Singapore will be one of the least affected parties in what looks like the non-implementation of the Trans-Pacific Partnership after the US withdrew from the 12-nation mega free-trade agreement. According to Moody's Investor Service, that's because Singapore "already has trade agreements in place with nine TPP countries."
Japan and Australia are similarly not as affected, since "they are only modestly exposed to trade with TPP countries, and their export products maintain strong access to other global markets."
But the opposite is true with the economies of Vietnam, Malaysia, Brunei and Mexico, which are reliant on exports and have the greatest exposure to trade with TPP countries. Moody's says it will reassess "prospects for significant gains in incomes" in Malaysia and Vietnam, as examples.
The 12 TPP countries -- the US, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam -- had signed the free-trade agreement, which would come into force when ratified by their national legislatures. US President Donald Trump withdrew from the agreement on January 23.
Several members, among them Australia, Chile and New Zealand, are exploring ways of reviving TPP without US participation. Before the US withdrawal, however, Japan had said TPP without the Americans would be "useless." The TPP countries collectively account for 40% of global GDP, with the US accounting for some 16%.
"Some countries have begun exploring other trade options, bilaterally or with China through the Regional Comprehensive Economic Partnership (RCEP)," Moody's notes. "However, the potential trade deals currently envisaged are unlikely to provide as big an economic benefit as the TPP."
Moody's had anticipated that TPP would reduce the cost of trade and open up new investment opportunities for its 12 members, particularly those in Asia.
"In recent years, TPP trade negotiations served as a catalyst for reform, such as the reduction of protectionist policies in Japan's agriculture sector," it adds. "The abolishment of the deal could slow impetus for further structural change in member countries that would boost competitiveness and investment and improve institutional quality."
But Moody's does not expect the reform measures already implemented to be reversed.