The Trans Pacific Partnership deal is credit positive for Asian sovereigns, said credit rating agency Moody’s.
The deal will reduce the cost of trade and open up new investment opportunities, supporting growth it said.
"While full details of the agreement have yet to be published, greater access to the US for their goods should help to make Asian countries the biggest beneficiaries in GDP-relative terms," says senior analyst Christian de Guzman.
Malaysia is one of the Asian countries which is part of the 12-member grouping which concluded negotiations in Atlanta last week.
According to Moody's the FTA between Australia (Aaa stable), Brunei (unrated), Canada (Aaa stable), Chile (Aa3 stable), Japan (A1 stable), Malaysia (A3 positive), Mexico (A3 stable), New Zealand (Aaa stable), Peru (A3stable), Singapore (Aaa stable), the United States (Aaa stable) and Vietnam (B1 stable) -- will increase market access, lower or eliminate tariffs.
It will also set standards in areas including intellectual property rights, environmental and u conditions, and government procurement.
Moody's highlighted Vietnam's apparel and shoe manufacturers as those who will profit from lower import duties with the US and Japan.
" Likewise, Malaysia's palm oil, rubber and electronics' exporters will see substantial value from the TPP deal.
"In Japan, cars and auto-parts makers in particular stand to do well out of the agreement.
Australia and New Zealand's farmers will also benefit from increased market access and lower tariffs on their goods.
For Singapore, which has trade agreements in place with nine TPP countries, the deal will complement these existing pacts and boost investment and trade flows with partner nations.
Another positive aspect of the trade negotiations has been to act as a catalyst for reform in several countries in the region, such as Japan and Vietnam.
"One modestly credit-negative aspect to the trade deal is that it could hurt governments' fiscal balances by reducing their customs revenues over the longer term," said de Guzman.
"But additional receipts from an expected uptick in economic growth due to the agreement are likely to offset foregone tariff revenue,"he added.
Meanwhile, FitchRatings said Vietnam could see a significant boost to long-term economic growth, investment and exports upon ratification of the agreement.
Fitch believes that the agreement would have significant impact on two key areas in Vietnam - trade and domestic economic policy.
The free trade elements of the TPP will lower tariff barriers, giving Vietnam greater access to large consumer markets in the US, Japan, Canada and Australia.
TPP signatories accounted for 39 per cent of Vietnam's total exports and 23 per cent of imports in 2014.
Vietnam in August also concluded the terms of a free trade deal with the European Union, putting it on course to complete free trade agreements with three of its four largest export destinations - the EU, Japan and the US.
Source: http://www.nst.com.my
Key words: TPP credit positive, for Asian sovereigns, Moody’s
