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Trump's 1st Executive Order Pulls US Out Of TPP

by Mike Godfrey, Tax-News.com, Washington

24 January 2017


President Donald Trump has followed through on his previous policy statements by signing an executive order to pull the United States out of the Trans-Pacific Partnership.

In the past, the anti-globalization President had said that TPP was one of the worst deals he had ever seen, and earlier this year he described the treaty as "the greatest danger yet" to the US economy. There has also been opposition to TPP in both the Democrat and Republican parties, with many also believing its terms would actually harm, rather than grow, the US economy.

TPP was signed in February last year by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. It would therefore have encompassed a huge marketplace, with 800m people and about 40 percent of global gross domestic product.

Approximately 86 percent of tariffs on industrial goods would have been eliminated by the agreement. Last year, the Asian Trade Centre noted in a paper that, while it is unlikely that it will have the same level of market access benefits as TPP, for many non-US TPP countries "the default Plan B option will be the Regional Comprehensive Economic Partnership (RCEP) negotiations."

In fact, seven TPP countries (Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam) are already involved in the ongoing talks on the Chinese-led RCEP between the 10-member Association of Southeast Asian Nations and its six trade agreement partners (South Korea, Australia, New Zealand, China, India, and Japan).

However, the prospect of the United States now being shut out from closer trade relations in the region has prompted US lawmakers to request an alternative strategy from the President. House of Representatives Ways and Means Committee Chairman Kevin Brady (R - Texas) stated that "it's important that America not abandon the Asia-Pacific region because American companies and workers will lose out. … We have to reach new customers around the world through strong enforceable trade agreements."

Ways and Means Committee Ranking Member Richard Neal (D - Massachusetts) added that "the TPP agreement was flawed in many respects, as all of the major presidential candidates recognized last year. But withdrawing from the TPP must be a first step, not a last one. We need new rules and better enforcement to make trade a two-way street, particularly in the Asia-Pacific region."

TAGS: law | tariffs | trade treaty | agreements | United States | import duty | trade | Asia-Pacific

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