Industry Trend Analysis - APAC Region Will Overcome TPP Setback - MAY 2017
BMI View: A failure to ratify the Trans-Pacific Partnership (TPP) will hinder medical device companies operating in the Asia Pacific (APAC) region, which has seven of the 12 member countries signed up to the agreement. While these countries remain committed to closer economic co - operation and trade liberalisation, the wide reaching reforms of the TPP including stronger intellectual property rights will be implemented at a slower pace , diminishing the attractiveness of the APAC market. In the longer term, alternative trade pacts such as the Regional Comprehensive Economic Partnership (RCEP) could benefit the region.
The US formal withdrawal from the TPP in January 2017 will inevitably lead to the demise of the long awaited trade deal despite efforts by the remaining signatories to keep the TPP alive through a reformulated agreement. With seven of the 12 participating members located in the APAC region (Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam), its implementation would have been an engine of economic reform driving improvements to the APAC business environment, especially as other Asian countries such as Indonesia, South Korea and Thailand had signalled their interest in joining.
The 11 remaining members of the TPP are expected to decide on the future of the pact at the Asia-Pacific Economic Co-operation (APEC) meeting of trade ministers on 20-21 May 2017. Australia, Malaysia, New Zealand and Singapore have all signalled support for continuing with a partnership without the US, citing the significant economic benefits to the region that a modified 11-member TPP, or TPP 11, would still bring, despite the absence of the US. However, the benefits for less developed economies such as Vietnam, which was hoping for greater access to the US market, are less clear cut.
|New Zealand Most Exposed To TPP Failure|
|Medical Device Exports By Leading Destinations, 2016 (% Total)|
|*2015. Source: Intracen/BMI|