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Japan and other members of the Trans-Pacific Partnership (TPP) agreed on Sunday to pursue their proposed trade deal without the US, during a meeting of Asia-Pacific countries in which the Trump administration's "America First" policy created tension.
The current turmoil over global trade negotiations was laid bare at the meeting of the Asia-Pacific Economic Co-operation (APEC) forum, which failed to agree on its usual post-event joint statement due to US opposition to proposed wording on fighting protectionism.
The meeting in Hanoi, Vietnam, was the biggest trade gathering since the election of US president Donald Trump upended the old order.
Mr Trump has argued that multilateral free-trade agreements are costing Americans jobs and that he wants to cut new deals.
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Mr Trump’s administration withdrew the US from the TPP’s proposed trade deal in January 2017.
On the sidelines of the APEC meeting, the 11 remaining countries of the TPP agreed to explore how they could move ahead with the deal without the US, partly in the hope that Washington would reconsider leaving.
However, new US trade representative Robert Lighthizer said there was no way back and that he believed the US would make a series of bilateral agreements with countries in the region instead.
A statement from Mr Lighthizer said that free trade required the tackling of “trade-distorting measures” that have led to “massive US trade imbalances” in the region - a possible reference to China’s trade surplus, which was nearly $350 billion in 2016.
“I look forward to working with our trade partners to expand US export market access and address persistent unfair trade practices,” Mr Lighthizer said.
Although the TPP members kept the trade agreement alive, they did not give a wholehearted commitment to advance immediately with a deal that members also see as a way to contain an increasingly dominant China.
“We’re focused on how we can move ahead with 11 countries,” New Zealand’s trade minister, Todd McClay, said.
One of the biggest challenges is keeping on board Vietnam and Malaysia, who signed up for the deal largely to gain better US market access.
“We will need to ensure that our interests remain protected and the benefits derived from it still outweigh the costs,” Malaysian trade minister Mustapa Mohamed said.
The volume of trade between the remaining countries is barely one-quarter of the level it would have been if the US had remained in the TPP.
Officials from TPP countries will meet again in Japan in July and bring forward proposals in November, Mr McClay said.
Protectionism
Fears of protectionism have grown under the Trump presidency and the failure of the Asia-Pacific countries to agree on their usual joint statement due to the issue did nothing to quell them.
The US was against wording agreed by the other 20 APEC countries that supported free trade and opposed protectionism, officials at the talks said.
Explaining US opposition to using the word protectionism in the statement, Mr Lighthizer said the term was being confused with the steps that were really needed to promote free trade.
A statement from the Vietnamese chairman of the talks gave a “commitment to promote trade and investment liberalisation”.
But the only announcement that came from all the members was an “Actions Statement” that contained no such commitments.
That statement mentioned topics such as sustainable growth, small businesses and technical co-operation.
On the sidelines of the APEC forum, Mr Lighthizer held a series of one-on-one meetings with key partners.
These included China, Canada and Mexico, who are all members of the North American Free Trade Agreement that Mr Trump aims to renegotiate.
China is putting itself forward as a global free-trade champion in light of the US shift, and is pushing for a trade agreement that would encompass the vast majority of Asian economies.
The Asia trade deal it favours is called the Regional Comprehensive Economic Partnership.
Reuters