India may gain from Donald Trump’s TPP pullout threat

A withdrawal of the Trans-Pacific Partnership is likely to increase focus on RCEP agreement and WTO trade deals, eventually benifitting India


US president-elect Donald Trump in a Twitter video says he’ll focus fair, bilateral trade deals that bring jobs and industry back on to American shores. Photo: Reuters
US president-elect Donald Trump in a Twitter video says he’ll focus fair, bilateral trade deals that bring jobs and industry back on to American shores. Photo: Reuters

New Delhi: The announcement by US president-elect Donald Trump that his country will exit the Trans-Pacific Partnership (TPP) trade deal on his first day in office is likely to increase focus on the Regional Comprehensive Economic Partnership (RCEP) agreement and World Trade Organization (WTO) trade deals, eventually benefiting India.

“On trade, I am going to issue a notification of intent to withdraw from TPP, a potential disaster for our country. Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back on to American shores,” Trump said in a short video message posted from his Twitter handle.

Trump is scheduled to take over as US president from Barack Obama on 20 January 2017 after an unexpected victory earlier this month.

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The TPP is a trade agreement under negotiation among 12 nations: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam, which together account for 40% of the world’s gross domestic product (GDP). Although the deal is aimed at countering China’s influence in international trade, India feared that it could adversely affect the country through trade diversion and stringent non-tariff measures.

A senior commerce ministry official, speaking on condition of anonymity, said India may be the unintended beneficiary of Trump’s move. “There was pressure from Japan and other common member countries between TPP and RCEP trade deals to make the latter more ambitious in intellectual property rights and investment, which India was opposed to. We hope such pressure will subside now,” the official said, cautioning that India is closely watching the still-developing situation.

Started in May 2013, RCEP comprises the 10 economies of the Asean region (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and six of its free-trade partners (Australia, China, India, Japan, New Zealand and South Korea).

The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population and with a combined gross domestic product of $21.3 trillion.

The regional economic pact aims to cover trade in goods and services, investment, economic and technical cooperation, competition and intellectual property.

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Kavaljit Singh, director of Madhyam, a Delhi-based policy research institute, said that so far India was at the receiving end at RCEP. “Now hopefully, other RCEP members will be more accommodative towards India’s demand for greater market access in services to find jobs for its skilled professionals. The effort of importing major provisions of TPP into RCEP may not succeed now,” he added.

Jayant Dasgupta, executive partner at law firm Lakshmikumaran & Sridharan and former ambassador of India to WTO, said having denounced TPP, Trump may go back to WTO at a later stage, which may give a boost to multilateral trade negotiations. “This may be in India’s interest as India has always supported multilateral trade deals,” he added.

However, Abhijit Das, head and professor at the Centre for WTO Studies, said the US may try to push through the same trade issues propounded by TPP through WTO.

Biswajit Dhar, professor of economics at Jawaharlal Nehru University, said if China agrees to lead TPP, then it could be a more difficult situation for India. “We should wait and watch the developing scenario. We should not lower our guard,” he cautioned.

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