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2 Asia's
free-trade bandwagons to
nowhere By Peter Lee
The United States has declared that its
Trans Pacific Partnership free trade zone is not a
vehicle for the economic isolation and containment
of China.
Per Reuters:
US-led talks on a free trade pact in
the Asia Pacific region are not an attempt to
economically contain China ... "This is
absolutely not a negotiation that's directed at
China," Deputy US Trade Representative Demetrios
Marantis said … [1]
And, straight from
USTR chief Ron Kirk:
The United States "would love
nothing more" than to have China join the pact,
Kirk said. [2]
If this is truly the
case, the TPP does not look like a very good
deal for America's
partners and China is wasting its time promoting
the ASEAN + (China and every other Asian power)
free trade zone, the RCEP or Regional
Comprehensive Economic Partnership.
Although the details of the TPP
negotiations are secret, the basic outlines of the
deal appear to be clear: participating states are
supposed to level the economic playing field to
America's satisfaction and in return obtain
privileged access to the markets of the United
States and other TPP members.
In other
words, tariffs on 11,000 line items will be
eliminated if participating states do away with
trade barriers and subsidies, fully open their
markets to foreign providers of goods and
financial and other services, and undertake to
smite the pirates of intellectual property with
merciless vigor.
Tearing down their
protectionist barriers might make sense for many
of the smaller states if they got a tariff
advantage over China in return.
But
if the People's Republic of China eventually joins
the TPP, the club is so big that membership is
essentially meaningless. China would compete on
the same terms as everybody else, just as it does
today under the US Most-Favored-Nation and WTO
regimes. To be frank, despite Kirk's
stated enthusiasm, prospects for the People's
Republic of China joining the TPP negotiations are
not good. According to the unique structure of the
TPP, the nine original participants have veto
rights over who gets to participate in talks to
join the club.
That means that Vietnam,
locked into a antagonistic zero-sum tangle with
the PRC over economic, maritime, and security
issues, can blackball China from the proceedings.
Therefore, in the event that the TPP
becomes the governing document of the Pacific
economies, perhaps a trade bump at China's expense
is possible.
However, that case is not
being made, at least not publicly.
Given
the unwillingness to declare openly that the TPP
is, by design, a China-free zone, and the United
States will structure its tariffs to enable its
plucky Pacific allies to eat China's lunch in the
US market, there is no significant trade benefit
to announce.
In any case, even with an
implicit no-China orientation, the TPP seems to
promise little trade upside for the United States
or the Pacific partners, many of whom already
enjoy preferential free trade relations with the
US and each other.
Public pronouncements
concerning the expected economic benefits of the
TPP are remarkably vague, along the lines of "Asia
is the fastest growing economic region in the
world," a rising tide lifts all boats, blah blah
blah.
The smaller Pacific nations will, in
this case, have sacrificed their sovereign
defenses against intensely competitive
multi-nationals (and their armies of lawyers, who
will become ubiquitous figures in the courts of
TPP nations if the pact goes into effect) in
return for…
…in return for what is not
abundantly clear.
To a significant degree,
the TPP looks like a public relations exercise by
the United States, designed to put some economic
meat on the bones of its Asian pivot.
Negotiations are secret. Negotiations are
a mare's nest of national interests and conflicts
between the TPP principles the US is now promoting
and the preferential deals it previously cut in
various free trade agreements. The US strategy
seems to be to punt difficult questions down the
road and encourage countries to sign on to the
initiative, creating momentum for the pact and
setting up a series of all-or-nothing votes at the
politically most advantageous moment.
Logrolling and arm-twisting have their
place as well, if the publicly-reported travails
of Canada are any guide.
Canada's Prime
Minister Stephen Harper belatedly decided that he
wanted to join the TPP negotiations in the summer
of 2012. According to one version of events, he
decided it would be easier to promote his
deregulatory agenda against his own country's
agricultural industry if he could do it under the
cover of TPP compliance.
It is clear that
the process of securing a place at the TPP table
was not the finest hour for Canadian diplomacy.
As Michael Geist reported in the Vancouver
Sun:
Given Canada's late entry into the
TPP process, the US was able to extract two
onerous conditions that Prime Minister Stephen
Harper downplayed as the "accession process."
First, Canada will not be able to reopen any
chapters where agreement has already been
reached among the current nine TPP partners.
This means Canada has already agreed to be bound
by TPP terms without having had any input. Since
the TPP remains secret, the government can't
even tell us what has been agreed upon.
Second, Canada has second-tier status in
the negotiations as the US has stipulated that
Canada will not have "veto authority" over any
chapter. This means that should the other nine
countries agree on terms, Canada would be
required to accept them. [3]
The nine
worthy states to whom Canada has surrendered its
Pacific destiny: The United States, Australia,
Brunei, Chile, Malaysia, New Zealand, Peru,
Singapore, and that democratic and free market
powerhouse and beacon of human and labor rights,
Vietnam.
We can assume that Mexico, which
signed on about the same time as Canada, got the
same deal, and will also be negotiating with the
United States - instead of picking up the phone to
lobby the Sultan of Brunei or the President of
Peru - to advance its views in the TPP
discussions, giving Washington the whip hand in
shaping the TPP agenda.
It is also safe to
assume that Canadian prime minister's agreement to
"be bound by TPP terms" negotiated by the group of
nine is not absolute, and contingent upon
ratification by the Canadian legislature.
From the point of view of TPP proponents,
the ideal scenario would presumably involve
painless ratification of the pact by a critical
mass of sympathetic states, thereby creating an
anxious "we can't afford to be left out" stampede
by less-enthusiastic foot draggers.
A
secret document prepared for a Canadian deputy
minister of international trade to help lobby the
United States for an invitation to join the TPP
highlighted the advantages of unified control of
the executive and legislative branches by Harper's
party - and the prospect for a smooth ratification
- as a key selling point for gaining Canada's
participation in the grouping:
"Canada is seeking entry into the
TTP negotiations as soon as possible," say the
documents. "Canada is an ambitious partner that
can keep pace with these negotiations. We have a
majority government that is ready, willing and
able to make decisions." [4]
The TPP
will need more than a little luck and cheerleading
from pro-business governments to succeed.
The main political flaw of the TPP appears
to be that, while it pays lip service to the trade
advantages to exporters, it is laser-focused on
securing the legal and economic rights of
multi-national corporations, many of whom claim
the United States as their base of operations.
From what we know of the TPP, it is a
profoundly pro-business document, even more than
it is a pro-trade document, prepared with little
public input but with the full participation of
the affected US industries. This invites the
expectation that the corporate sector will be
deploying its unmatched financial, political, and
media assets into the debate on the side of the
TPP.
Nevertheless, corporate interests are
not omnipotent when it comes to partisan politics.
Efforts to finesse the immense and immensely
complicated TPP agreement through national
legislatures will probably fall victim to numerous
political obstacles.
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