Trump's repudiation of TPP leaves the ball in China's court
- By Tim Collard
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E-mail China.org.cn, November 30, 2016
U.S. President-elect Donald Trump's decision to pull out of the proposed Trans-Pacific Partnership (TPP) trade agreement was not entirely unheralded, but it turned a campaign promise very rapidly into a firm commitment. The TPP, agreed in outline last year following lengthy negotiations for an overarching regional deal, ran into opposition within the U.S. even before Trump's election, with opponent Hillary Clinton, formerly a supporter, turning lukewarm during the campaign.
U.S. non-participation does not entirely kill the deal - the Singaporeans stated as recently as November 20 that they still planned to sign the agreement - but it postpones any prospect of a comprehensive regional agreement for the time being. And certainly there is no further prospect of a new trade regime being established without China's participation.
China has not firmly thrown her weight behind any single option; President Xi Jinping, at last week's APEC summit in Lima, said that China was in favor of simplifying trade procedures to maximize trade volumes, irrespective of formal multilateral arrangements. It is, after all, businesses and enterprises which actually trade, not governments.
But the removal of TPP from the negotiating table cannot but focus some attention on a proposal which remains on the table: the Chinese-backed Regional Comprehensive Economic Partnership (RCEP), which has the ASEAN nations at its core, includes Australia and India, but - mirroring TPP's exclusion of China - excludes the United States. China hopes that RCEP negotiations can be concluded in the near future, but in view of the new situation China is unlikely to put all her eggs in the RECP basket; this was the sense of President Xi's remarks in Lima.
RCEP may indeed function as a nucleus for a wider association, a milestone on the road to a truly comprehensive Asia-Pacific Free Trade Area; but the important point is that the U.S. has now abdicated any claim to lead the shaping of such a deal, and China's recent active regional economic diplomacy makes it clear where the only possible source of leadership lies on this issue.
It is doubtful whether China could ever have engaged with the sort of trade regime the U.S. has been pursuing over the last few years. The TPP, and its parallel organization in the Atlantic region, the Transatlantic Trade and Investment Partnership (TTIP), contain some elements which are extremely controversial in many countries.
One of these is a proposal for a dispute resolution mechanism which amounts to a newly instituted court for settling differences between corporations and sovereign states, called "Investor-State Dispute Settlement." This would give corporations a platform to sue sovereign states for adopting policies which damage the "anticipated profits" of the foreign corporation.
I cannot imagine that such derogation from the sovereign rights of state governments could ever be acceptable to China. And, although China was at no point a party to the TPP negotiations, it is unlikely that she would be happy to see such arrangements prevailing in her own region or in the world at large.
The new U.S. president has no wish to withdraw completely from the shaping of trade arrangements in the Asia-Pacific reason. It is, however, likely that Trump realizes that his own election was partly due to a backlash against "establishment" overreach, in the field of international trading regulations among other areas. In this, Trump's election can be compared with the reaction against overreach and complacency which gave rise to the British people's decision to leave the European Union; and it is not impossible that the British example will be followed by other countries - leaving the EU with a choice between the radical reform it has always shied away from and dissolution. Both TPP and TTIP seem to be examples of large corporations and their international networks aiming at supranational power, undermining the capacity of sovereign governments to act in the interests of their own peoples.
This is not a question of China trying to enforce her own approach to international trade on the rest of the world. It is just that the West appears to have lost its way, just at the point at which China is ready to accept a larger role in the management and development of the global trading infrastructure. Also, in recent years it has been China who has drawn attention to the lack of a sustainable balance between the requirements of businesses to operate internationally with the minimum of obstacles and the rights and obligations of governments to ensure the welfare of their peoples - this was the subject of the recent World Internet Conference which China hosted.
It could be that China is ideally placed to lead the rebalancing act which is clearly needed in the governance of world trade. Perhaps Trump deserves thanks for taking a speedy decision, rather than allowing a futile negotiation to drag on; and the world awaits China's response.
Tim Collard is a columnist with China.org.cn. For more information please visit:
http://m.keyanhelp.cn/opinion/timcollard.htm
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