WELLINGTON (Reuters) – A landmark agreement with 11 countries that will lower tariffs across much of the Asia-Pacific region will come into force in late December, New Zealand said on Wednesday's trade war intensifies.
FILE PHOTO: The New Zealand Minister for Trade and Export Growth David Parker signs the Trans-Pacific Partnership (TPP) Trade Agreement on 8 March 2018 in Santiago de Chile. REUTERS / Ivan Alvarado
The deal was pushed ahead after Australia, as the sixth country, officially ratified the agreement alongside Canada, Japan, Mexico, New Zealand and Singapore.
"This will trigger the countdown of 60 days to the entry into force of the agreement and the first tariff reduction round," said New Zealand Minister of Trade and Export Growth, David Parker. His country is responsible for official tasks such as receiving and sharing notifications by members of the pact.
The original 12-member deal was blown off early last year as US President Donald Trump scrapped the agreement to protect jobs in the US.
The rest of the nations, led by Japan, finalized a revised trade pact in January, the so-called Comprehensive and Progressive Treaty for the Trans-Pacific Partnership (CPTPP).
The agreement will lower tariffs in economies, which together account for more than 13 percent of global gross domestic product (GDP) – a total of $ 10 trillion. In the United States this would have been 40 percent.
"By strengthening protectionist policies around the world, the importance of free and fair rules is becoming increasingly important," said Japanese Minister of Economic Affairs Toshimitsu Motegi at a press conference in Tokyo.
He added that Japan would continue to be "a standard bearer of free trade".
The deal's success was announced by officials in Japan and other member countries as an antidote to growing US protectionism. They hope that Washington will someday rejoin the pact.
However, Trump's economic agenda continues to focus on China, as a trade war between the world's two largest economies shows little signs of weakening.
Trump warned on Tuesday that he was ready to levy additional tariffs on Chinese goods if agreement could not be reached with Beijing.
The United States has already imposed tariffs on Chinese goods worth $ 250 billion, and China has responded with retaliatory tariffs on $ 110 billion of US goods.
The trade war threatens to curb global economic growth, although signatories to the CPTPP said the deal would be a blessing for several sectors.
Australia said the agreement will boost agricultural exports, which, despite the drought this year, will be worth over A $ 52 billion (US $ 36.91 billion).
The five member states that still have to ratify the agreement are Brunei, Chile, Malaysia, Peru and Vietnam.
While most of the remaining parties to the agreement have agreed to ratify the agreement, Malaysian Prime Minister Mahathir Mohamad said he still wants his benefits.
Deputy Peruvian Trade Minister Edgar Vasquez told Reuters he expects Lima to ratify the agreement by 2019.
"One of the countries that will benefit the most is Peru," Vasquez said.
Reporting by Charlotte Greenfield and Praveen Menon in WELLINGTON,; Additional coverage by Colin Packham in Sydney, Yoshifumi Takemoto in Tokyo, Mitra Taj in Lima, Joseph Sipalan in Kuala Lumpur; Arrangement by William Maclean, Shri Navaratnam & Kim Coghill