Pessimism about concluding an agreement for the Trans-Pacific Strategic Partnership (TPP) has reached the highest point since the United States joined in the negotiation process. If the negotiation still drags on, the US will lose a vital pillar for its “Asia-Pacific rebalance” strategy. The Obama administration must either make every effort to make the TPP talks a success or participate in similar mechanisms designed by other Asia-Pacific nations; otherwise the US will not only suffer economic losses but will also see its political supremacy undermined.
The US has relied on a favorable international order in politics, finance and trade to maintain its powerful position in the world. Its influence is also embodied in its ever-upgrading design and control of international rules. This year marks the 70th anniversary of the victory of World War II over fascism. One can hardly imagine how the US would have led the world if the United Nations, the International Monetary Fund, the World Bank, the General Agreement of Tariff and Trade and the World Trade Organization had not been established.
The current negotiations over the establishment of TPP, TTIP (Transatlantic Trade and Investment Partnership) and TISA (Trade in Service Agreement) are as strategically important as the international political, financial and trade systems established under the dominance of the US over 70 years ago. These negotiations are part of Washington’s efforts to create a new world order. They will determine whether the US will be able to maintain its leading position in the 21st century.
The procrastination in the TPP talks will undoubtedly delay or even ruin Washington’s process of maintaining its power in the Asia-Pacific region. If the Obama administration had succeeded in concluding the negotiations before the end of 2014, as it had planned, TPP would become Asia-Pacific’s first, and thus standard, mechanism for economic and trade cooperation way before the China-proposed Asian Infrastructural Investment Bank (AIIB) and Belt and Road Initiative, the ASEAN Economic Community (AEC), the China-Korea and China-Australia Free Trade Areas. Now, the AIIB and Belt and Road Initiative have been launched; AEC will be established by the end of 2015; and more Free Trade Areas have been put into operation. The strategic leading role TPP was expected to play has been greatly weakened.
To expedite the process of TPP, the Obama administration must take immediate measures to overcome technical problems that have hindered the negotiations. Otherwise, by the time the TPP negotiations are completed — perhaps 2016 or even later, other economic-trade cooperation mechanisms in the region may have entered their second-round readjustment. And by then, more countries will embrace the FTAAP, which will mean a considerably significant weakening of the TPP’s strategic importance.
To prevent TPP from becoming something of a zombie, the first thing the Obama administration needs to do is to make sure that the negotiations focus on concrete “technical problems” such as dairy products, automobile parts and new drugs. And it has to partly abandon the “platinum standard” to encourage minor members of the TPP to make concessions before a new round of domestic political tussles, especially the disputes about TPP, flare up in the US. When it first joined in the negotiations, the US announced its plan to turn the TPP into a “platinum-class” trade agreement, hence the term “platinum standard” for the principles to be followed by the partnership.
Second, the Obama administration needs to urge the partners to look beyond the TPP to be aware of the present global trade order. In fact, most of the major global trade talks are troubled with problems but the TPP negotiation is the fastest in development. Trade talks similar to TPP include the FTAAP, CJKFTA (China-Japan-Korea Free Trade Area), RCEP (Regional Comprehensive Economic Partnership), AEC, PA (Pacific Alliance) and SAARC (South Asian Association for Regional Cooperation) but none of them has gone as far as TPP in the negotiation progress. While the WTO has frequently proved to be powerless, many economies have tried other forms of multi-lateral negotiations, which, however, were not as effective as expected. As one of these attempts, TPP seems to have nothing to worry about, if viewed purely from the technical angle. What hindered the progress at the Hawaii meeting were tariff and products origin rather than the labor issue and the new criteria for environment protection emphasized by TPP. The facts indicate that substantial progress has been achieved in the TPP negotiations.
Third, it is now widely feared that TPP will be involved in the pre-election politics and the Congress will not pass the agreement in a timely fashion. This argument may have somewhat exaggerated the impact of election and partisan wrangles on Washington’s major strategic decisions. In many cases, these quarrels are nothing more than a show. Moreover, even during the election, the Congress has the “window phase” for normal operation. The window phase for TPP may be in early March or last from March till May. If all partners can finalize the agreement before October, the TPP could still go into practice in 2016.
TPP also matters much to the Sino-US relations. In recent years, Washington’s China policy has been swaying between containing and contacting. TPP provides a third option. By using the TPP’s rules, the US can maintain its superiority over China while allowing the country to keep growing. That’s why the China Threat theory is the main argument used by TPP supporters in the US to sell their ideas. This has certainly caused serious worries among China’s strategists.
Some people say that to solve the China-US contradiction over TPP, the two countries can be encouraged to join the systems promoted by each other, i.e., the US joins the RCEP and AIIB while China joins TPP. But that may be just wishful thinking. RCEP and TPP represent different concepts and rules systems. The former is aimed at maintaining the manufacturing industrial chain and focuses on the commodity trade while the latter covers a wider range and applies higher standards to serve the interests of developed economies. The mutual participation may generate even more contradictions between China and the US. Besides, the RCEP is led by ASEAN rather than China.
Another suggestion is that China and the US should begin talks on a bilateral China-US Trade Investment Agreement. This is also impractical, given the current situation. The two countries are pointing fingers at each other over Internet security. This alone poses an enormous obstacle for investment and trade. There are also huge differences between both countries’ economic structures. Filling in the gaps calls for the injection of huge amounts of resources.
A more practical thing to do is to open an obstruction-free channel for dialogue, through which both countries can use anticipatory diplomacy to enhance mutual trust. When addressing the Boao Forum for Asia in 2014, Chinese Premier Li Keqiang said: “China is open to TPP. So long as it is beneficial to the development of world trade and to the maintenance of a fair and open environment for trade, China is happy to see it succeed.”