Asia Trade Policy after Trump
16 March 2017
Opening the event on 15 March, Fraser Cameron drew attention to the many uncertainties surrounding trade policy. What would happen to TPP? Is there an opportunity for the EU to play a leadership role? Could China now dominate the trade scene with RCEP? Could the EU-Japan FTA be completed in the coming months?
Professor Yorizumi Watanabe, Keio University, former senior Japanese diplomat and expert in EU-Japan relations, said that Trump did not see himself as a protectionist. But there was a fight for control of trade policy in Washington and it was unsure who would win. Any changes to NAFTA would have a big impact on Japanese companies. There had often been friction in US-Japan trade, especially in the car industry (responsible for 80% of the trade deficit) and agriculture. The confusion would be seized upon by China with its OBOR project and one could forget serious market reforms. A TPP without the US was possible. The EU and Japan should now push for conclusion of their trade talks as both actors were now main pillars of the multilateral system.
Jon Nyman, Cabinet, Commissioner Malmström, said that the EU could fill the gap and was the strongest supporter of the multilateral system. The EU had a very ambitious FTA agenda both bilateral and multilateral. The Commissioner had announced just last week the re-start of scoping talks on an EU-ASEAN FTA. There was a window for the EU-Japan deal although there were a few tricky issues to resolve. FTA talks with Australia and NZ were going to start soon. The deal with India, however, remained challenging. The EU was also moving forward on investment agreements with China, Myanmar and soon Hong Kong and Taiwan. CETA shows the EU can deliver even though there are problems with the ratification process as the Singapore FTA showed. The EU could not give up on its core standards – sustainability, human rights, labour, etc.
Iana Dreyer, Chief Editor, Borderlex, said now was the time to close ranks and save the WTO system. China was a key actor. It would now push for RCEP but this was not the same standard as TPP. China was still protectionist in many areas. This trend was mirrored by some industrial sectors in the EU. Interestingly China was not pushing the EU as hard as it might for MES in the WTO system. The BIT would be challenging and now some people favoured a screening for investment. Add in the growing role of the European Parliament and it was not so easy to conclude trade deals. There were some accusations that the EU was inconsistent in dealing with third countries eg Thailand v the Philippines. People were also critical of the EU proposing an investment court system ex-post to the Singaporeans. There could also be some competition between the EU and US for trade and markets in Asia. She agreed that an EU-Japan trade deal would be sending the right signal.
Arthur Beesley, FT correspondent, Brussels, said that predictability was key for business and there was little around just now what with Brexit, the collapse of TPP, TTIP and possibly NAFTA. What was the future for the WTO? With Trump one had to wait and see as there were so many conflicting voices. He counseled ‘strategic patience’, a term used by Merkel to deal with Putin, to see who would come out on top. The US-China relationship would be critical as there were so many problem areas. The problems of the EU in securing ratification of trade deals had to be tackled. The EU was really too slow. He hoped the Japan deal could be concluded soon as this would send a signal to the world that the EU was open for business. It would also balance the over-dependence on China.
In the discussion there were questions mainly about TPP with the NZ ambassador arguing that the essentials of it might yet be saved by the 11. TPP was too big to let drop. RCEP, in contrast, was very light.
Concluding, Ambassador Kodama said that Japan was committed to a global approach through the WTO. The ABE-Trump summit would have a positive spin-off in bilateral economic relations. PM Abe would also be visiting Brussels next week and this would give further impetus to a trade deal.