While implementation of the TPP would have improved some regulations and the promotion of digital services, it’s unclear if TPP’s dissolution will have an adverse effect on cross-border trade in digital services.
While it is possible that, with the demise of TPP, countries could enforce mandatory localisation policies, the probability of an abrupt change doesn’t seem too high.
As members of the Asia-Pacific Economic Cooperation (APEC), many countries party to the TPP already abide by digital services standards under the APEC Cross Border Privacy Rules system.
While APEC is non-binding, it does set a regulatory tone that will be difficult to strike against.
Even China may become less forceful on issues around source code if it advances its regional agenda.
Furthermore, driven by exponential price decreases in core technologies over the past decade it’s increasingly cheaper to build technology companies. Despite a potential unwinding of TPP, growth of e-commerce and digital services is likely to continue across APAC.
LET’S BE CLEAR
A Trump presidency represents a challenge to globalisation, not its end. Trump’s rise is as much about citizen-initiated debate, as anything else.
Almost certainly the world will be more fractious and less harmonious, with debate amongst governments adopting a tone we haven’t heard much of since the end of the Cold War.
Coupled with a more protectionist stance from the US, this is likely to propagate businesses’ post-crisis hesitancy to make long-duration decisions—hiring staff is likely to continue to be prioritised over capital investment.
But not everything will be in President Trump’s control. Asia’s prosperity is clearly tied to a more open trading environment and Asian leaders in recent months have been vocal in their support of a transparent and open trading system.
In any case, digital trade has also been a source of explosive growth and Trump, as president, is likely to leave well enough alone.
As well, a large fiscal stimulus will raise US demand for imports - regardless of President Trump’s trade policy gymnastics. It will be difficult, therefore, for him to upset a system of global trade anchored in Asia that has flourished in decades past. Even if the US pulls away.
Richard Yetsenga is chief economist at ANZ