Rajiv Biswas, Asia-Pacific Chief Economist, IHS Global Insight
Report Summary:
- TPP: With the Trump presidency not expected to proceed with TPP, this represents a setback for a number of Asian TPP members that had been set to benefit from the trade liberalization benefits of TPP, notably Vietnam and Malaysia, which had been expected to be significant beneficiaries.
- NAFTA: With Trump having also stated that he intends to revisit NAFTA, this could have potential implications for Asian MNCs that have invested in production facilities in Canada and Mexico.
- Bilateral FTAs: Trump has also identified problems with bilateral FTAs, highlighting as an example that the new FTA with South Korea has resulted in a widening bilateral trade deficit for the US.
- Countervailing Tariff Measures: A key part of Trump’s trade policy platform is to use countervailing tariffs as a defence against unfair trade practices used by trade partners, such as export subsidies. There is a risk that trade tensions between the US and some Asian countries could escalate if countervailing tariffs are used more frequently and in a more wide-ranging fashion by the US.
- RCEP:A significant shift of US trade policy towards Asia by abandoning TPP, greater use of countervailing tariffs and revisiting bilateral FTAs could result in Asian countries refocusing on greater regional co-operation within APAC, through alternative trade liberalization initiatives such as RCEP.