The outlook for a cross-Pacific free trade deal looks bleak and would mean Australia missing out on billions of dollars of benefits.
US president-elect Donald Trump has flagged he’ll begin a US withdrawal from the 12-nation Trans-Pacific Partnership pact from his first day in office.
Mr Trump, in a video updating the American people on his transition planning for the White House, described the regional agreement a “potential disaster for our country”.
He will file a notification of intent to withdraw from the deal pushed by President Barack Obama as soon as he takes office on January 20.
Instead, Mr Trump will pursue “fair” bilateral trade agreements.
“The outlook for the Trans-Pacific Partnership is bleak,” Australian Chamber of Commerce and Industry boss James Pearson told AAP on Tuesday.
US participation in the TPP is central to the success of the pact, which represents some 40 per cent of global GDP and a quarter of world trade.
It would eliminate $9 billion of tariffs presently paid by Australia on its exports to the US and 10 other TPP countries: Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam .
Returning from the Asia-Pacific Economic Co-operation meeting in Lima on Tuesday, Prime Minister Malcolm Turnbull said the TPP had been a major topic of conversation over the weekend.
“We believe, as do the other the 11 nations who are parties to the TPP … it is an important strategic commitment,” the prime minister told reporters in Canberra.
It was up to Mr Trump and his new Congress to make decisions in what they believed was in their nation’s interest.
Time would tell to what extent the US would engage with the TPP or an evolved version of the trade pact.
“It is very clear that from Australia’s point of view, getting greater access for Australian exports … to those big markets is manifestly in our interest,” Mr Turnbull said.
Trade Minister Steven Ciobo said the TPP does require US ratification for it to come into effect, but there is a two year period for that to happen.
In the meantime Australia will go ahead with its own processes to ratify the deal.
“We know this is a good deal … we have just got to give the Americans time to weigh up the pros and the cons further,” he told reporters.
Mr Pearson said Australia needs to engage with the new administration in Washington, and with other regional trade and investment partners, to make it easier to do business.
“I hope that will appeal to the businessman as well as the politician in president-elect Trump,” he said.
HSBC Australia chief Tony Cripps said the TPP failure will put a fresh focus on the trade liberalisation efforts being driven from Asia, such as the Regional Comprehensive Economic Partnership and the Free Trade Area of the Asia Pacific.
“Bringing down barriers to facilitate trade is crucial for business,” he said.
G20 affiliate, the B20 Trade Taskforce, has calculated that the global economy would get a $US432 billion boost annually if protectionist measures introduced from 2008 to 2013 were reversed, supporting nine million jobs.