The TPP: Right Or Wrong?

November 20, 2016

Tags: TPP, RCEP, Pacific Trade Agreement



Does your brain trying to figure out the plus and minuses of the TPP? I mean the Trans-Pacific Partnership deal that the Obama administration supports and Trump rejects. You're not alone.

Here is a breakdown. The TPP is a trade agreement among eleven countries of the Pacific. Pacific trade is the most vital in the world.

In the words of the China specialist, Gordon Chang, the issue is not the lopsided benefits of tariffs, dumping and currency manipulation. These can be negotiated.

The question is: Whose vision of Pacific trade will prevail, Washington's or Beijing's.


The problem is: while geopolitics would suggest that the TPP is a good thing, the view on the ground, the local issues, say that the TPP would have negative consequences.

On the good side: Washington's TPP, at the moment, leaves China out. China had the chance to join almost a decade ago and declined. It has suggested its own regional trade alliance, the Regional Comprehensive Economic Partnership, RCEP.

The RCEP, which leaves the U. S. out. This is a trade policy similar to the military policy of attempting to crowd the U. S. Navy out of the Western Pacific in regard to the South China Sea. It counters the post-World War II regional order that has provided stability in the Pacific for seventy years.

To quote Chang:

"The truth is that China’s leaders know their country has to remain outside the TPP because they cannot sign onto the “high standards” that are incorporated into the structure of the pact. Even if China could somehow meet labor, food safety and environmental rules, it would have to adhere to restrictions on the business activities of state enterprises, which would mean a fundamental change in the Chinese economic model and permit wider internet access, which would strike at the heart of the Communist Party’s quasi-monopoly on information.

Furthermore, China would have to further open its services sector. At the moment, Beijing cannot even agree to allow investment in a few protected areas, which has stalled agreement on the long-awaited Bilateral Investment Treaty with the U.S."

Would the reforms be good for China? China had to accept the rules for entry into the World Trade Organization and these were beneficial. Would the new requirements be good for China? Probably. Given that Xi has the massive task of fixing the SEOs, the state-owned enterprises, with the dislocation that comes with reform, will he liberalize now? Is it possible to liberalize now?

I am bothered by the post of Doctors Without Borders. They say that the TPP will have disastrous consequences for affordable medicines because of the patent provisions.

This writer sincerely hopes that President-elect Trump will review the geopolitical implications of the TPP, and negotiate any unfairness, such as access to markets and currency manipulation, rather than scrap the deal. Fix it, don't dump it.

http://nationalinterest.org/feature/tpp-vs-rcep-america-china-battle-control-pacific-trade-14021