Trade Pact Sets Sail Without Its Biggest Pacific Power

03/08/18 05:44 AM EST
By William Mauldin in Washington and Paul Kiernan in Santiago, Chile 

WASHINGTON -- For the second time in two years, eleven countries around the Pacific are coming together to form a bloc aimed at boosting trade and putting pressure on China's economic system.

This time, they are doing it with one less member: the U.S.

Japan, Canada, Mexico and eight other Pacific nations are set to sign a new version of the Trans-Pacific Partnership, or TPP, on Thursday. The Trump administration, which is expected to announce as soon as today unilateral tariffs on global imports of steel and aluminum, pulled the U.S. out of the original TPP a year ago, fulfilling a promise in a 2016 election campaign dominated by skepticism about the benefits of global trade.

The goal of the pact is to open borders to more trade in the rapidly growing Asia-Pacific region and to set international standards, which many see as crucial to managing the encroaching dominance of China, the second-biggest economy in the region.

Officials involved said the pact shows some countries are eager to liberalize trade at a time when the Trump administration and some other governments are wary of economic integration. "It sends a message to the world that Mexico remains a country committed to free trade," said Mexico's Deputy Economy Minister Juan Carlos Baker.

The 11-member bloc, formally called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership will have less than half of the economic impact of the original, according to economists who back the TPP, which also includes Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam.

The signing in Chile on Thursday will kick off an effort to get enough countries to ratify the deal to allow the agreement to enter into force. The Obama administration, facing resistance to the deal during the 2016 election season, never brought the original TPP to Congress.

The pact will eventually eliminate most tariffs among the 11 countries, and it will also set rules on intellectual property, labor and the environment that will have help modernize economies such as Vietnam's. It will also open up Japan's highly protected agricultural market, allowing for more beef and pork shipments from Australia and Canada. The bloc could put some pressure on China to adopt market-friendly reforms or abide by Western-style commercial rules, according to officials who support the TPP.

The agreement's signing will also renew the efforts of U.S. farm and business lobbyists to persuade Mr. Trump -- or a future president -- to rejoin the pact to address what they worry will be their competitive disadvantages in the region.

Partly as a bargaining chip for future negotiations with the U.S., the TPP countries have "suspended" some of the original deal's provisions that were popular in the U.S. Those sections, which include international protections for drug makers' intellectual property, could be restored if all the other countries agree.

For now, efforts to bring the U.S. into the pact will face an uphill battle. In addition to excoriating the deal in 2016, Mr. Trump and his advisers have made it clear they prefer bilateral trade agreements where the U.S. can better leverage the influence of its large economy, potentially winning more concessions from a single partner than from a trading bloc. The TPP is also strongly opposed by labor, environmental and other left-leaning groups who say the deal favors multinational corporations over workers and consumers.

The Trump administration is currently locked in contentious negotiations with Canada and Mexico to overhaul the North American Free Trade Agreement, or Nafta. Those two countries have rejected provisions from U.S. officials designed to boost American content in automobiles, restrict access to government procurement contracts in the U.S. and weaken Nafta's systems for resolving disputes.

In January, Mr. Trump shocked economists and business leaders gathered in Davos, Switzerland, by saying he would consider opening negotiations to rejoin the TPP "either individually or perhaps as a group, if it is in the interests of all."

A spokeswoman for U.S. trade representative Robert Lighthizer declined to comment on the TPP plans.

--Anthony Harrup in Mexico City contributed to this article.

Write to William Mauldin at and Paul Kiernan at


(END) Dow Jones Newswires

March 08, 2018 05:44 ET (10:44 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.