The Trans-Pacific Partnership looks increasingly doomed – and possibly with good reason

Not only is US congress reasserting its right to oversee an agreement whose details have been kept secret from it but the period of trade deal mania may be passing. That’s because the period of globalization may be drawing to an end. Sure, global trade continues. But there is a Balkanization going on. Russia and China are drifting further from Western trade institutions. The China-Japan tensions are likely to have a lasting effect on East Asian trade. As Russia’s economy falters its reliance on coercion grows. At the same time, the US is looking decidedly inward, after the post-9/11 age. In this climate, the value of trade deals remains dubious. And as US trade expert/globalization-scoffer Clyde Prestowitz elucidates on the TPP: 

“Congress is saying that free trade deals now truly have to be about trade and not about reassuring allies of U.S. commitment to them. No longer will Congress agree to buy allies with distorted and lopsided trade deals. The end of American hegemony will be mourned by many around the world and in America, but it is likely to be a very good thing for U.S. workers and the American middle class.”

Further, the WikiLeaks TPP leak shows how US corporates are fashioning a sweetheart deal for themselves in the area of IP trade negotiations. This group is already on the bad side of US citizens after decades of gaming the economy against them. Now companies want to have their legal wishlist enshrined in a pan-Pacific trade deal.

“The extent of this unbalanced influence and how it works can be seen in the contents of the leaks. The deal being proposed apparently includes measures like those contained in the Stop OnLine Piracy Act (SOPA) and the Protect Intellectual Property Act that have already failed once to achieve passage in Congress… Clearly what is afoot is that the non-transparent TPP talks are being used to make an end run around the Congress and the parliaments and publics of many countries to achieve far reaching special rights in the guise of free trade.”

It also raises an intriguing question: should the US look to trade as the best way to reassure allies in the region? Compare the trends emerging in the past three decades in the US and hold them up against what’s happening with China. In the US business has assumed a prime place in society since the time of Reagan. Even the Supreme Court has upheld corporations’ “right” to free speech. (Is this really what the American Revolution was about?) But now incomes in the US are dangerously unequal, thanks in large part to a system in which capitalism has effectively eroded democracy. China meanwhile is aggressively growing its economy and trying to find a balance between state control and some form of citizen’s right. Its economy is dangerously unequal, as well.

More crucially, China’s government relies on secrecy as a strategy. The more powerful it grows, the more uncertainty and ambiguity it can foist onto global affairs (We want peace with our neighbors/we want revenge on Japan-duality, etc). What the US can offer as a strategic counterbalance is transparency. The world craves it. But engaging in secret trade negotiations over the TPP runs counter to a long-term US strategy.

Even though business has essentially driven politics in recent years in the US, it’s likely that will the difficulties faced in the US economy, politics will move business. Obamacare is the biggest example of that. History runs in cycles and in the US, just as deregulation hastened the decline of the middle class, re-regulation in key areas may assist its restoration. This represents a switch from the concept of people as citizens, rather than people as consumers. In China, too, there is a tentative effort to embrace a kind of civil society (while cracking down on journalists- there is that duality, again).

In this period of reform on both sides of the Pacific, if the US wants to send a signal to non-China Asia, maybe the US should consider an agreement less about trade and more about codes of conduct in diplomacy and security with a measure of transparency. The last thing the US would want is to shackle citizens of Pacific countries with the kind of onerous trade laws that undermine their own rights. If the outlook for the TPP is uncertain, it could be because the agreement is founded on an already-dated understanding of how to achieve international influence.

Further, if war is possible, then US business is wrong to think it can piggy-back its needs onto the needs of the US as it contends with the turbulent region. How thoroughly 1995.

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

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.