Following Donald Trump’s announcement of the US leaving the Trans Pacific Partnership, the European Union have seen a potential gap for a new trade relationship with Asia.
With years of build-up for the Trans Pacific partnership with America, it was a distressing time in January after it seemed that nothing would change. Being beaten, jailed and hospitalized has worryingly become the norm for Do Thi Minh Hanh. In Vietnam, independent trade unions are banned, which leads to activists such as Hanh fighting for improved human rights in the workforce. Hanh is just one of many activists in Vietnam whose flicker of hope has been extinguished. The world is in a state of change and fingers are pointing towards one man; Donald Trump.
Improved labour and working conditions are one of the many stipulations that came with the Trans Pacific Partnership trade agreement. Donald Trump didn’t even make it through his first day without signing a paper which, for all intents and purposes, confirmed that America had dropped out of their involvement in the trade agreement. For Hanh and many other Vietnamese people, whose bruised and battered souls looked towards change, were once again kicked down.
But with America gone, there may be another superpower laying in the shadows, a flame that could be reignited for the likes of Hanh and Vietnamese workers. The European Union.
The EU, who are known for their strict human rights laws have been placing pressure on Vietnam to improve their human rights laws. Why exactly? A new trade deal between the EU and Vietnam is in the works. For Hanh this is the glimmer of hope lost from America’s TPP departure, for Asia it is the beginning of a possible new era of trade after the TPP setback.
The EU’s pressure on Vietnam is just a small part of something brewing in international trade negotiations. The establishment of a Vietnam-EU trade deal is expected to be a launch pad for a new era of European trade with Asia.
The power balance is shifting and trade wars are becoming increasingly common in our day and age. The times they are a changin’ and America leaving TPP is only the beginning of a shift that will effect Vietnam, Asia, the EU and the US.
It is a turbulent time in the ever confusing world of free trade agreements, with the TTIP agreement between the EU and US, and Ceta between the EU and Canada causing continued controversy in Europe – to Donald Trump now announcing that that the United States would not be a part of the Trans Pacific Partnership.
“The President understands how critical it is to put American workers and businesses first when it comes to trade…This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers.” A White House press release claimed on the matter.
It is no secret that Trumps adamant push to abandon any TPP obligations leaves Asia and the other TPP members up a proverbial creek with no clear direction for how to proceed forward. Vietnam was one of the countries who were projected to benefit most from the TPP agreement. It was estimated that Vietnam’s gross domestic product would increase by $36 billion in a decade with apparel, footwear and fishing sectors benefiting from the deal.
Vietnam is now focusing their attention to a new free trade agreement with the Eu, which, if all goes as planned will come into effect next year. The trade agreement is expected to boost Vietnam exports by 50% by 2020. While TPP is not necessarily dead in the water, the new agreement could be the future for free trade in Asia. This deal is leading the charge for further European/Asian trade agreements in the wake of TPP’s murky presence.
But will the EU be able to successfully place themselves in to a powerful trade position with Asia, how beneficial is a Europe/Asia trade agreement and what of the future of US/Asian relations?
“We have seen that many of the TPP countries are now approaching us and saying ‘we still want to do deals…We are engaged with basically all of them, either negotiating or have a deal or preparing negotiations.” EU Trade Commissioner Cecelia Malmström said last month. While the EU already has free trade agreements with Canada, Mexico and Chile, it is clear there is now a motion to exercise their power in the Asia region.
Europe is in a race against China, who are also looking to gain new trade deals and partnerships after America tapped out of the TPP. China is not a part of the TPP and is also a potential new game changer in the future of free trade in Asia.
Judy Dempsey from Carnegie Europe, a Foreign Policy analysis centre, claims that the ASEAN countries are looking towards the West when it comes to trade, “They’re desperate to do big partnerships with the EU because they would get into the camp — a western camp that sets the trading rules, and standards, essentially.”
The Relationship between Asia and Europe
The deal between Europe and Hanoi could establish Vietnam as a role model for other fellow ASEAN countries to push for similar deals with Europe. As of late the EU is focusing on individual deals between ASEAN countries but this could perhaps be the start of unified agreements between the two groups.
Trade deals between Asia and Europe have substantial benefits for both groups. In Asia, many years of effort and capital has been put into the existence of TPP which is feared to be wasted if TPP does eventually die. For both Europe and Asia it will show a stance against Trump who is moving towards protectionism in the US and turning his back on Europe, and now, Asia. It also is a chance for the EU to leverage itself following the Brexit vote last year.
Along with Vietnam, the EU is working towards multiple trade deals in Asia. One such notable deal is an agreement between the EU and Japan which is hoped to be met this year.
“Japan is the main target because it’s a very large country so that could have a positive impact on our economy…Japan also offers huge access to the Southeast Asian market – Indonesia, Vietnam,” said Chairman of European Centre for International Political Economy’s Steering Committee, Patrick Messerlin.
Japan had previously ratified TPP only one month before Trump announced the US’s exit. The EU and ASEAN member state Indonesia, have begun discussions for a free trade agreement, extending their reach into Asia by negotiating with could’ve-been TPP candidates.
The Future is Uncertain
TPP resulted in over five years of rigorous negotiations and planning but as US congress had not yet ratified the agreement, it will take much less time for Trump to leave it behind. While Trump claims that America needs to be first and is drifting away from globalization, he states that the US will strike one on one deals with individual TPP members.
But has Trump severed his chances with Asia? Vietnam sought a renewed relation with the US through TPP, only to have the rugged pulled out from under them. With the now 11 TPP members trying to work together and China on one side and the European Union on the other, the options are widening. Trump found the easy way out of TPP but may have created a hard path for the near future.
Asia is currently in a time of tension and what seemed like a political sign of cooperation by the US in support of Asia, has been diminished with the withdrawal from TPP. With tensions growing in the South China Sea and the growing influence of China and India, the region is in a state of flux.
Trump is adamant that he will find better ways to trade between Asia and the US. That may or may not be true, but one thing seems certain, by putting ‘America first’ he is pushing international diplomacy down the totem pole.
It is still early days in what will be a long and turbulent time for the TPP. While a renewed European-based TPP or a brand new European/Asian free trade agreement is likely years away, the seeds are being sowed.
One looming question remains in the haze of trade confusion; will the European Union successfully establish free trade with Asia from the ashes of the TPP? With the US pulling inward, the EU is showing clear signs of throwing the line into Asian territory getting nibbles of negotiation. An EU based TPP may or may not be a reality but the Asian trade world is most definitely shifting.