A stalled TPP bad news for lib­er­al­iza­tion

This might re­sult in sim­i­lar pro­tec­tion­ist views af­fect­ing other trade agree­ments be­ing ne­go­ti­ated else­where in the world.

China Daily (USA) - - VIEWS -

The prospects for the pas­sage of theUS-led 12-na­tion Trans-Pacific Part­ner­ship agree­ment by theUS Congress look bleak. BothUS pres­i­den­tial can­di­dates, Hil­lary Clin­ton and Don­ald Trump, are crit­i­cal of the TPP. AlthoughUS Pres­i­dent Barack Obama will try hard to get the TPP rat­i­fied be­fore leav­ing of­fice, the cur­rent anti-trade po­lit­i­cal sen­ti­ment in theUnited States makes the task ex­tremely dif­fi­cult for the Obama ad­min­is­tra­tion.

If the Congress does not pass the TPP dur­ing Obama’s term, the nex­tUS pres­i­dent will have to take it to the Congress. And no mat­ter who the next pres­i­dent is, he/she is likely to pro­pose ma­jor re­vi­sions to the cur­rent TPP agree­ment. But re­vis­ing and rene­go­ti­at­ing the agree­ment will be very dif­fi­cult. The other TPP mem­bers are un­likely to agree to rene­go­ti­a­tion as they have al­ready worked on achiev­ing do­mes­tic po­lit­i­cal con­sen­sus be­fore agree­ing to the TPP. Fur­ther rene­go­ti­a­tion on any is­sue prompted by shifts inUS in­ter­ests would cre­ate new­po­lit­i­cal chal­lenges for other TPP mem­bers. As a re­sult, the TPP may get stalled in­def­i­nitely.

The fail­ure of the TPP will have sev­eral im­pli­ca­tions. The agree­ment was widely pro­moted as a 21st cen­tury gold-stan­dard trade agree­ment. It is prob­a­bly the most ex­haus­tive trade agree­ment drafted so far with more than 5,000 pages and 30 chap­ters. It in­cludes many is­sues that are hardly dis­cussed at the­World Trade Or­ga­ni­za­tion and are ab­sent from most bi­lat­eral and re­gional free trade agree­ments such as la­bor and en­vi­ron­men­tal stan­dards, gov­ern­ment pro­cure­ment rules, e-com­merce and in­vestor-state dis­pute set­tle­ment.

By mak­ing do­mes­tic reg­u­la­tions of mem­ber coun­tries as iden­ti­cal as pos­si­ble for en­sur­ing free move­ment of goods, ser­vices, cap­i­tal and peo­ple within the TPP group, the agree­ment is aimed at set­ting new­stan­dards for global trade gov­er­nance. The fail­ure to im­ple­ment such an agree­ment would im­ply the lack of suc­cess of trade pol­i­cy­mak­ers to con­vince all stake­hold­ers about the benefits of a high-class trade agree­ment. It would also mean a global set­back for free trade, be­cause pro­tec­tion­ist prop­a­ga­tors op­pos­ing the TPP would suc­ceed in their ob­jec­tive. This might re­sult in sim­i­lar pro­tec­tion­ist views af­fect­ing other trade agree­ments be­ing ne­go­ti­ated else­where in the world.

Along with the TPP, an­other ma­jor trade agree­ment— the Transat­lantic Trade and In­vest­ment Part­ner­ship be­ing ne­go­ti­ated by the US and the Euro­pean Union— has also run into prob­lems. The TTIP talks ap­pear to have failed with the US and EU be­ing un­able to agree on sev­eral is­sues. The fail­ure of the TTIP and TPP, both led by the US, is a ma­jor blot on the US’ abil­ity to pro­vide lead­er­ship to global trade. For sev­eral years, the US has been pay­ing less at­ten­tion to theWTO and de­vot­ing more en­ergy to push­ing trade lib­er­al­iza­tion through mega-trade agree­ments like the TPP and TTIP. It is not clear whether the lack of suc­cess with these agree­ments will prompt the US to re­turn to theWTO with greater vigor for push­ing an in­clu­sive mul­ti­lat­eral trade agenda.

The TPP would have sig­nif­i­cantly changed the re­gional eco­nomic ar­chi­tec­ture of the Asi­aPa­cific. Its fail­ure might also af­fect the Re­gional Com­pre­hen­sive Eco­nomic The au­thor is a pro­fes­sor at and as­so­ciate dean of the In­sti­tute of In­ter­na­tional Stud­ies, Fu­dan Univer­sity. Part­ner­ship. The 16-mem­ber RCEP, apart from large emerg­ing mar­kets like China, In­dia and In­done­sia, which are not in the TPP, has sev­eral mem­bers com­mon to the TPP from the Asia-Pacific. The stalling of the TPP would make the RCEP mem­bers much more cau­tious about push­ing trade lib­er­al­iza­tion given the po­lit­i­cal back­lashes such at­tempts might pro­duce. This might re­sult in the RCEP set­tling for un­con­tro­ver­sial and min­i­mal lib­er­al­iza­tion, which would hardly make the agree­ment more mean­ing­ful than the trade deals that al­ready ex­ist in the re­gion. And the re­gion as a whole might also step back from im­ple­ment­ing an ag­gres­sive agenda for free trade till the po­lit­i­cal out­look for trade im­proves. The au­thor is a se­nior re­search fel­low and re­search lead (Trade and Eco­nomic Pol­icy) at the In­sti­tute of South Asian Stud­ies in the Na­tional Univer­sity of Sin­ga­pore.


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