Trans-Pacific Partnership: It’s not just about secrecy, it’s about countering China

by Chris Zappone

The US has finally stated the real urgency behind an agreement on the much-loathed Trans-Pacific Partnership: China.

Comments by US Trade Representative Michael Froman, which originally appeared in a Bloomberg story but were referenced from the Wall Street Journal (deep behind a paywall), quoted Froman as saying about the TPP:

‘‘We’re not the only ones out there,’’ Froman said…citing other trade deals emerging in Asia that include a prospective pact among China, Japan and South Korea. ‘‘The question isn’t whether we’re going to open these markets or we’re not. It’s, we’re either going to open them on our terms or they’re going to be open on other people’s terms.’’Froman said it’s ‘‘infinitely better’’ for the U.S. to be involved to help set standards and trade rules in Asia.

And he may have a point there. The TPP is designed to counter the influence of Chinese state-owned-enterprises on global trade. SOEs are the messy combination of China’s government and big business. The Chinese themselves want to reform them and better separate private business from government influence. It’s a big question whether they will be able to.

The pressure is on for the US. Because the Chinese are pushing yet another free-trade deal, the Regional Comprehensive Economic Partnership, that would come with a lot fewer labor, health and environment requirements. It would be much more accomodating to the Chinese view of business.

Yet, there is also chatter about China actually supporting the TPP and using it as a crutch/incentive for its own painful internal reforms of its SOEs and various unproductive sectors of its own economy. Basically, like they did with the WTO and we all know closely China observes the rules of the WTO particularly in the areas of intellectual property.

For the US, the TPP is designed to be a large part of the “rules-based order” central to the US vision of the Asia “Pivot.”

Unfortunately, the Trans-Pacific Partnership agreement discussions have run into opposition from Western good-governance groups and NGOs over the opacity of the negotiations and the threat to digital rights and drug pricing schemes, not to mention sovereignty issues for courts.

If the rules the TPP is founded on are fair, and not a sweetheart deal to big corporations which, lets face it, have been the biggest civil disobedient in the West in recent years, then the TPP would be a positive development for Asia and for the world.

The TPP could potentially build a framework around a dynamic area and prevent the more kleptocratic elements of Chinese business and political culture from becoming a regional and global norm. It’s really a question of which side can reform more quickly the US or China. And whether the region will move in a rules-based legal direction or more of a Chinese-styled status-based direction.

We’ll see. But the clock is running down on the self-imposed deadline for Obama. And Congress is reasserting oversight over trade, too.