Picture Credit: Two track bicycle & pedestrian bridge at Melkwegbridge, Purmerend, Netherlands
As the Trans-Pacific Partnership (TPP) has now died finally after a decade-long push, a sincere effort should be made by the new Trump Administration to engage bilaterally with our trading partners, incorporate elements of trade pacts that are in our national interest, and look to incorporate trade policies that will allow the U.S. capital, education and knowledge infrastructures to get a much needed upgrade. A two track strategy will allow these objectives to be accomplished. Rather than conducting trade negotiations through media fear-mongering, Professor Larry Crump of Brisbane University explored ways to enhance the two-track trade process by harmonizing multilateral negotiations sponsored by GATT/WTO based on evolving rules grounded in non-discrimination and bilateral and regional negotiations between nations that reduce trade barriers on a reciprocal and preferential basis.
Harness the Best Lessons of the Past Multilateral Agreements
In October, President Obama hailed the proposed Trans-Pacific Partnership (TPP) as “the most progressive trade deal in history.” Yet, under TTP, foreign corporations would be empowered to drag the U.S. government in front of investor-state dispute settlement (ISDS) tribunals composed of three private arbitrators. Many ISDS arbitrators are lawyers who rotate between suing governments for corporations and acting as the “judges.” In a November 2016 Policy Brief, the Council of Economic Advisers lobbied that, in 2015, the United States shipped $680 billion dollars of goods and $184 billion in services exports to the 11 other countries who participated in negotiating the TPP which President Obama just abandoned. And only three Republicans, Senators Session, Lee and Lankford, admitted to even reading it! Senator Sessions wrote about the TPP “Living Agreement” provision in his “critical alert” to Capitol Hill members warning about the sovereign state abdication it embodies- “the ‘living agreement’ provision means that participating nations could both add countries to the TPP without Congress’ approval (like China), and could also change any of the terms of the agreement, including in controversial areas such as the entry of foreign workers and foreign employees. Again: these changes would not be subject to congressional approval.”
Just before Thanksgiving, in presenting his agenda for his first 100 days in office, President-elect Trump declared his intention to withdraw the U.S. from the TPP, a step already taken by a number of Asian nations. And China, which rejected the TPP, quickly filled the void by promoting its Regional Comprehensive Economic Partnership (RCEP) trade pact., Originally promoted by Japan, RCEP sought to form the world’s biggest free trade agreement and China has dominated the nine rounds already conducted: the scope includes 46% of global population, a combined GDP of $17 trillion, and 40% of world trade encompassing the ten ASEAN nations plus China, Japan, South Korea, India, Australia and New Zealand. U.S. trade interests were just undermined in the Asian-Pacific Economic Cooperation (APEC) summit in Lima, Peru where Peru, Chile and Japan signed on publicly! Pepe Escobar at Asia Times Online and the Financial Times explains that, “RCEP is also the fulcrum of the Free Trade Area of the Asia-Pacific (FTAAP) – a concept that was introduced at an APEC meeting in Beijing by, who else, China, with the aim of seducing nations whose top trade partner is China away from entertaining TPP notions.”
Free or Fair Trade?
Where, in fact, has been anyone advocating for American business or workers? The TTP epitaph is thus:
Like most recent international economic agreements, the TPP only glancingly resembles a classic trade deal, concerned mainly with tariffs and quotas. Rather, like the WTO agreements or NAFTA, it is an attempt to set the rules of the global economy to favor multinational corporations over everything else, trampling on democracy, national sovereignty and the public good. The more than 600 corporate lobbyists who had access to the draft texts used their insider status to shape the deal, while labor unions, environmentalists and others offered testimony from outside, with little impact. Like most post-World War II trade deals, the TPP also has a strategic political goal: tying as many countries as possible to the United States as trade partners—often under terms unfavorable to the average American worker—in order to win political support against anyone seen as a rival to the American economic model.
NATO member Turkey is now seeking to join the Shanghai Cooperation Organization (SCO), consisting of China, Russia and four Central Asia nations (Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan), and Escobar explains how sweeping the trade alignment against the West has become. “Over the years, the SCO has evolved much further – into an Asia integration/cooperation mechanism. India, Pakistan, Iran, Afghanistan and Mongolia are observers, with India and Pakistan to be admitted as full members arguably by 2017. The SCO is progressively interlocked with OBOR, EEU, China’s Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) and even the BRICS’s New Development Bank (NDB).”
So, a Trumpian Washington is better served by engaging Asian nations in bilateral trade pacts which could, in fact, be a better means of resetting the agreements that have left the U.S. with a staggering $4T trade deficit over the eight years of the Obama Administrations. Professor Larry Qiu, of Hong Kong University’s School of Economics and Finance, explained that globalism has created myriad distortions; he exclaimed to Fortune that “what the world needs is not more trade and investment … but higher quality and better ordered trade and investment.”
Opportunities for Fair Trade and Enhanced Relationships Exist
Now, Canada, the United Kingdom and China itself see a trade shift by the U.S. as a potentially positive development.
- Derek Burney, Canada’s former ambassador to the US, and global security expert Fen Osler Hampson argued that Trump’s stance on free trade could present itself as an opportunity for Canada.
- Deanne Julius from the Bank of England Monetary Committee suggests a two trade approach is entirely reasonable in the wake of Brexit.
- Zhang Yansheng, chief researcher for the Institute for International Economics Research at China’s National Development and Reform Commission told Fortune, “Maybe under the new economic policies issued by Trump, more Chinese companies will enter American market.”
The incoming Trump Administration needs to look a trade promotion realistically – 45% tariffs will not work- but a trade rebalancing on a bilateral basis is critical now. With the overt currency manipulation of the yuan by China and panic devaluations and OPEC deals by Mexico and Venezuela, the efforts to precipitate a trade war are not acceptable. A NAFTA rewrite is overdue and Mexico already is conducting “stress tests” on what happens to its banking system when black money flows across borders are sharply curtailed…