Trump And The TPP: Making China Great Again?

tpp-china

carolynn By Carolynn Bass

Has American president Donald Trump unintentionally begun the decline of American economic prowess? It certainly seems so, when one looks at his running platform and actions in his first month in office; threats to withdraw from many free trade agreements, and seeking to cut ties with China as well as alienating much of the American economic partnerships around the world. Conservative Trump’s economic and foreign policy are definitely a change from Obama’s liberal agenda that pushed for diplomacy and free trade among markets, and it seems that changes are already beginning in Washington.

In effort to bridge the oceans diving half the world, and indeed expand upon the earlier 2008 Trans Pacific Strategic Economic Partnership Agreement (TPSEP), the United States, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile, and Peru began reworking the old treaty to better the economic and political incentives for each state, and thus the Trans Pacific Partnership was drafted in 2015.

TPP ONE.png

Source: https://tax.thomsonreuters.com/blog/onesource/tpp-trans-pacific-partnership-overview/

The Trans Pacific Partnership, here after referred to as the TPP, is a 12-nation trade pact aiming to liberalise the flow of goods among countries in the Pacific Rim. The product of more than seven years of negotiations and a signature achievement of Barack Obama’s presidency, and includes almost forty percent of the worlds gross domestic product (GDP) (United States Trade Representative). But what does this actually mean? A free trade agreement, which the TPP undeniably is, is a treaty between two or more states renounce trade tariffs and bans and taxes upon imports from one another. In effect, it would allow the twelve member states to have tax free trade and form a thicker economic relationship between them, ensuring economic interdependence and increased cooperation, usually followed by closer diplomatic and political ties between the united countries.

However, the TPP is more than just a free trade agreement, it also endeavoured to standardize basic international law among member states; enshrined in the text are outlines for operating procedure of states, some that are fairly standard in international trade law, such as lowering trade barriers and enforcing copyright and paten protection, as well as adhering to international labour standards. However, the TPP also required a few concurrent norms in international relations: the parties to the treaty are to pass the minimum environmental standards, inhibit human trafficking, abstain from overfishing, and uphold anti-corruption laws. However, there are a few aspects to the treaty that have been quite controversial- particularly to the United States; Article 28: DISPUTE SETTLEMENT allows for any party to seek restitution for any loss of income or damages resulting from actions taken by another party. What this means in lay terms is, any actor can sue a state, which includes other states (through the International Court of Justice or preferred forum) as well as private companies outside of state influence (through International Tribunals or panel). Trans Pacific Partnership Agreement, 2016

This is all good and well, but what does it mean for the states involved, particularly the US, and why is it so emphasized in the international arena? Not only does it inevitably tighten the socioeconomic ties between the Americas and Asia, it intertwines them and harbours a particularly symbiotic relationship, but this is not the only end goal of the TPP. An aspect we might examine would be not who is involved, but rather, who was intentionally excluded: China. As the largest population, and second largest economy in the world, with staggering GDP rates annually, and indisputable political power, China is missing from this massive Asian-American economic deal. Some might argue that this entire plan is intentional, to broaden the sphere of influence for the west and particularly the US into South East Asia, limiting the amount of regional power that China retains in the area.

The TPP might well be one of the best attempts by the US to forestall the expansion of China into the surrounding countries’ economic markets, social and political spheres. By relieving these South East Asian countries of pressures from the regional power, it opens these countries up to the US market and cleanses any soft power influence that China might have leveraged against them.

And indeed, if this was the unspoken plan, we have seen its likes before, the Cold War era ideology of containment. Setting up states with heavy western/American influence surrounding a power communist competitor to mitigate the spread of communism and inhibit the competitor’s regional influence and powers. China is the new Russia, and South East Asia is our former Soviet block.

However, there has been a slight catch in the implementation of the TPP; Donald Trump, current President of the United States, announced in his running campaign that he was against the TPP and would be one of his first acts in office to withdraw from the negotiations, citing his motivations to bring the industry back to the US, and get more jobs out of China (Ballotpedia). And true to his word, Trump’s first act as President on January 23rd 2017, the first executive order was withdrawing from the negotiations of the TPP. This quickly follows the publication just hours before from the Japanese Prime Minister, Shinzo Abe, that the Trans Pacific Partnership would be ‘meaningless’ without the United States as a signatory and participating party (Financial Times)

What this means internationally? While the US is apparently adopting a so-called ‘isolationistic’ policy toward world affairs, their direct competitor, China is doing anything but; China has proposed their answer to the TPP – The Regional Comprehensive Economic Partnership, or RCEP for short.

The RCEP is not entirely dissimilar to the TPP; it is also a free trade agreement set up between South East Asian countries that seeks to unite them in a single interconnected market that would allow for greater unity among the included parties. The RCEP, however, includes a very different list of participating countries; Australia, Brunei, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. As evidenced by the map below, there are some overlaps in Australia and Japan and a few others, but noted exclusion of any American countries.

TPP 2.png

Source: http://rmgbd.net/tpp-rcep-and-aiib/

What does the RCEP do? The full text has not been released yet, but it can be assumed to be a veritable facsimile for the TPP. But it is not the actual text nor requirements of the treaty that are important; the significance of the RCE, is that it is China’s attempt to regain what the US has been attempting to alienate; sole influence over the Asian markets and an arguable authority over a large portion of the world GDP.

What does this all mean together though? Well, the US brokered a trade deal allowing them significant access to Asian markets and consequently a lot of political influence, estranging them to China, the regional power. However, due to change in leadership, the US has unfortunately withdrawn from the TPP, leaving the treaty effectively useless and the other parties stranded. Enter China, seeking to make use of the sudden trade power vacuum, capitalizes (or should we say communizes) on this event and has negotiated another free trade agreement that indisputably favours them, both in terms of the international implications, and actual trade agreement.

 

CITATIONS:

TPP- https://www.mfat.govt.nz/en/about-us/who-we-are/treaties/trans-pacific-partnership-agreement-tpp/text-of-the-trans-pacific-partnership

Image- https://tax.thomsonreuters.com/blog/onesource/tpp-trans-pacific-partnership-overview/

Shinzo Abe- https://www.ft.com/content/59972c38-b058-11e6-a37c-f4a01f1b0fa1

Second Map- http://rmgbd.net/tpp-rcep-and-aiib/

40% – https://ustr.gov/tpp/overview-of-the-TPP

Trump on TPP- https://ballotpedia.org/2016_presidential_candidates_on_the_Trans-Pacific_Partnership_trade_deal

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