Death of Trans-Pacific Partnership could ease pressure on labour mobility

Author: Thomas Maresca | Date: 7 Dec 2016

US President-elect Donald Trump has promised to abandon the trade deal on his first day in office

HR experts in the Asia-Pacific region are mulling the potential impact of US President-elect Donald Trump abandoning the Trans-Pacific Partnership (TPP) trade deal. He has promised to withdraw the US from the agreement on his first day in office.
 
And without American participation, the pact seems dead in the water: Japanese Prime Minister Shinzo Abe recently said it would be “meaningless,” while Vietnam, whose export-driven economy was expected to be one of the major beneficiaries of the TPP, has withdrawn the proposal for ratification by its National Assembly.
 
What does the likely end of the TPP mean for southeast Asia from a labour perspective? The pact included provisions for labour protections that would have required all members to adhere to International Labour Organisation (ILO) standards. And the US had negotiated separate labour standards consistency plans with Vietnam, Malaysia and Brunei. This pressure to boost Asian labour standards could now fall, although critics have said that it was unclear how the provisions would have been implemented or enforced.
 
Other provisions would have enhanced labour mobility, primarily among more developed economies such as Canada, Australia and Japan, with mutual recognition agreements for specific professions and the removal of economic needs tests and numerical limitations for some fields. Again, this pressure for labour mobility will now fall.
 
That said, changes in both labour standard protection and mobility are already underway through agreements underpinning the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC), a 10-year plan that was adopted in 2015.
 
Overall, the chief outcome of the TPP’s demise, in HR and other business arenas, is likely to be China gaining further influence over the region.
 
According to a note from US-based geopolitical research firm Stratfor, the Asian TPP members “will have to acclimate to a future in which China more actively shapes regional economic competition.”
 
China is filling the TPP vacuum with its own trade pacts such as a Regional Comprehensive Economic Partnership (RCEP), a deal under negotiation that includes the 10 ASEAN countries plus China, India, South Korea, Australia, Japan and New Zealand.
 
China may also take the opportunity to exert a greater cultural and educational influence, and that will be felt in the management sphere.
 
Bob Aubrey, managing partner of HR consultancy Bob Aubrey Associates and chairman of the HR Committee of the European Chamber of Commerce in Singapore, said that the educational centre of gravity for the region may begin to shift away from the West and towards China in coming years, which will be felt in the type of business culture its graduates bring.
 
“A huge wave of talent coming from Asia will of course impact leadership, management and business,” he said. “And when you look at HR concepts, systems methodologies, they've all come from the West basically.”
 
China has already begun linking up its own successful entrepreneurial and start-up culture with the growing start-up space in southeast Asia. For instance, Alibaba founder Jack Ma is acting as a tech advisor to the Malaysian and Indonesian governments and his company has invested US$1 billion in Singaporean e-commerce start-up Lazada. These partnerships are already creating HR models more attuned to local needs, said Aubrey.
 
“HR models coming from the West have been very focused on cost reduction and performance, rather than development,” he said. “I think we will start to see a different focus on HR because if you've got very fast development, you have a set of problems that are quite different from how to control costs for your workforce.”