BY CHANDRAN NAIR
The Trans-Pacific Partnership (TPP) could be the world’s biggest trade agreement. But it is coming under increasing suspicion. At the East Asia World Economic Summit in Jakarta this week, Cambodian Prime Minister Hun Sen raised this question when he spoke at the opening:
“There are 10 Asean countries. Why does the TPP include only some of them and leave out the others?”
At the moment, the 12 countries involved in negotiations – the United States, Japan, Brunei, Malaysia, Vietnam, Singapore, Australia, New Zealand, Canada, Mexico, Chile and Peru – account for 40% of the world economy and one third of world trade. It should be noted, however, that the US and Japan alone make up almost 30% of the world economy, with the other four Asian members accounting for barely over 1%.
Yet, setting aside the question of whether the world needs another overhyped trade agreement, it is clear the TPP is not the “ambitious, 21st century trade agreement” its proponents claim it is. Rather, it is in danger of becoming a throwback to 20th-century geopolitics, in which Western powers made the rules and everybody else played by them.
Much has already been made of the fact that China has not taken part in the negotiations, which many see as a move to “contain” it. But just as important is the fact that the treaty is being negotiated on a piecemeal basis with individual countries, even as its companion treaty, the Transatlantic Trade and Investment Partnership (TTIP), is being negotiated between the US and the European Union as a bloc. Only five Asian nations have participated formally in the negotiations, of which American ally Japan is the only major economy.
Defenders of the TPP have argued that no country is “excluded” from it; an interested nation needs to only apply and meet the requirements. But this is clearly quibbling over semantics – what serious Asian trade agreement would start by leaving out almost 95% of Asia’s population and the world’s largest trading nation? Unless, of course, it is less about trade and more about recreating the geopolitics of a bygone era.
As economic influence continues to shift from West to East, it behooves not just Western, but also Asian leaders to start behaving as such, rather than reinforcing the outmoded ideas of the last century. 2015 is the year when Asean has stated it will establish an Asean Economic Community (AEC). It is thus the perfect opportunity for Asean to step up and begin to negotiate entry into the TPP as a bloc. This would ensure that no divide-and-rule politics rear their ugly head in the early days of the AEC. It also allows Asean nations to ensure they are equal economic partners in the process.
It should be said that all of Asean is already in negotiations for another trade agreement, the Regional Comprehensive Economic Partnership (RCEP), which also includes China. Yet despite what some say are the RCEP’s less onerous requirements, its importance pales in comparison to the TPP. The RCEP excludes the US, therefore removing a full 22% of world GDP and the less tangible influence American membership in a treaty brings, and shows no sign of being implemented any time soon. Talks have been in progress since 2011 with no clear end date in sight.
China’s favoured initiative, the more ambitious and significant Free Trade Area of the Asia-Pacific (FTAAP) is even further off. China restarted it at last year’s Apec (Asia-Pacific Economic Cooperation) with a target completion date of 2025, though this has now later dropped.
Of course, it goes without saying that the nations within Asean will have different economic and political goals, but this is no less true for the EU. And negotiating a version of the TPP agreement that (mostly) satisfies all parties involved, rather than just a few, will create a far more effective framework in the long-run, not to mention promote the increased transparency and efficiency that is the goal of the TPP in the first place. By using its current tactic of negotiating with individual nations, the US may very well manage to push through a favourable agreement for itself with a few of them, but it will win few allies in the process.
As it stands, the TPP is “seen in much of Asia as designed for the benefit of US corporations”, said Mr David Pilling, Asia editor of the Financial Times. Many in the US see it this way as well, including leading US economist Tyler Cowen, who agrees with his fellow economist Paul Krugman that the TPP would be of marginal economic benefit to the US but is important because it ensures a “deal happens on American terms” and not Chinese.
There is no better way to address this issue than for Asean to consider joining as a bloc and for the negotiations to be conducted transparently, with all of the involved parties rather than just a few. Exclusion has rarely been an effective method for building trust.
Here, Japan, America’s strangely silent ally on the TPP, could play a critical role. There can be no doubt in the minds of realists in Japan that its subservient post-war relationship with the US cannot be maintained in the 21st century. Japan could gain more by leading an effort to get Asean as a bloc to join the TPP negotiations. Japan, which has long ties with Asean nations through decades of being the dominant economic power, will win many friends and perhaps even an approving nod from China.
In other words, Asean, and Asian leaders more generally, cannot expect the US to simply hand them what they want on a platter, no matter how much it might be mutually beneficial to do so. Inaction now would likely result in their sleepwalking into a situation in which the region is split between different camps, which would leave everybody worse off.
If Asean leaders truly want the regional influence they talk about so frequently, they must work together and take the necessary action to prove they deserve it. There is no better platform than the TPP negotiations to do so.
The writer is chief executive of the Global Institute For Tomorrow, a think-tank based in Hong Kong. This article was originally published in The Straits Times. To bring Chandran into your organisation for a learning session or talk, email email@example.com for more details.
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