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TPP Should be Inclusive

Nov 09 , 2015
  • Chen Yonglong

    Director of Center of American Studies, China Foundation for International Studies

After five years of intensive negotiations and hurried bargaining and scheming in the past few months, the 12 members of the Trans-Pacific Partnership have finally reached an agreement.

The Trans-Pacific Partnership (TPP) is a proposed trade agreement among 12 Pacific Rim countries, including the U.S. and Japan, with the purported goals of lowering trade barriers and promoting investment.

The United States and Japan are rejoicing and congratulate each other for the achievement, because from the perspective of trade alone, the TPP is said to be the most liberal, wide-ranging, and populous regional free-trade area with the biggest economic aggregate and most active trade activities in the present-day world.

Judging from messages from various sources, each party is calculating its own wins and losses, and to what extent it will contribute to GDP growth. Some people are chuckling to themselves for dominating future trade rule-making for the Asia-Pacific, even the entire world; some are reminding that China may be the biggest loser; some are complaining that it is unfair to small, poor nations; some have concluded that the TPP will change both the future order and pattern of world economy and trade.

It is really hard to tell whether the TPP is an innovative development of a regional free-trade area, or it has gradually evolved into a geo-political and geo-economic tool in the hands of a small number of countries since the US joined the negotiations. But the TPP has at least fully displayed two outstanding characteristics.

First, the TPP has more political tint, and thus bred exclusiveness. As the negotiations started, China had already become one of the world’s main trading powers, the volume of Sino-US trade had been rising continuously. China was not invited to participate in the TPP negotiations. Was it because the threshold was too high, or trade was not liberal or convenient enough in China? Yes, in some aspects, China lags behind the US; no, trade was more liberal and convenient in China than in most TPP member nations. The reason may be what President Obama had stated:  “We have to make sure America writes the rules of the global economy … because if we do not write the rules for trade around the world … China will.”  US Secretary of Defense Ashton Carter believes the TPP is more important than dispatching an additional aircraft carrier to the region. Official US statements have made it obvious that the TPP is one of the main pillars of US “rebalancing” to the Asia-Pacific, the geo-political and geo-economic goals and criteria of which are self-evident.

Second, the TPP lacks inclusiveness, and is thus not fair or rational. Diversity has been the most prominent contributor to the vigorous development of the Asia-Pacific, East Asia in particular, in the past few decades. With its emphasis on high standards and institutionalization, the TPP will very naturally weaken effectiveness, restraining the competitive advantages and rights of small and weak enterprises in most developing countries, even developed ones.  No wonder Nobel Prize winning economist Joseph Stiglitz commented that the US-dominated agreement would bring about manipulated trade, not free trade. The TPP may be a protectionist agreement in the disguise of high-degree free trade.

President Obama may or may not know clearly what a country China is. China’s attitude is open and transparent. China is a major trading power in the area, and worldwide. No exclusive agreement can contain China. No high standards can restrain China. It can only inspire China to further deepen reforms, open its doors wider, and work harder to innovate. China has blazed its own trail exactly in such manner. We will miss no opportunity to learn from the good. But we will surely let go the bad. We believe an inclusive, transparent, just, all-win world order entails concerted efforts by the US, China, and the rest of the world. It may not be that easy for the TPP, even combined with the TTIP, to stride over or supercede the WTO.

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