Pacific rim leaders scramble for trade options in Trump era

[November 19, 2016]  By Rosalba O'Brien and Mitra Taj

LIMA (Reuters) - Leaders of Pacific rim nations scrambled to find new free-trade options on Friday as a looming Donald Trump presidency in the United States sounded a possible death knell for the Trans-Pacific Partnership (TPP).

After lower-level meetings, U.S. President Barack Obama, Chinese President Xi Jinping, and Russian President Vladimir Putin were due to arrive at the Asia-Pacific Economic Cooperation summit that brings together leaders whose economies represent 57 percent of global gross domestic product.

While campaigning for the presidential election which he won, Trump labeled the TPP a job-killing "disaster" and called for curbs on immigration and steeper tariffs on products from China and Mexico.

Though Obama championed the TPP as a way to counter China's rise, his administration has now stopped trying to win congressional approval for the deal that was signed by 12 economies in the Americas and Asia-Pacific, but excluded China. Without U.S. approval the agreement as currently negotiated cannot come to fruition.

China's Xi is selling an alternate vision for regional trade by promoting the Beijing-backed Regional Comprehensive Economic Partnership (RCEP), which as it stands excludes the Americas.

The Obama administration said China would be happy to take over the United States' role as global free-trade promoter.

"We see people around the table here right now talking about if the TPP does not move forward then they're going to have to put their eggs in the RCEP basket," U.S. Trade Representative Michael Froman told journalists.

Froman said that RCEP would not have labor and environmental protections that are written into TPP.

Mexico, Japan, Australia, Malaysia, New Zealand and Singapore, however, aim to continue with TPP with or without the United States, Mexico's Economy Minister Ildefonso Guajardo said.

"We determined that our countries will press ahead with this agreement independently of what Washington decides," Guajardo said of the trade deal on Mexican radio. He said Mexico had not ruled out joining RCEP but was focusing on TPP.

Peru and Japan, on the other hand, signed a joint statement pledging to work harder to put into force the 12-nation accord.

DIFFICULT TO EXCLUDE U.S.

Alan Bollard, the APEC secretariat's executive director, said it was premature to write the TPP off, and that excluding the United States could prove difficult.

"Actually there were concessions given to the U.S. in those negotiations that they may not want to sign up to without the U.S. in it," he said in an interview. "Without the U.S., it does change the economics of the whole thing quite a bit."

Japanese Prime Minister Shinzo Abe (L) and Peru's President Pedro Pablo Kuczynski wave as they meet at the presidential palace ahead of the 2016 APEC (Asia-Pacific Economic Cooperation) summit in Lima, Peru November 18, 2016. REUTERS/Mariana Bazo

The 21 members of the APEC have finished a study for a regional free-trade area but will not discuss it until the next annual summit in Vietnam, Peruvian Trade Minister Eduardo Ferreyros said. Both the TPP and RCEP were seen as pathways toward an APEC-wide agreement.

Robert Moritz, the global chairman of PricewaterhouseCoopers, said not implementing TPP would represent the loss of a potential economic growth accelerator, but that CEOs surveyed by the auditing and corporate advisory firm hoped other trade deals could be reached.

"Many of those countries and the companies within them are also looking for bilateral and trilateral trade agreements in addition to or maybe even separate from TPP," Moritz said in an interview. "So to me it's a question of how do they pivot if in fact TPP does not go forward."

Though most were careful not to criticize Trump directly, leaders at APEC, which ends on Sunday, universally warned of the dangers of turning away from globalization and free trade.

"To anyone who wants to propose protectionism I suggest that you read the history books about the 1930s," Peruvian President Pedro Pablo Kuczynski said.

Sun Xiao from China's Chamber of International Commerce blamed unequal distribution of free trade's benefits for rising protectionism, and suggested it would be different under Chinese leadership.

"If there was a bigger role for China we would promote the principle of joint participation and shared benefits to ensure free trade arrangements can benefit all," he said.

(Reporting by Rosalba O'Brien, Teresa Cespedes, Caroline Stauffer, Ursula Scollo and Mitra Taj in Lima, Additional reporting by Natalie Schachar in Mexico City; Writing by Caroline Stauffer and Rosalba O'Brien; Editing by Alistair Bell, Mary Milliken and Lisa Shumaker)

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