mead berger shevtsova garfinkle michta grygiel blankenhorn bayles
The Pacific Trade Scramble

With a stroke of the pen, President Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP) yesterday, sending the trade agreement’s members scrambling to pick up the pieces. With the U.S. out of the picture, the Pacific’s major powers are already making their opening pitches on how a trade deal could be salvaged. FT:

Malcolm Turnbull, prime minister of Australia, vowed to keep TPP alive and said he was open to China joining the pact instead of the US — a sign of how withdrawal could damage American interests in the region, even with its closest allies.

But trade negotiators from several countries said it would be hard to sustain TPP in its current form. Instead, big players such as China and Japan are likely to engage in intensive diplomacy as they try to shape a new regional deal. […]

On Tuesday, China’s foreign ministry declined to say whether Beijing would consider any invitation to join the TPP. A ministry spokesperson instead cited two rival trade pacts, saying that the rival Regional Comprehensive Economic Partnership, which unlike TPP includes Beijing, “should be concluded at an early date”. The ministry also said the Chinese government would continue to promote a free trade area of the Asia-Pacific.

Amid all the competing proposals, some initial battle lines are being drawn. Japan and Australia both want an agreement that preserves TPP’s high standards on labor, the environment, and intellectual property rights, but they disagree on how to pursue that goal. Australia, which has been making friendly noises toward Beijing for some time now, wants to keep TPP and invite China in. Japan, by contrast, has called the agreement “meaningless” without the United States and is wary of having China take over the American leadership role.

China, for its part, hopes that with some minor tweaks around the edges, Pacific countries will buy into its preferred, less ambitious trade frameworks, like the 16-member Regional Comprehensive Economic Partnership (RCEP). Beijing wants reduced tariffs and greater access to other markets, but it has no interest in upholding stringent protections on human rights or intellectual property. If other countries stick to those priorities, China may have difficulty seizing the free trade mantle that it has been publicly jockeying for in the wake of Trump.

It’s clear that the Pacific trade debate is far from over. If anything, free trade is likely to become an issue of intensified geopolitical competition as China seeks to capitalize on the U.S. withdrawal. Given Beijing’s own substantial trade barriers and opposition from countries like Japan, however, its success in doing so is by no means guaranteed.

Features Icon
show comments
  • Dhako

    I think you will find that you are so wrong on this issue as well. In other words, apart from Japan, there is not other country who sees its interest threatened by China, particular now that they know that the Uncle Sam has effectively ended any dalliance (of political and economical) kind in which he ever evinced towards “Multilateral Trade regime” under the current Trump’s regime. Hence, that act of “abrogating” the TPP will be seen for what it is, in the rest of the Pacific-Rim states. Which is, that now, reluctantly or otherwise, these states have only China to lean on, when it comes to having a continental-size internal market for their export as well as having a deep-pockets to which to draw from where their inward direct investment is concern, So in that sense, I expect, these pragmatic states to swallow hard and accept the Chinese version of the free-trade, namely, the RCEP, regardless of how much they think this agreement falls very short on some aspects they thought the defunct TPP have upholding, such as environmental standard or even the “protection” of the intellectual property, in which various Japanese companies would be looking to be included into a any Pacific-Rim-wide regional free-trade agreement.

    Hence, even in the absence of some of those “strictures” the likelihood is that, the rest of the Asia will still welcome the RCEP, given the fact, that, the US, seems to have developed the idea of thinking that taking “your own ball” home is a good and friendly idea where the prosperity of the other nations is concern. And, that means, these nations will simply grumble a bit under their breadth, but, at the end of the day, you can’t beat empty hands with some thing, which means, I kind of see these states simply asking to expedite approach for the RCEP agreement while perhaps saying that some of the issues and regulations already written in this agreement needs to beef it up a bit, which is something, the Chinese side, will not be averse in looking into, so long as the RCEP sees at the end of the day, as the “new trade agreement” in that part of the world.

