Leaders red-faced

Japan, with support from Australia and New Zealand, have taken the lead role in keeping the TPP alive after US President Donald Trump withdrew from the deal as one of his first acts on coming to power 12 months ago.

The remaining 11 countries were poised to sign the agreement at Asia Pacific Economic Co-operation summit in Vietnam in November, only to have Canadian Prime Minister Justin Trudeau derail the deal at the last minute by refusing to show up for the final meeting, leaving his fellow leaders red-faced and fuming.

Mr Trudeau's objections centred around the impact on Canada's automotive and cultural sectors.

While the other 10 countries remain deeply frustrated Canada is still a problem and are exploring what can be done to get Ottawa to the finish line or even forge ahead without it, discussions are under way for a tentative meeting in Chile if an agreement can be finalised within the next couple of months.

"Both Japan and Australia are trying to keep the regional economic structure together," says Peter Drysdale, an economist and Japan expert from the Australian National University. Sasha Woolley

Despite Australia lodging a World Trade Organisation complaint this week against Canada over restrictions on wine exports, Trade Minister Steven Ciobo believed it would not derail the TPP, which only had some "minor issues" needing to be worked through.

"There is a strong aspiration from virtually all 11 countries for this to happen," he told The Australian Financial Review.


"I'm confident that on the application of goodwill over the next month or two or three, we could see it come to fruition."

Possible path forward

The Canadian High Commission said Canada was engaging with the remaining TPP members "to discuss a possible path forward that meets the needs of all parties".Veteran trade expert Alan Oxley, a former ambassador to the WTO's forerunner, said a former senior Canadian trade official had told him that Mr Trudeau was ultimately expected to sign the TPP.

Concetta Fierravanti-Wells questioned the value of China's aid in the Pacific, suggesting much of it was used to fund "useless projects". Andrew Meares

He warned if Canada did not sign, Mexico might then be tempted to pull out of the TPP, with both countries facing demands from Mr Trump to rework the North American Free Trade Agreement.

Peter Drysdale, an economist and Japan expert from the Australian National University said Australia and Japan were trying to keep the regional economic structure together in the face of Mr Trump's "America First" agenda which is seeking to weaken free trade and the institutions that support it, including the World Trade Organisation.

As well as trying to conclude the TPP, Mr Drysdale said the Japanese were also leading efforts to conclude the Regional Comprehensive Economic Partnership (RCEP), a free-trade deal comprising 10 south-east Asian countries, along with Australia, China, Japan, India and New Zealand.

"These two deals would provide a bloc to deal with Trump," Mr Drysdale said.


Peter Jennings, executive director of the Australian Strategic Policy Institute, says Australia and Japan have a similar philosophy on aid delivery. Jay Cronan

"The deep problems facing trade across the region have been under-appreciated for some time but are starting to gain prominence."

Key ally

He said while security considerations had dominated the lead-up to Mr Turnbull's visit, Japan had become a key ally of Australia's on free trade.

North Korea looms as the most immediate security threat for the Prime Ministers' talks, along with China's increasingly assertive behaviour around territorial disputes in the East and South China seas.

But the Pacific is quickly emerging as a point of strategic conflict with China, with the issue brought into focus last week when Australia's Minister for International Development and the Pacific, Concetta Fierravanti-Wells, accused Beijing of funding "useless" projects in the Pacific.

Her comments were quickly condemned by China and the government has since sought to soften the remarks.

Yet at the same time Canberra is seeking to counter Beijing's influence in a region long regarded as Australia's backyard.


The most advanced of these efforts is an aid and defence partnership with Japan, which was signed with little fanfare in early 2016.

It envisaged a greater number of joint maritime security and surveillance operations, along with better co-ordination of aid and diplomatic efforts between Tokyo and Canberra.

One source confirmed the Pacific would be raised when Mr Turnbull met Mr Abe on Thursday evening, although he said it was not the main focus of the trip.

On the defence front, Australia is looking to advance the "reciprocal access agreement" during the Prime Minister's visit, which should allow for greater military co-operation through joint exercises, information sharing and collaboration in defence industries.

This is seen as a natural evolution for Japan as it gradually normalises its defence posture and looks to play a larger role in the region. It fits with Mr Abe's ultimate goal of changing the country's pacifist constitution by 2020.

Expanded regional role

Part of Tokyo's expanded regional role is in the Pacific where both Australia and Japan have been traditionally large aid donors.

But China has moved into the region and is estimated to have spent $2.6 billion on aid projects since 2006, according to the Lowy Institute.


Ms Fierravanti-Wells questioned the value of this aid last week, suggesting much of it was used to fund "useless projects".

"We want to ensure that the infrastructure that you do build is actually productive and is actually going to give some economic benefit or some sort of health benefit," she said.

Peter Jennings, executive director of the Australian Strategic Policy Institute, said Australia and Japan had a similar philosophy on aid delivery.

"I think there is a definite attempt [by Japan and Australia] to offer longer-term strategic co-operation that will counter the sugar hit of Chinese assistance," he said.