Asia to narrow trade focus as protectionism rises: analysts
November 21, 2016, 12:02 am TWN
LIMA — Fast-growing Asia-Pacific economies will strike more trade deals among themselves as opposition grows in Europe and the U.S. to globalization, analysts say, warning the West will lose out as the dynamic region powers ahead.
The most high-profile victim of recent protectionist sentiments has been a major U.S.-led trans-Pacific deal, which is as good as dead after the shock American election victory of Donald Trump this month.
The Trans-Pacific Partnership (TPP), an agreement of 12 Pacific Rim economies, was the economic plank of President Barack Obama’s “pivot” to Asia, and notably excluded China as the U.S. sought to combat Beijing’s rising influence.
But it is just the latest accord to run into trouble amid growing protectionism in developed economies, where globalization is increasingly regarded as a bogeyman responsible for sending jobs abroad and eroding living standards.
A proposed deal between the European Union and the U.S. is now unlikely to be signed after Trump’s win, while a trade accord between the EU and Canada took seven years to complete and was nearly torpedoed by resistance from a tiny Belgian region.
Given such problems, much of Asia — where economies have generally enjoyed robust growth in recent years and are heavily dependent on exports — will be looking with trepidation at potential accords with the West, analysts say.
‘Focus on regional deals’
“The result of having the U.S. and Europe turn inward is that Asia will focus on regional agreements,” said Deborah Elms, executive director of the Asian Trade Centre in Singapore.
“The global system will not function if the U.S. blocks action and the EU remains stymied.”
The immediate effect will be to give China a free hand to push its own favored regional accords, a heavy blow to Obama, who had hoped the TPP would allow the U.S. to write the region’s trade rules before Beijing got there.
At a meeting of the 21-member Asia-Pacific Economic Cooperation (APEC) group in Peru this week, Chinese President Xi Jinping took the opportunity to urge support for two potential accords it is backing.
These are an APEC-wide deal, and a 16-nation agreement whose members include Southeast Asian countries and India, but notably excludes the United States.
In reality, myriad small-scale trade deals had already mushroomed in Asia in recent years as efforts to forge truly global accords through the World Trade Organization proved difficult.
According to a study carried out by APEC and released at this week’s meeting, 145 trade deals existed between the group’s members as of December last year, at least 30 of which had been struck since 2008.
The U.S. election of Trump — who repeatedly railed against trade accords and dubbed the TTP a “terrible deal” — combined with rising opposition to free trade elsewhere is likely to accelerate that trend, experts said.