Death Knell to TPP, Boost to Trade Multilateralism!!!

The TPP is officially dead following the withdrawal of United States from the trans-regional trade deal after much rhetoric about regional and bilateral trade deals by the US President. As a matter of fact, the State-parties to the agreement agreed in the course of the TPP negotiations that the agreement would not be enforced unless both US and Japan ratified the agreement. Therefore, with Trump's executive action, the TPP is dead.

While international trade practitioners may be minded to argue against the action as a retreat to the dark past of trade protectionism and mercantilism, there could be a silver lining through the action. I would rather argue that the action may be the boost WTO would need as a global multilateral trade organization to work towards an inclusive world trade, founded on a true comparative advantage principle. I was of the opinion that TPP was a threat to objectives of WTO: it had the potentials of distorting an inclusive global trading arrangement. I can recall the then US Trade Representative, Mr. Michael Froman, quoting that the involvement of the US in the negotiations of TTIP (a trade pact being negotiated between US and EU) was not indicative of a policy on trade bilateralism, but an aspiration to create a trading platform that could subsequently be joined by other States. This to me sounded like the creation of an alternative trade platform. Just like the TTIP, the TPP was also negotiated with a similar intention that other States would vote to subsequently join it. Some countries, in fact, sought to join the TPP during its negotiations but were asked to wait pending its enforcement.

While some scholars argue that neo-trade preferentialism would converge under the WTO mechanism to entrench trade liberalism, I align with Bhagwati that preferential agreements are inimical to trade liberalization. Besides creating a “spaghetti bowl”, it may lead to a difficult trading relationship between members of the preferential trading bloc on one and hand, and non-members on the other hand. This would eventually take world trade to the dark past where preferential trade agreements reigned supreme at the expense of global peace.

With the demise of TPP and the TTIP negotiation in doldrums (it may never be completed given the deep gulf between EU and US and the rhetoric of Trump presidency), international trade is moving reclusively to WTO. It is now time for WTO activists to leverage on the existing political upheaval to push for a well-defined reformation of the system.

References

"US Warns Britain: If You Leave EU You Face Barriers To Trading with America", The Guardian (28 October 2015), online <www.theguardian.com>

"Trump withdraws from Trans-Pacific Partnership amid Flurry of Orders", The Guardian (23 January 2017), online <www.thegaurdian.com>

Bhagwati Jagdish, Termites in the Trading System: How Preferential Agreements Undermine Free Trade (Oxford: OUP, 2008).

*this is a guest post.