TPP countries will reluctantly turn to China as the US leaves, says former Obama trade representative

Kirk: This was at the top of Canada's agenda
Kirk: This was at the top of Canada's agenda

The 11 countries still involved in the Trans-Pacific Partnership, or TPP, may have no choice but to turn to China for global leadership, Ron Kirk said on Monday.

Now that President Donald Trump has formally withdrawn the United States from TPP, which Kirk helped to build, some are wondering if a nation like China will step up to fill the economic void left by the United States.

"What hurts me the most [is that] these were countries that very much came to the United States and effectively said, please don't leave us with only one global alternative. They had no choice but to be engaged with China," said Kirk, who served as U.S. trade representative under former President Barack Obama.

But if the administration reinforces the "America First" idea too aggressively, the unintended consequences could prove to be dire for U.S. businesses, he said.

"China is the 5,000-pound gorilla in Southeast Asia, but [the other countries] very much wanted to hedge against that by entering this partnership with the United States," Kirk said.

In the absence of that partnership, Kirk said there is little that would stop the other nations from going forward with the agreement, and hurting U.S. economic activity in the process.

"That would be a tragic outcome for U.S. businesses and exporters and farmers and their workers, because we would have effectively negotiated the largest duty-free zone in the world and then said to U.S. businesses, 'You can't play in that market,'" Kirk contended.

Canada, one of the remaining 11 that sought to gain considerably from TPP, could become a contender for that global leadership as well, Kirk said.

"[TPP] was at the top of Canada's agenda because they wanted to be a part of that new market," Kirk said.

The partnered countries are Canada, Australia, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore and New Zealand.

"And the irony was that the Trans-Pacific Partnership effectively was the opportunity for the three North American partners to modernize and update NAFTA," Kirk said, in a nod to Trump's calls for renegotiating NAFTA.

"But Canada's also shrewd enough, I think, to try to move forward and take advantage of our absence and our leadership, particularly in Southeast Asia, while we try to get our act together," Kirk added.