On day one of his White House administration, president-elect Donald Trump has vowed to withdraw the US from the Trans Pacific Partnership (TTP), a free-trade agreement covering 12 countries.
"Instead, we will negotiate fair, bilateral trade deals that bring jobs and industry back onto American shores," Trump said.
But what does the US' withdrawal from TPP mean for the world economy, and what are the implications for the other trade deal, the Transatlantic Trade and Investment Partnership?
The Trans-Pacific Partnership will create a free-trade zone with common labour and environmental standards, and measures to protect data and intellectual property of large companies. There are 12 countries involved across the Pacific Rim: Japan, the US, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
TTP and TTIP
Besides the TPP, which mainly focusses on the trade relations between the US and Asian countries, there is also TTIP which intends to bring about lower trade tariffs, and to reduce regulatory barriers that make trade between the US and the EU more costly than it need be.
However, with a new president just around the corner it is questionable what will happen to these trade agreements. Trump does not like the deals because he thinks they will hurt American workers and undercut US companies. His stance on trade is protectionist: he has vowed to shield Americans from the effects of globalised trade by slapping hefty tariffs on cheap Chinese imports of up to 45pc.
He has even talked of getting rid of Nafta, the North American Free Trade Area, and questioned the US' relationship with the World Trade Organisation.
Renegotiation
Trump also wants to appoint "tough and smart trade negotiators to fight on behalf of American workers". That said, in an interview with CNBC in August, Trump qualified his stance on global trade, saying: “The fact that I’m negotiating trade will mean that we’re going to make good trade deals.
But not an isolationist
“But we are absolutely going to keep trading. I am not an isolationist. And they probably think I am. I’m not at all. I’m a free trader. I want free trade, but it’s got to be fair trade. It’s got to be good deals for the United States."
So, with regards to these trade agreements we are entering a time of uncertainty. We can only wait to see what will happen to these trade agreements when Trump enters the White House.
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