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TPP signed without U.S., but it’s not all bad for America

container ship in Tokyo port in front of skyscrapers
A container ship at a port in Tokyo. Photo: Alessandro Di Ciommo / NurPhoto via Getty Images

As President Trump signed proclamations for tariffs on steel and aluminum this afternoon, the 11 remaining members of the Trans-Pacific Partnership (TPP) finally closed their sweeping trade deal, just over a year after the U.S. withdrew.

Why it matters: For the U.S., the TPP deal means that manufacturing, agricultural and services exporters and their workers will be at a disadvantage in the markets of the 11 Asian-Pacific countries. Beef, pork and dairy exporters, for example, will not benefit from the tariff cuts made by Japan that competitors from Australia, New Zealand and Canada will soon enjoy.

Few expected the other countries to proceed without their largest partner, but Japan filled the leadership vacuum left by the U.S. and pushed negotiations to the finish line. The final text is close to original agreement struck two years ago, minus a handful of provisions on areas including intellectual property, investment, government procurement and customs.

What's next: The TPP countries now must initiate their domestic approval procedures, which differ from country to country and in most cases include legislative votes. The deal will come into effect once six of the 11 countries complete these procedures, which should happen by early 2019.

After that, the door will be open for others to join. Thailand, South Korea and Indonesia have all expressed interest in the past. Some have suggested the United Kingdom, in need of trade partners post-Brexit, would be a good candidate. In light of President Trump’s statement in January that he would consider rejoining TPP provided significant changes were made, the U.S. may also find itself back at the negotiating table.

The bottom line: U.S. exporters will be hurt, but it’s not all bad for America. Many of the provisions included in TPP-11 — in such areas as state-owned enterprises, digital trade and labor — were based on U.S. proposals. These rules provide an important alternative to the state capitalism model offered by China and do so without invoking actions that would risk a trade war.

Wendy Cutler is vice president at the Asia Society Policy Institute and a former negotiator in the Office of the U.S. Trade Representative.

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