According to Trump, his new US administration will pursue bilateral trade deals with other countries. Again, this does not bode well for global trade and investment.
However, at the latest Asia Pacific Economic Cooperation (Apec) summit hosted by Peru last weekend, China and Russia announced they would push for an Asia-Pacific free-trade area in the event of the TPP collapsing.
Neither China nor Russia are members of the TPP, which was initiated by outgoing US president Barack Obama as part of his “Asia pivot” to contain China’s economic rise.
Abandoning the free-trade arrangement will also upset Japan, which is a key TPP member. Japan has urged Thailand to join TPP negotiations that have already secured the signatures of 12 other countries, including Association of Southeast Asian Nations members Vietnam, Malaysia and Singapore.
As a TPP outsider, Thailand would be at a disadvantage compared with Vietnam or Malaysia, whom foreign investors would eye in order to tap TPP economies whose share of the global economy is as much as 40 per cent.
Some Thailand-based domestic and multinational industries are also planning to relocate their manufacturing facilities to Vietnam to take advantage of TPP privileges.
In this context, aborting the Trans-Pacific Partnership would bolster Asean’s Regional Comprehensive Economic Cooperation (RCEP) framework, which is seen as an alternative to the bigger TPP arrangement.
Japan has also suggested that the RCEP could replace the TPP at this stage, but China would be the dominant player due to its sheer economic scale.
RCEP groups together the 10 Asean countries plus China, Japan, South Korea, India, Australia and New Zealand.
If it were to effectively replace the TPP, Thailand would have more time to reposition itself in the regional and global trade and investment arena. At present, exports account for as much as 70 per cent of the country’s GDP, so external factors are crucial to longer-term sustainable growth.
On the domestic front, the country’s third-quarter GDP growth slowed to 3.2 per cent, compared to second-quarter growth of 3.5 per cent.
According to HSBC, average Thai GDP growth was 3.3 per cent for the first nine months of 2016 compared to 2.8 per cent in 2015.
This year’s Q3 growth was more dependent on net services exports as compared to the previous two quarters, which showed more contribution from domestic demand.
For 2017, the growth outlook is 3 to 4 per cent, according to the National Economic and Social Development Board.
This is expected to be backed by a recovery of Thai exports projected to grow 2.4 per cent compared to this year’s zero growth.
However, there are external uncertainties, especially regarding US economic policies and protectionist sentiments amid a still-weak global economy.
To drive growth, the Thai government will have to push ahead implementation of mega-infrastructure investment projects, including mass transit lines, double-track railways, motorways, airport expansion and other schemes.
In addition, it will have to cope with the consequences of low agricultural prices and a slowdown in Chinese tourist arrivals.