By Prarthana Mitra
Eleven countries signed the revamped Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, Chile, on Thursday even after the Donald Trump-led US withdrew from the pact last year. The CPTPP is a slimmed-down version of the original deal.
The signing of the CPTPP comes at a time when Trump is pushing to introduce tariffs on imported steel and aluminium, threatening a trade war.
‘The most important trade agreement in the world’
Under this deal, tariffs will be cut in 11 countries—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—that together account for over 13% of the global economy, or $10 trillion. Had the US remained a part of the deal, it would have represented 40% of the world economy. Although the fate of the TPP was uncertain for a while following Trump’s decision to pull the US out of the pact, the 11 remaining countries moved forward with a trimmed-down deal with Japan leading the push for revival.
The “CPTPP has become more important because of the growing threats to the effective operation of the World Trade Organization rules,” New Zealand Trade Minister David Parker said ahead of the signing. Chilean Foreign Minister Heraldo Munoz even described it as “the most important free trade agreement and the most rigorous that has been signed until now in the world.”
What lies ahead for the US?
Former US President Barack Obama had pushed for the TPP as a means to counter a rising China. But Trump abandoned the deal soon after taking office as part of his ‘America First’ approach. Only time will tell if Trump’s decision to pull out of the deal will bode well for the country’s debt and unemployment crises. For now, the CPTPP has stepped back from many terms from the original deal that were in the US’s favour, including rules protecting the intellectual property for pharmaceuticals, which many feared would raise the cost of medicines.
Meanwhile, the CPTPP heralds a new dawn for countries that are poised to play a major role in the global economy, and is a historic and progressive moment for international trade.
Featured Image Source: Wikimedia Commons
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