TPP: Implications for Japan and the Asian production chain

HONG KONG - Facing the new economic bloc, the Trans-Pacific Partnership, China is likely to pay the largest cost. Global investment manager Nataxis says that to avoid the reforms that the agreement would require, China may decide to stay out of the TPP.

“Alternatively, it may prefer to form lower-level trade agreements with the US and Japan individually. Under this scenario, the US and Japan could have stronger bargaining power,” Nataxis says.

 “Furthermore, because Japan has already made substantial investment in China, it may win favourable conditions during negotiations.

“At the same time, the ASEAN economies may also benefit from the off-shoring away from China into these economies. Some of them. like Vietnam - being at an earlier stage of economic development - should be able to implement the latest practices without undergoing the difficult process of dismantling an existing system.”  www.nataxis.com (ATI).