Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

APEC Summit The TPP 11 and
Donald Trump
Carlyle A. Thayer
November 10, 2017

We request your assessment about important developments at the APEC Summit
2017 in Da Nang. Eleven nations have agreed in principle on a Trans Pacific
Partnership (TPP) trade deal after a three-hour closed door meeting last evening
(Nov 9). Can you provide an assessment of the following issues:
!. What are TPP members' motivations to take this step and what will come
next? Will the last stop during President Donald Trump's Asia visit to Manila make
any further difference on the fate of the TPP?
ANSWER: We now know from Trumps speech to the APEC CEO Forum that the
United States will only support bilateral trade agreements on U.S. terms and that the
United States will not support multilateral efforts. Trump is running against the
regional tide that promotes further integration by greater trade and investment on
a multilateral basis.
The TPP 11 represents a multilateral trade arrangement that is WTO Plus. In other
words, it complies with existing requirements plus higher standards in services,
protection of intellectual property rights, environmental and labour concerns. The
more advanced members of the TPP 11 favour this approach while the developing
members must make sacrifices to gain advantage. The TPP !1 is like a sport coach
telling his players no gain without pain.
The alternate is ASEANs Regional Comprehensive Economic Partnership (RCEP) now
championed by China. This is considered WTO compliant. It aims to harmonize the
tariff structures between ASEAN and its six dialogue partners. This will now continue
without the United States.
The eleven TPP members need to rewrite the original agreement that took account
of the U.S. dominant economic presence (sixty per cent of GDP of the twelve
members). New Zealand is proposing a change to restrict foreign ownership in
property because of rising housing costs. Canada has thrown in some last minute
concerns. Nonetheless, Japan and Australia are pushing the TPP 11 strongly and
negotiations are likely to commence in 2018.
General Comment
President Trump's speech to the APEC CEO Forum laid out starkly his America First
approach - "my way or no way." Trump, like the real estate salesman he is, wrapped
 2

up his deal with reassurance of respect for fairness, reciprocity and sovereignty of
prospective trade partners. Negotiations are to be bilateral; but Trump's offer was a
one-way street.
Trump showed disdain for multilateral approaches and thus undermined APEC's
objective of achieving trade and investment liberalisation on a multilateral basis
across the Asia Pacific. Trump has a zero sum view of trade, all trade must be
balanced. Regional states cannot walk away because they need access to the
American market.
Regional states will continue to pursue multilateral arrangements. ASEAN and China
will continue talks on raising the level of their free trade agreement. ASEAN, China
and other dialogue partners (minus the United States) will continue discussing the
Regional Comprehensive Economic Partnership. And eleven key economies, who are
APEC members, will also push negotiations on a TPP 11, also without the United
States.
ASEAN is pushing the development of an ASEAN Economic Community. They cannot
count on U.S. support. Trump's push for bilateral FTAs will isolate the United States
in the region.
On one positive note, Trump fired a shot across the bow of China's Belt and Road
Initiative, by advocating a greater role of the World Bank and Asian Development
Bank in funding infrastructure.

Suggested citation: Carlyle A. Thayer, APEC Summit The TPP 11 and Donald
Trump, Thayer Consultancy Background Brief, November 10, 2017. All background
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Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.