Although the United States is no longer part of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), countries in the Americas are still eyeing Brunei as a potential gateway for the Asian exports markets.
Signed in Chile on March 8, the CPTPP will reduce tariffs in 11 countries that together amount to 14 percent of the global economy.
With the ink is still drying on $14 trillion trade deal, governments from Canada to Latin America are keen to take to build on the momentum of the signing, which was delayed due to the US withdrawal from the agreement a year ago.
Nathan Wolf, Mexico’s non-resident ambassador to Brunei, said companies from the Americas will be keen to capitalise on Brunei’s tariff-free access to ASEAN and North Asia.
“Agrifoods is a big industry in Mexico and we want to see how we can get halal certification and distribute halal food to the whole region,” he told The Scoop during his first visit to the sultanate two weeks ago. “So we’re looking at Brunei not as a destination but as a gateway to the Asian market.”
Likewise, Bruneian entrepreneurs can now penetrate the Latin American market via Mexico, which has FTAs with several countries in the region, as well as with the US and Europe.
“I think there are a lot of potential areas to collaborate together since both countries signed the CPTPP,” Wolf said after a meeting with Brunei’s International Chamber of Commerce and Industry.
“One is the tourism sector, we can share our expertise on that. Also the oil industry where we can find common projects of mutual benefit.”
J. Ian Burchett, director-general for Southeast Asia at Canada’s foreign ministry said while it was “unfortunate” the United States chose to withdraw from the the CPTPP, Canada and Brunei remain committed to the process “all the way”.
“It will be a great opportunity to open a new channel for Canada and all of the members of CPTPP, including Brunei,” he told local media in a recent interview. “Maybe at a future date there may be an opportunity for the United States to re-join, but right now we are proceeding with the arrangement as it stands.”
Burchett added that in addition to existing Canadian investment into Brunei’s aviation and pharmaceuticals sectors, the CPTPP would facilitate FDI into new sectors such as ICT, clean technology and food processing.
This is a key selling point for Brunei — still trying diversify its economy away from oil and gas — which has recorded negative growth for the past four years.
Brunei’s Ministry of Foreign Affairs and Trade (MOFAT) has said the CPTPP could potentially bring $1 billion to Bruneian businesses over the next five to 10 years.
During the sitting of the Legislative Council in March, Brunei’s second minister for foreign affairs and trade said MOFAT will devote more spending to trade promotion, as Brunei pushes its SMEs to enter international markets.
“[The CPTPP] can provide opportunities for local companies to establish joint ventures with outside companies, allowing them to develop their products and enter the international market,” said Dato Paduka Hj Erywan Pehin Dato Pekerma Jaya Hj Mohd Yusof.
The Peterson Institute for International Economics forecasted that by 2030 Brunei’s GDP will grow by over two per cent under the CPTPP, compared to six per cent growth under the initial TPP agreement, which included the United States.
Under President Trump’s leadership, the US seems to be taking a more protectionist stance, recently imposing substantial tariffs on steel and aluminium imports to America.
While the resuscitated deal is undeniably weaker without the participation of the world’s biggest economy, it serves as a powerful symbol of how countries that previously counted on American trade leadership are now forging ahead without it.
“The CPTPP is a significant achievement. At a time of rising nationalism, protectionism, and threat of trade wars, the 11 nations showed we know how to make a win-win deal,” Singaporean Prime Minister Lee Hsien Loong said in Facebook post.
The CPTPP, along with Regional Comprehensive Economic Partnership (a 16-nation trade deal that includes China and India), are seen as the building blocks towards an eventual Free Trade Area of the Asia-Pacific.
Brunei has said it aims to ratify the CPTPP by early 2020, but the trade deal will only come into effect once at least six nations ratify the agreement.
The 11 countries signing on to the trade pact are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.