Trans-Pacific Partnership: A US entry to Asian integration
World Politics Review | 15 Mar 2010
Trans-Pacific Partnership: A U.S. Entry to Asian Integration
Sean Goforth
The United States is entering negotiations this week to join the Trans-Pacific Partnership (.pdf), a relatively unknown trade agreement that includes Brunei, Chile, New Zealand, and Singapore. The pact is perhaps humble in its origins, with the population of its largest member — Chile — less than 16 million at the time of its inception in 2005, and the group’s share of global GDP minute. But the TPP has quietly gained momentum over recent years and may come to serve as a free trade zone that incorporates large parts of both sides of the Pacific. In addition to the United States, three other countries — Australia, Peru, and Vietnam — will be sitting in on the membership talks being held in Melbourne, while Canada, Malaysia, and Mexico may initiate entry talks in the near future.
Free trade agreements have proliferated throughout Asia over the past decade. In 2000, there was only the loose ASEAN pact and APEC to speak of, with APEC — though foundering — being the largest. Today there are more than 150 in force that include at least one Asian nation, and another 50 or so are under negotiation. Among them, the TPP is both unique and promising, for two reasons. It is impressively comprehensive, calling on Chile, New Zealand, and Singapore to liberalize all goods — with a relatively small list of exclusions — over time, and Brunei to cut tariffs on 99 percent of products. And it is expressly open to new members, a rare feature.
The Asia-Pacific is already a large market for the U.S., with APEC economies accounting for more than $747 billion in exports in 2008. A working Asia-Pacific free trade deal would likely increase real wages in the U.S. by a bit more than 1 percent, according to a University of Michigan study. Conversely, a deal excluding the U.S. would mean the loss of perhaps $25 billion in exports immediately, according to Jeff Schott at the Peterson Institute for International Economics. That equates to sacrificing about 200,000 high-paying jobs.
Adding to the economic potential, such accords are of special importance in Asia. Given the region’s sharp distaste for joint security arrangements, shaping commercial ties has become the main staging ground for political influence.
China’s sway, in particular, has many in the region increasingly on guard. On Jan. 1, the China-ASEAN Free Trade Agreement went into effect, creating the world’s third-largest trade bloc, and China is now brokering a $10 billion fund that will invest in Southeast Asian infrastructure projects. The People’s Republic has already supplanted the United States as the largest trading partner for Australia, Japan, and South Korea, leading many to worry it is altering trade patterns in a way that "draws a line down the Pacific."
Singapore’s elder statesman Lee Kuan Yew has warned that the U.S. faces economic exclusion from Asia if it doesn’t act to counter China, referencing the TPP as a conduit for increased engagement. Australian Prime Minister Kevin Rudd has echoed the call, proposing a broadly inclusive Asia-Pacific Community — with U.S., Chinese and Russian participation — by 2020.
Their remarks indicate that more is afoot in the Pacific than simply fears of a Chinese takeover. The TPP represents a model of growth that spans both sides of the Pacific, as opposed to an alternative vision that espouses integration just within Asia. China, while not repudiating bilateral opportunities across the ocean, has become a backer of a regional model that excludes the United States and Taiwan. Japanese Prime Minister Yukio Hatoyama also seems keener for a more restrictive model (though he is in the awkward position of trying to advance integration within Asia while also trying to check China’s leadership). However, if an Asia-only model prevails, the more-developed nations — namely Australia, New Zealand, and Singapore — could find themselves swamped with cheap imports, while only gaining access to diminutive markets for their higher-value goods.
Of course, trade policy isn’t made in a political vacuum, and over the past few weeks domestic interests in the U.S. have begun to take aim at the TPP. A variety of agricultural trade groups, for instance, object to the increased access to U.S. markets the deal will offer New Zealander producers — especially Fonterra, a firm with a virtual monopoly on milk production there. Furthermore, Vietnam’s unsavory human rights record makes it an easy target for opponents of the deal.
In addition to the objections of the usual coterie of free trade adversaries, the American unemployment rate — currently hovering at 10 percent — represents another, perhaps more formidable political obstacle. In his State of the Union address this past January, President Barack Obama called for a doubling of exports over the next five years as a way to create 2 million jobs — but that remains a tall order, especially since Europe’s recovery may well trail that of the United States. The Asia-Pacific, though, is one place where there’s room for U.S. exports to increase dramatically, and a growing TPP would certainly help on that score. However, free trade deals are never an easy sell, and they become tougher still when the domestic jobs picture is bleak.
As it stands, the TPP is of slight benefit to the U.S. economy, especially because of existing bilateral trade agreements with Chile and Singapore — but it’s a benefit nonetheless, and its dividends will only compound if it enlarges. And should TPP talks presage a comprehensive trade policy that finalizes current bilateral pacts and/or breathes new life into the stalled Doha Round of global trade talks, there are likely to be enough winners to drown out the howls of protectionists.
One way or another, the Asia-Pacific is becoming more integrated. What remains to be seen is whether the United States will help itself to a piece of the action.
Sean Goforth teaches international political economy at Coastal Carolina University and blogs on Latin America for the Foreign Policy Association.
