'Restructuring' globalization?

(Baonghean) - The 2017 World Economic Forum Annual Meeting last week was dominated by bad news related to the rising nationalist and protectionist trends. Right on the day the conference ended, the newly inaugurated US administration of President Donald Trump made that trend a reality by deciding to withdraw from the TPP.

“Death” was foretold

Immediately after the inauguration of new US President Donald Trump, the new US government announced that the country would withdraw from the Trans-Pacific Partnership Agreement (TPP).

“With fair and strong agreements, international trade can be used to spur economic growth, bring millions of jobs back to America, and revitalize America’s struggling communities,” a White House statement said. “This strategy starts by withdrawing from the TPP and ensuring that any new trade agreements benefit American workers.”

Not stopping there, President Trump's administration also announced that it would renegotiate the North American Free Trade Agreement (NAFTA). This statement also emphasized that if NAFTA partners refuse to make a fair deal in the renegotiation agreement, President Trump will leave open the possibility that the US will withdraw from NAFTA.

TPP will still be a problem for the US after withdrawal (Channel News Asia)

The new administration’s first move in Washington may have been shocking, but it was hardly surprising. Trump’s consistent and hard-line stance that free trade has hurt millions of American workers and created injustices was what won him the election last November. And if one looks at broader political trends around the world, one can confidently conclude that the era of protectionism and anti-globalization is upon us.

The 2016 referendum in the UK to leave the European Union (EU) is a case in point. Britons were loath to join the bloc, feeling that many British workers had been left out after more than four decades in the bloc. The burdens and responsibilities of membership left Britain feeling like it was losing more than it was gaining. This, combined with the country’s protracted debt crisis and the wave of migration that came with the idea of ​​joining, only added to the opposition.

There is no real measure of the anti-trade sentiment, integration and globalization in Europe, but the leader of the far-right National Front party in France, Marine Le Pen, said on January 20 that Europe will wake up to unity in 2017 after Brexit. Politicians running for the French presidency this year seem to want to take full advantage of this wave.

“We are witnessing the end of one world and the birth of another,” Ms Le Pen said. “I am not saying that every country must leave the Eurozone… However, we must leave that possibility if a country wants to leave.” Ms Le Pen also reiterated her desire to “control borders, gain monetary independence and give the people back their voice.”

What is post TPP?

As the world’s most ambitious free trade agreement in decades, the TPP was expected to create a strong boost to GDP growth for 12 countries around the Pacific Rim, including, of course, the United States. But now that remains just an expectation. In the event that the remaining 11 participating countries agree to renegotiate the TPP and continue the agreement without the United States, things will still move forward. But without an economy that accounts for 60% of the group’s GDP, no one knows how the TPP will survive.

Besides, it would be a mistake to talk about TPP only in terms of GDP growth. From the beginning, the agreement always had a strategic component. It was where the US wanted to create and disseminate its standards and values.

Brexit or TPP is a hot topic at the World Economic Forum 2017 (Business Insider).

The ambition of the TPP’s creators is to shape the international trade architecture in Asia and beyond, and set a new standard for future agreements. Instead of the traditional emphasis on tariff reduction, they turned to thornier issues such as differences in intellectual property regulations, labor rights, and more environmental protections. Notably, the agreement excludes China, a partner and strategic rival of the United States in the region. Therefore, the TPP is understood as a signal to impose American influence in the Asia-Pacific region.

The decision means that Asian partners can no longer count on the US to play a role as an economic power in the region. Now is the time for China to assume economic leadership in Asia as the world’s second-largest economy is also pushing for a free trade agreement called the Regional Comprehensive Economic Partnership (RCEP).

However, experts say the shift in power to China is not simple. Countries in the region are showing caution towards the export giant. That is not a good starting point for negotiations. Therefore, the element of uncertainty will be attached to Asia Pacific after the decline of US influence.

Free trade or TPP may take away jobs from many American workers, but at the same time, foreign trade is also an essential part of the sustainability of an economy. This was applied by former President Barack Obama in his “Pivot to Asia” strategy. However, how effective it is is a matter of debate. In this case, it was the “Achilles heel” that caused the previous administration to be criticized. And so, regardless of what the new US administration wants, globalization is still a part of the modern world. Of course, with the moves with TPP, the world will still adapt and continue it in a different model, one without the US.

Phan Tung