    As for Japan, I think, the current leadership of Prime-Minister Shinzo Abe, seemed to have mortgaged everything he has (in political terms) on the TPP basket, only for him to see Mr Trump kick him in the teeth in return as his first action as a president. Hence, I expect, a prolong period of “mourning” in the Japanese political circles, particularly those who had banked on the predictability of the US’s leadership, such as Mr Abe in particular. Subsequently, after Mr Abe goes through his “equivalence take of the seven stages of political grieve” I expect him to realize that the only game in town (which is still left standing) is the propose agenda of Mr Xi in upholding the current level of global interconnection and trade. And, since, Japan more than any other nation around the world depends on these seamless global trade, I expect, his national interest to compel him to put aside his “childish obsession” of always seeing the dark side of things where China is concern.

    • Jim__L

      At this point, the rest of the Pacific is left with the option of a) trying to cut a deal with China, or b) trying to cut a deal with Trump.

      Sure, cutting a deal with Trump won’t be child’s play, like it was to cut a deal with Obama. But compared to cutting a deal with China? Seeing what Trump has to offer is still well worth a look, and everyone knows it.

      • Dhako

        Not true. And in fact since he could have simply have said that instead of “abrogating” the whole shebang of the TPP, he is open to “renogiate” what he doesn’t like about it means that no other nation will take Mr Trump as a partner they could trust. Which means, the whole idea of cutting deal with him will be seen as insult now that their effort of 10 years, which is the the time it took to cobbled together this TPP, was discarded by him

        • Jim__L

          Seriously, does any nation actually believe that China will give them anything like a good deal? They can see how China systematically screwed over the United States for the last 25 years. The baleful effects of that (well, and the effects of PC) are basically why Trump is now president.

          The Pacific Rim is better off with the US, even if we’re not giving away the store anymore.

    • seattleoutcast

      “ln other words, apart from Japan, there is no other country who sees its economical interest threatened by China,”

      Um, Vietnam? I also see East Africa getting a little upset with the Xianistas.

  • Jim__L

    “With a stroke of the pen, President Donald Trump”…

    So now we have a president with a Pen and a Twitter Account.

    The future is here.

  • QET

    The USA is far and away the largest consumer nation. There is no nation on Earth that can afford not to enter into a trade deal with the US. Despite Dhako’s feverish fantasizings, the rest of the world (including China more than any other) needs, economically, the US far far far more than the US needs the rest of the world. So withdrawal from TPP by the US will produce the predictable grandstanding and speechifying by other nations but then they will duly rush to negotiate trade deals with us. This is simply a fact. One day it might not be, but that day is far off over the horizon. No one wants an economic order led by China, least of all China.

    • Dhako

      I fear in your case, you are in danger of taking your crippling delusion as the gospel truth. But I reckon that soon enough you will see how other nations start acting now they know what is in stored for them under Mr Trump.

      • Tom

        The crippling delusion that the American economy is still the largest in the world by a considerable margin, even with China cooking the books?

      • seattleoutcast

        We were told Britain was under the crippling delusion that it could survive as a separate state from the EU. But I’m sure Germany still will sell its BMWs to the Brits.

        The same applies to the US.

    • rpabate

      We are seeing Trump’s negotiating style right from the get-go. He also knows that we hold a lot of the best cards, and he probably knows far better than the “community organizer” how to play them.

  • FriendlyGoat

    Upholding the “stringent protections on human rights” is what either Trump leadership or Chinese leadership will soft-pedal or drop. It does not belong in the same sentence with protection for intellectual property—-a totally different subject.

    • seattleoutcast

      You have to admit that you’re happy we’re out of it. And it is thanks to a republican.

      • FriendlyGoat

        I’m not particularly happy we’re out of it. Something else will be coming instead and focused much more on corporations’ benefit than people’s benefit in this country or any country.

  • Arkeygeezer

    Confusion to the enemy

  • Joey Junger

    Everyone from Chomsky to Bernie seemed to be against these destructive trade deals but now that Trump has eviscerated them in the course of twenty-four hours (and I doubt Jill Stein or Bernie could have done it in eight years), expect to hear everyone except Julian Assange walk back their rhetoric about these deals being bad. They hate Trump too much to engage with reality at this point, which is fine, since it’s not like they’re much help anyway.

    Besides, how many people have read the TPP (or the portions available)? People couldn’t even be bothered to read the Affordable Care Act (which didn’t stop them from endorsing or denouncing it), and the TPP is far more formidable (and deliberately obscurantist) than the Obamacare documents. TPP is not as much about trade as it is about corporations being immune from prosecution (or even control) by national or international law. It makes Citizens United look reasonable.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service