My dear fellow exporters,
US President Donald Trump has formally announced the US’s withdrawal from the Trans-Pacific Partnership (TPP) agreement signed last year by 12 nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam) with a combined population of 480 million. The TPP region would have been the largest free trade area with a share of about 40% of world GDP as well as 40% of global trade.
The demise of the TPP agreement however would not make much of a difference to India’s trade and investment prospects. A study conducted by the US think-tank Peterson Institute for International Economics (PIIE) concluded that impact on India’s trade and investments due to an operational TPP is virtually nil.
This also gives respite to Indian industry as TPP was threatening to introduce new template for trade by incorporating higher standards and setting of new trade rules which were far more stringent than those that India is comfortable with.
The end of TPP is now likely to turn the focus to regional agreements – one of them could be the Regional Comprehensive Economic Partnership (RCEP) – a multilateral deal that includes all of the ten member states of the Association of Southeast Asian Nations (ASEAN), Asia’s two emerging giants, India and China, and Australia, South Korea, Japan, and New Zealand.
The grouping envisages regional economic integration, leading to the creation of the largest regional trading bloc in the world, accounting for nearly 45% of the world’s population and with a combined gross domestic product of $21.3 trillion.
Yours sincerely,
(Tarvinder Singh Bhasin)