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Revised TPP deal sends strong signal on free trade

Ministers from 11 countries have gathered in Chile to sign a revised Trans-Pacific Partnership, signalling a commitment to lower barriers to trade across the region in the face of creeping protectionism.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) sets up the world's most populous trade bloc, and its signing comes a week after US President Donald Trump's move to impose steep tariffs on steel and aluminium imports sparked fears of retaliation.

"While taxes are going to be applied to certain products and there is a threat of a trade war, we are going to give a signal of openness," Chilean Foreign Minister Heraldo Munoz said ahead of the signing at 2am today, Singapore time. "It is the most important free trade agreement and the most rigorous that has been signed until now in the world."

Japanese Foreign Minister Taro Kono said in Tokyo: "We hope that the TPP-11 will be an important cornerstone for our collective efforts to expand a free, fair and rules-based economic order."

The pact represents 13.5 per cent of the global economy with a market of 500 million people, and comes amid a backlash against globalisation.

Singapore is represented at the signing by Minister for Trade and Industry (Trade) Lim Hng Kiang.

The CPTPP will enter into force when it has been ratified by at least six of its 11 countries, a process that could take up to a year and involves amending their respective laws.

The 11 countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The deal's completion comes a year after Mr Trump pulled the United States out of the original agreement on his first day in office.

Led by Japan, the remaining members spent a year reworking the deal and ended up suspending 22 out of the over 1,000 provisions.

The CPTPP will do away with virtually all tariffs and other barriers to trading goods, and help shipments clear Customs more easily.

CPTPP countries accounted for $214 billion - a fifth - of Singapore's total goods trade last year.

Under the deal, service providers will be able to compete for some government contracts in other member states for the first time, including in Singapore. E-commerce rules can also ensure that data moves freely across borders.

The signing is expected to speed up ongoing negotiations on the Regional Comprehensive Economic Partnership (RCEP), an Asean-led pact involving seven CPTPP members, which Singapore is pushing hard to conclude. Singapore's hope is that the CPTPP and RCEP can be stepping stones to its "end-goal" of a wider free trade area of the Asia-Pacific, Mr Lim said last week.

The CPTPP agreement leaves the door open for the US to rejoin the club, a step Mr Trump in January hinted he would be open to if the US could get a "substantially better deal".

Meanwhile, Mr Kono said protectionism harms the very jobs it seeks to protect.

"Protectionist measures make producers unable to access the cheapest and best quality inputs. As a result, producers lose export competitiveness in global markets, making them less able to sustain jobs at home," he said.

National University of Singapore economist Davin Chor said the deal showed that the rest of the world was prepared to advance free trade, with or without the US.

"Like it or not, the Trump ad-ministration and the US could find itself increasingly isolated in the international trade policy arena," he said.

Source: The Straits Times

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