The US’ withdrawal from the Trans-Pacific Partnership (TPP) trade deal implies that the agreement will not be implemented.
“We had anticipated TPP to reduce the cost of trade and open up new investment opportunities for its 12 members, and in particular, its Asian members,” Moody’s Investors Service Associate Managing Director,Marie Diron said.
The failure to implement the deal represents a lost opportunity for exporters aiming to gain greater access to major markets. Among the 12 member countries, the economies of Vietnam, Malaysia, Brunei and Mexico are reliant on exports and show the greatest exposure to trade with TPP countries. With this lost opportunity, prospects for significant large gains in incomes, for instance in Vietnam or Malaysia over the medium term on the back of higher trade will be reassessed.
Some countries have begun exploring other trade options, bilaterally or with China through the Regional Comprehensive Economic Partnership (RCEP).
However, the potential trade deals currently envisaged are unlikely to provide as big an economic benefit as the TPP, where member countries accounted for 40% of global GDP.
In recent years, TPP trade negotiations served as a catalyst for reform, such as the reduction of protectionist policies in Japan’s agricultural sector.
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