The Trump administration has promised to bring a lot of complex changes in the US economy, many of which involve trade relations with other countries. The US President has expressed his desire to renegotiate NAFTA with Canada and Mexico but has decided to pull out of the Trans-Pacific Partnership. While some Asian leaders have noted the importance of US participation in this deal, it seems that the region is moving along just fine even without Uncle Sam.
Some fear that Trump's protectionist policies could draw manufacturing activity and jobs away from Asia and bring them back to the homeland as he offers tax incentives for companies that do so and promises to enforce higher tariffs on imported goods. While this could benefit US domestic production and growth, it could leave a burden on its trade partners as a result. However, countries in the Asia Pacific region are showing that they can get by fine on their own as they seek to strengthen their trade ties with their neighboring countries.
Earlier this month, signatories of the Trans-Pacific Partnership had a two-day summit to expand trade and financial ties. According to Australian Trade Minister Steven Ciobo, the summit marks the first opportunity that the nations can get together and discuss the future of trade without the United States. After the meeting, partners made a firm commitment to collaborate in keeping markets open and raised fears about protectionism in other parts of the world, likely referring to Trump's "America First" pledge during his inauguration speech.
Apart from that, their joint statement also alluded to discussions on the next steps as senior trade officials are scheduled to have another meeting in May. The latest summit was held in Chile, partly to broker a potential working relationship with the Pacific Alliance or the four-country group comprised of Chile, Colombia, Mexico, and Peru.
This alliance was launched in 2012 and has made progress in terms of tariff elimination deals. It aims to be a platform to connect Latin America to Asia, thereby providing the latter with another big market for its products should it lose certain trade benefits with the US. The countries, along with TPP members plus China and South Korea, are pursuing high-level dialogue on integration initiatives in the Asia-Pacific region.
If this pushes through and bears fruit in the near term, funds such as The Asia Pacific Fund (APB) could yield strong returns. This particular fund was set up in 1987 and is listed under the New York Stock Exchange. Its holdings consist of investments in equities of companies in the Asia Pacific region which are poised to take flight with these strengthening trade ties. Countries participating in trade talks include Australia, Brunei, Canada, Chile, China, Colombia, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, South Korea, and Vietnam.
Other regional trade initiatives are also being made, such as the Regional Comprehensive Economic Partnership within a 16-country Asia Pacific group. This includes the members of the ASEAN and their FTA partners, which are Australia, China, India, Japan, New Zealand, and South Korea. In particular, this group made strides in e-commerce and intellectual property, affirming the potential for them to boost business confidence and benefit consumers.
Besides, the Asia Pacific region is also being eyed by Europe, which is currently dealing with the uncertainty from Brexit. Recall that the decision to leave the euro bloc could leave the United Kingdom without access to the single market, which means that it might turn to other areas in search for potential trade relations. Similarly, the rest of the EU also stands to lose a big market for their products with Brexit so it might seek to establish stronger ties with Asia as well.
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