President Donald Trump’s executive order withdrawing the US from the Trans-Pacific Partnership (TPP) has sent tremors across the world, albeit it being expected. This was Trump’s first step in solidifying his devotion to a self-proclaimed, ‘America First’ policy. In his first day in office, Trump revoked one of the key initiatives of his predecessor, Barack Obama, who had sought to create an ‘Asian pivot’ with the hopes of keeping China’s presence ‘in check.’

The withdrawal marks a major shift in the US’ position within the global and, in particular, the Asian economic dynamics in a number of ways. Overwhelming focus has been on how China stands to gain massively from this manoeuvre, along with how this could potentially hurt the US in the long run as it now risks losing a potential US$77 billion a year in earnings from being in the TPP. Australian trade minister Steven Ciobo has recently stated how, despite intentions to push forward with the agreement, Australia had not considered the effects of an America-absent trade agreement. The move to push forward with the US has so far been panned, as the Partnership cannot be ratified without either the US or Japan (which between them account for 79% of the total GDP among signatories).

This has afforded China a major chance to expand its strategic interests. The existence of the Shanghai-based New Development Bank (formerly known as BRICS Development Bank) and the Asian Infrastructure Investment Bank (AIIB) offers added leverage in swinging regional influence towards Beijing. Prior to Trump’s inauguration, however, Chinese President Xi Jinping spoke of how American protectionism was not compatible with the current global system in place. “Any attempt to turn off the flows of capital and people around the world will be like trying to divert a river into lakes and creeks,” said Xi, speaking at Davos. “It will not be possible.”

But what does all this mean for the ASEAN states that signed on for the TPP, namely Singapore, Malaysia, Vietnam and Brunei? With the US backing out of the TPP, any hope of the partnership coming into fruition seems to have been laid to rest for good. For Malaysia and Vietnam in particular, this represents a harsh blow as both countries were aiming to become integral parts of the ‘New China’ – a grouping of five Southeast Asian nations aiming to break into the top 15 nations for manufacturing competitiveness. On the social side the TPP’s enforcement of more stringent regulations would have empowered labor unions desperately lacking in voice and direction, such as in Brunei and the former two countries. Additionally, aims on instigating environmental protection measures have also taken a hit. Among the affected countries, Singapore is unlikely to suffer as substantial a blow to its economy in light of Trump’s withdrawal. In the long run, though, analysts have pointed out how protectionist policies would pose risks to a Singapore economy heavily dependent upon trade for its survival.

On a wider scale, Trump’s move would see ASEAN states veer away from the TPP and towards the Regional Comprehensive Economic Partnership (RCEP), an Asia-Pacific wide free trade agreement (FTA) that has done over three years of negotiation rounds across Asia. In contrast to popular speculation, the RCEP is not a China-led initiative, but an ASEAN-led one and encompasses the entirety of ASEAN along with the six states which ASEAN shares FTAs with, which are China, India, South Korea, Japan, Australia and New Zealand.

Also read: How far can the RCEP ship sail?

What makes the RCEP attractive for states is the lower levels of regulations accompanying it, unlike the TPP’s aforementioned stringencies. This would especially be pivotal to developing countries with transitioning economies such as Cambodia, Laos and Myanmar, which lack infrastructure sufficient enough to fully satisfy the requirements the TPP would have placed.

RCEP’s feasibility as a free trade bloc will rest on a number of factors, most notably on whether the pleasantries of many meetings can translate into actual cooperation and integration across the region, or devolve into rivalry and even greater fragmentation. Additionally, China’s South China Sea stance serves as a sticking point for a sizable number of RCEP participants. The Trump administration’s unpredictable China policy, veering from cooperation to confrontation, adds further uncertainty into the deal going through. Yet at the very same time, finalizing RCEP can prove invaluable in countering this uncertainty, since a better, Asia-norms conscious bloc can lead not only to greater integration, but serve as a united counterweight to Trump’s policies. This arrangement opens one positive avenue: the provision of a platform for ASEAN to actively lead Asia-Pacific in a more impactful manner relative to non-ASEAN members. In a time of global uncertainty, ASEAN, collectively, has the chance to take centre stage against the backdrop of the TPP’s breakdown.


Aung Zin Phyo Thein is a third year student of International Relations from Myanmar at the University of Durham. He currently serves as an associate at the ASEAN Economic Forum, and has written for a number of publications, and has accumulated research experience across a variety of sectors, ranging from ASEAN reform to terrorism, labor rights and regional security.

Disclaimer: All opinions expressed in this article is the author’s own and do not necessarily reflect the views of the ASEAN Economic Forum.