(25 JANUARY 2018)DAILY MARKET BRIEF 2:Trans-Pacific Partnership (TPP): towards an alternative of NAFTA agreements?
Monday’s fruitless negotiations between the United States and its Canadian – Mexican counterparts has brought many uncertainties to the question if the trilateral “American” arrangement might hold. During its sixth meeting with regard to NAFTAS’s terms of trade among partners, the Trump administration brought to the table conditions that the two others can hardly endure: 1) the NAFTA agreements should be repealed by any of the members within a five year time period; 2) rescind article 19 of the NAFTA treaty which stipulates that the right to appeal for the “Binational Panel” declaratory opinion with regards to antidumping or countervailing statutes (suggesting that members could make unilateral trade-related decisions without consulting their partners); 3) access to public USA market must be restrained for foreign counterparts; 4) “origin rules” need to be reinforced for the automotive industry by imposing a 85% provenance of automotive components (currently 65%) within the member countries and adding that 50% of the constituents have to be USA-based; 5) Canadian agricultural Supply Management System has to be abolished.
Out of these lengthy negotiations (supposed to end up next Tuesday), there is talk of advancing TPP agreements between its 11 members excluding the USA since its withdrawal decision of the project in January 2017 (Trump naming it a “job killer”). The parties have the willingness to accelerate the project by solving contentions among them and come up with a final accord as early as March 2018.
We maintain our stance that NAFTA agreement will be maintained, as they remain a big contributor for the New World (NAFTA countries representing 34% of total US exports). Furthermore, since the arrival of Trump’s provocative and isolating political behavior, we remain subdued as whether the US could develop new cross-country trade agreements for now, thus forcing US negotiators to remain flexible with NAFTA stakeholders.
