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Revised Pacific trade deal to bring less gains without US, says Moody's

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Revised Pacific trade deal to bring less gains without US, says Moody's

The recently signed revised version of the Trans-Pacific Partnership free trade pact will help boost exports and incomes for its members, but the absence of the U.S. will mean gains are smaller than they would otherwise have been, Moody's said in a report published March 9.

The revised deal, renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP, will bring real income gains of $157 billion for member countries, down from $465 billion from the original accord including the U.S., Moody's said, citing analysis by Peterson Institute for International Economics.

President Donald Trump withdrew the U.S. from the deal in 2017, saying it would cost American jobs.

The absence of the U.S. will shrink the CPTPP to about 13.5% of global GDP, instead of 40%, Moody's said.

The lost trade opportunities will be more pronounced in Vietnam, Malaysia and Japan as they would be the biggest beneficiaries of easier access to the U.S. market, the report said.

Still, Malaysia, which exports palm oil, rubber and electronics, is poised to reap the biggest gains from the CPTPP, with a boost to its sales to countries such as Canada, Peru and Mexico.

Singapore will also benefit from new preferential access to Canada and Mexico, as well as unprecedented access to Japan, Australia, New Zealand, Chile and Peru, the report said.

The deal will likewise give Japan its first high-level multilateral free trade pact, with Japanese auto set to benefit.

For Australia, Canada and Mexico, the gains from the revised deal will be similar to those from the original TPP pact as they have existing trade agreements with the U.S.

Canada and Mexico are expected to attract more investments from Southeast Asian exporters looking for wider access to the U.S., the report said.