Industry News

Members of Congress Urge USTR to Rethink TPP Withdrawal

May 10, 2021

In a May 5, 2021 letter sent to the United States Trade Representative (USTR) Katherine Tai, leaders of the Senate Finance trade subcommittee formally urged the Biden administration to re-examine the possibility of the US re-entering the Trans-Pacific Partnership (TPP). The letter was signed by Sen. Tom Carper (D-DE), Sen. John Cornyn (R-TX), Sen. Stephanie Murphy (D-FL), and Rep. Adam Kinzinger (R-IL), and referred to the 2017 decision to withdraw from the TPP as “misguided” and “short-sighted.” The TPP was designed to lower tariffs and trade barriers among a select group of countries throughout the Pacific region, with Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam all part of the agreement. TPP negotiations began in January of 2008 with the final agreement announced on October 5, 2015.

Although the United States was widely seen as instrumental in the creation of the TPP, due to congressional gridlock the agreement was never formally ratified by the US and on January 23, 2017 President Trump signed a presidential memorandum officially withdrawing the United States from the agreement. As United States economic competition with China has increased in recent years the decision to withdraw from the TPP has begun to face increased scrutiny in Washington. Following United States withdrawal from the agreement the remaining eleven signatories to the TPP were forced to grapple with how or if they should proceed. While a variety of options were reportedly discussed, without the United States on board the remaining countries signed a modified agreement in 2018.

The TPP, as originally conceived, excluded China from the agreement. Following the United States withdrawal, China proposed a trade deal of its own, the Regional Comprehensive Economic Partnership (RCEP). The RCEP is designed to link China with Australia, Brunei, Cambodia, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. The RCEP was signed on November 15, 2020. To date China, Japan, Singapore, and Thailand have formally ratified the agreement.

China’s successful push to implement the RCEP has borne out the fears of many in the trade community that withdrawal from TPP created an opportunity for China. In its May 5, 2021 letter to the USTR, the Senate Finance trade subcommittee argued that the United States withdrawal from the TPP has served to “empower China” and has caused the United States to “cede leadership in arguably the most strategically vital and economically dynamic region of the world.” The letter ultimately concludes that the current United States trade policy in the Asia-Pacific region is “in need of a strategic direction that includes robust engagement with our allies in the region, similar to what was envisioned by the 12-country Trans-Pacific Partnership.”

The United States currently has bilateral free trade agreements with Australia, Canada, Chile, Mexico, Peru, and Singapore in the TPP group, as well as South Korea, which is an RCEP target country.

If you have questions about utilizing any free trade agreement or any issues related to the TPP or the United States Trade Representative, do not hesitate to contact an attorney at Barnes, Richardson & Colburn, LLP.