trans-Pacific Partnership (TPP) a year after making withdrawing from it one of his first acts in office. “I’ll give you a big story. I would do TPP if we made a much better deal than we had,” he told CNBC in an interview yesterday on the sidelines of the World Economic Forum in Davos.
The TPP which was a trade agreement between 12 countries was a main policy agenda of the previous Obama administration. However, under Trump’s administration, the US has pulled out mainly because the TPP does not put America’s interests first.
The remaining 11 countries proceeded to negotiate a new trade agreement, CPTPP or "Comprehensive and Progressive Agreement for Trans Pacific Partnership" which will be signed in March in Chile. The 11 countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Malaysia has often vigorously defended its participation in the TPP as it opens doors to greater trade for the country despite controversial chapters in the agreement such as on Bumiputera policy, Intellectual Property and State Owned Enterprises (SOE’s). However, the Malaysian government has been given some concessions under the CPTPP.
From 40 per cent of global GDP, the latest trade deal — without the US — now covers about 14 per cent, and involves the livelihoods of 500 million people. It is estimated that the net benefit of CPTPP to all its members from liberalisation of trade in goods and services is roughly 0.3 per cent of their combined GDP or US$37.3 billion (RM145.8 billion) in the medium term.
Trump is due to address the forum in Davos today in a much-anticipated speech that will lay out his defence of his “America First” trade policy and declare that it is good for the global economy. Much of the discussion at this week’s gathering in the Swiss Alps has focused on concerns over Trump’s aggressive stand on trade and the possibility that he may trigger a destructive trade war with China and other major trading partners.
Trump’s withdrawal from the TPP last year was seen by many trade and foreign policy experts as a strategic mistake. The TPP, which the US spent years negotiating with Japan and 10 other economies, was one of the biggest geo-economic priorities of the Obama administration and constructed as a long-term strategic response to the rise of China.
But Trump put his opposition to it at the centre of his 2016 run for the presidency and aides have repeatedly hailed his decision to leave the TPP as “historic” and a pillar of his efforts to rewrite the US’s trading relationships.
Led by Japan, the remaining countries in the TPP this week struck a final agreement to press ahead and have said they will sign the deal in March. They also have left the door open to the US rejoining someday. Rather than strip them out entirely from the agreement, the remaining countries have frozen almost two dozen provisions that had been sought by the US.
Trump made it clear yesterday that he would seek a much deeper renegotiation of the TPP if the US was to rejoin someday, pointing to the efforts to rewrite the North American Free Trade Agreement with Canada and Mexico as an example.
“We had a horrible deal [with the TPP]. The deal was a horrible deal. Nafta is a horrible deal and we’re renegotiating it,” he said. “I’m only saying this: I would do TPP if we were able to make a substantially better deal. The deal was terrible. The way it was structured was terrible. If we did a substantially better deal I would be open to TPP.”