The second round of the US Democratic Party primary
debates, which ended on July 31, 2019, sent a clear message on
the Trans Pacific Partnership (TPP). There were strong convergences between the
views of nearly all of the Democratic Party’s presidential candidates and that
of US President Donald Trump.
During the debate, Joe Biden who served as Vice President under Former US President Barack Obama and is considered part of the Washington DC elite, stated that the TPP in its current form was unacceptable and if elected as President, he would only make the US join the agreement if parts of it are “renegotiated”.
Washington DC based think-tank Council for Foreign Relations (CFR) conducted a survey ahead of the debate to which seven candidates responded. Six of them: Senator Bernie Sanders, Senator Cory Booker Mayor Pete Buttigieg, Sen. Kirsten Gillibrand, Rep. Tim Ryan, and author Marianne Williamson, vehemently opposed the TPP. Bernie Sanders, who lost the Democratic primary to Hillary Clinton in 2016, made the point that the trade agreement was “disastrous” and would not help in bringing back even one job, which had been “outsourced” to China.
Only one candidate, John Delaney, unequivocally supported the TPP. He argued that there were adequate safeguards of American interests and labor, and environmental standards were included as well. Delaney made the point that the US could not isolate itself from Asia and the rest of the world.
One of the first steps which Donald Trump took after taking over as President was to pull the US out of the TPP agreement. During his election campaign, Trump had dubbed this agreement as a “potential disaster” for the US. After the US withdrew from the agreement, he said that the step was taken in the best interests of American workers. The US President instead batted for bilateral deals; for instance, Japan and the US are both working towards finalizing a trade deal at the earliest. Interestingly, one year after pulling the US out from the TPP, the US President tweeted that he could re-consider if it was fairer to the US. In his tweet, Trump pointed out that US already had bilateral trade deals with 6 of the 11 nations which were part of the agreement.
Pulling out of the TPP sent the wrong signals to a number of US allies like Japan and Singapore, but Trump was emphatic in his stand. The agreement went ahead with the other 11 members and was re-named Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP). It has been ratified by 7 members: Australia, Canada, Japan, Mexico, New Zealand and Singapore and Vietnam. If implemented by 2030, the CPTPP could lead to annual global income gains of a staggering USD 157 billion.
Members of the CPTPP met in January 2019 at Tokyo. They batted for an inclusive, rules-based trading system, while being open to new members. This agreement will cut down tariffs amongst 11 countries which contribute an estimated 14 percent to global growth. In the month of February 2019, beef imports from Canada soared to 14,403 tons, not far behind US’ 14,599 tons. This was an increase of a whopping 120 percent from the previous year. During Japan Prime Minister Shinzo Abe’s Canada visit, both Abe and Canada Prime Minister Justin Trudeau praised the CPTPP. Implementation of CPTPP has only added to the woes of US farmers as they have also suffered heavily as a result of the China-US trade war.
CPTPP is not only about US losing out. Vietnam has benefited immensely. In the first two months of 2019, the Southeast Asian country’s exports to Canada were estimated at over USD 500 million, an increase of a whopping 36 percent over the same period in 2018. Vietnam’s exports to Japan for the first quarter of 2019 were estimated at USD 4.62 billion, an increase of over 6 percent from the first quarter of 2018.
The campaign for the US 2020 election will be
watched closely by China and US allies. The stand on crucial geo-political,
economic and social issues will also give an idea of whether the narrative of
2016 still has resonance.
The campaign for the US 2020 election will be watched closely by China and US allies. The stand on crucial geo-political, economic and social issues will also give an idea of whether the narrative of 2016 still has resonance.
Interestingly, one of the main propelling factors for the TPP was a desire on Obama’s part to check China’s growing clout, especially as a result of the Belt and Road Initiative, in the Asia-Pacific region. The TPP was an important component of the “Pivot to Asia” vision, dubbed by many as one of the “hallmarks” of Obama’s foreign policy. Obama, who was more inward looking than earlier Presidents, argued in an op-ed penned in May 2016 that this agreement would benefit American workers, since it would provide more markets and prevent tariffs. In the op-ed, Obama also argued that US must play a more pro-active role with regards to the rules of the global order. He said, “The United States, not countries like China, should write them. Let’s seize this opportunity, pass the Trans-Pacific Partnership and make sure America isn’t holding the bag, but holding the pen.”
After the US withdrew from TPP in 2017, signatories including Australia suggested that China should join the TPP. Former Australian PM Malcolm Turnbull remarked, “There is the potential for China to join the TPP.” While Beijing is opposed to the TPP, there are arguments in favor of China joining the agreement. A report by a Beijing based think-tank in 2019 stated that US absence from the bloc provided an important “window” to China. Other signatories such as Singapore is in favor of China joining the agreement. Some of the importance provisions of the CPTPP, especially those pertaining to worker’s rights, market access, Intellectual Property rights and support to SOEs (state owned enterprises) will not be easy to comply to — at least in the short run. That is why the possibility of China joining the CPTPP in the near future is minute. There are those who argue that some of the requirements of the CPTPP are very much in sync with China’s vision for reforms, and believe that Beijing would benefit immensely by being part of CPTPP.
Looking at the domestic politics of the US, the TPP issue clearly reiterates the divide not just between Republicans and Democrats but between the Democrats themselves. In the previous election, Sanders had taken a firm stand against TPP. Even Hillary Clinton, who had served as Secretary of State under Obama, had been compelled to oppose the agreement. While the narrative in the US has changed in the Trump era, it remains to be seen whether domestic lobbies realize that they have not benefited from Trump’s policies, and while globalization has its flaws, isolationist and protectionist policies will hit US businesses.
While Trump recently stated that countries like Iran and China were looking forward to working with a Democrat President, the truth is that an insular, inward looking America suits Beijing. Beijing certainly would not mind Trump’s withdrawal from important agreements as well as US discord with key allies over crucial strategic issues, as these had benefited China. Beijing had also been astute in making the right noises at international platforms with regard to globalization. At Davos for instance, Chinese President Xi Jinping, while agreeing that globalization was a double-edged sword, lashed out at protectionism and stated that the global economy was a big ocean. He said, “Any attempt to cut off the flow of capital, goods, and people between economies, and channel the waters into the ocean back into isolated lakes and creeks is simply not possible.”
Due to Trump’s unpredictability, a number of countries including Japan have sought to improve ties with China. In Australia, which imposed a ban on Huawei (and were one of the few countries which was unequivocal in its opposition to the same), more citizens (30 percent) believe that Xi would do the right thing as opposed to Trump (25 percent).
In conclusion, the campaign for the US 2020 election will be watched closely by China and US allies. The stand on crucial geo-political, economic and social issues will also give an idea of whether the narrative of 2016 still has resonance. While farmers lobbies as well as businesses have realized the limitations of Trump’s simplistic approach towards issues of immense importance, the US President’s support in certain constituencies seems intact.