US allies sign trade deal in challenge to Trump

SANTIAGO, Chile — A trade pact originally conceived by the United States to counter China's growing economic might in Asia now has a new target: President Donald Trump's embrace of protectionism.

A group of 11 nations — including major U.S. allies such as Japan, Canada and Australia — signed a broad trade deal Thursday that challenges Trump's view of trade as a zero-sum game filled with winners and losers.

Covering 500 million people on either side of the Pacific Ocean, the pact represents a new vision for global trade as the United States threatens to impose steel and aluminum tariffs on even its closest friends and neighbors.

Trump withdrew the United States from an earlier version of the agreement, then known as the Trans-Pacific Partnership, a year ago as one of his first acts in office. The resuscitated deal is undeniably weaker without the participation of the world's biggest economy, but it serves as a powerful sign of how countries that have previously counted on U.S. leadership are now forging ahead without it.

"Only free trade will contribute to inclusive growth of the world economy," Taro Kono, Japan's foreign minister, told a group of ministers from Southeast Asian countries in Tokyo on Thursday. "Protectionism isn't a solution."

In its original incarnation as the TPP, the pact was conceived as a counterweight to China, whose vast economy was drawing other Asian countries closer despite its state-driven model and steep trade barriers. Not only does the TPP lower trade barriers, it could also prod Beijing to make changes to enjoy the same benefits.

When President Barack Obama was advocating the deal, he said that "America should call the shots" instead of China.

Now, the agreement could, in some respects, act as a defense against the shots the United States is calling.

The United States has "gone from being a leader to actually being the No. 1 antagonist and No. 1 source of fear," said Jeffrey Wilson, head of research at Perth U.S.-Asia Center at the University of Western Australia. "If you're a trade policymaker in Asia, your No. 1 fear is that Trump is going to take a swing at you."

He added that such fears could prompt countries, however reluctantly, to tether themselves more closely to China. "The U.S. is really delivering the region to China at the moment," Wilson said.

The new agreement — known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership — drops tariffs drastically and establishes sweeping new trade rules in markets that represent about one-seventh of the world's economy. It opens more markets to free trade in agricultural products and digital services around the region. While U.S. beef faces 38.5 percent tariffs in Japan, for example, beef from Australia, New Zealand and Canada will not.

Once it goes into effect, the agreement is expected to generate an additional $147 billion in global income, according to an analysis by the Peterson Institute for International Economics. Its backers say it also bolsters protections for intellectual property and includes language that could prod members to improve labor conditions.

Other members include Mexico, Vietnam, New Zealand, Chile, Malaysia, Peru, Singapore and Brunei. Officials signed the deal Thursday in Santiago, Chile.


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