Tag Archives: RCEP

Pulling out of TPP: the first major foreign policy error of the Trump administration

The Trump administration today pulled out of the 12-nation TPP talks. (123rf / art1980)

Keeping a promise from his 2016 campaign, US president Donald Trump formally pulled the United States out of the Trans-Pacific Partnership today, a 12-nation trade and investment agreement in the works for nearly a decade.

Though the move will win plaudits from both the populist right and the anti-trade left (including Vermont senator Bernie Sanders, the former Democratic presidential candidate) Trump’s move is the first major unforced foreign policy error of the Trump administration. TPP opposition brings together an ascendant protectionist coalition that includes many of Trump’s populist supporters, but also many rust-belt and leftist Democrats and many organized labor officials.

In junking the US role in the TPP, a death knell for the trade accord, Trump has now cleared the way for the People’s Republic of China to set the baseline for trade rules across the Asia-Pacific region, negating hopes from the previous Obama administration to ‘pivot’ the country’s strategic and economic orientation toward the fast-growing region and backtracking on a decades-long bipartisan consensus that the United States takes an open and, indeed, leading approach to the ideal of free trade.

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RELATED: One reason for Americans to support TPP?
Absolving US sins in Vietnam

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Though the general terms of global trade will continue to be governed by the World Trade Organization, regional trade deals allow for countries to deepen trade ties in ways that go beyond the standard WTO rules and to develop strategic alliances.

Trump railed against the TPP from the earliest months of his presidential campaign, arguing that it gave China an unfair advantage:

The TPP is horrible deal. It’s a deal that was designed for China to come in, as they always do, through the back door and totally take advantage of everyone.

But China was never a signatory to the TPP and, indeed, was never party to the 12-country talks that also included stalwart US allies like Australia, New Zealand, Canada and Japan. The US national interest in negotiating and signing an agreement like the TPP would have been to create a trade paradigm in the region that seeks to help US interests in contrast to Chinese interests and, of course, to draw both traditional allies and new allies closer to the United States economically and strategically.

If anything, the TPP provided a framework to protect the United States from Chinese competition. To the extent that American manufacturing jobs have suffered as a result of international trade, and from trade with China, in particular, it has come from the decision in 2000 by a Republican Congress and Democratic president Bill Clinton to grant permanent normal trade relations to China (which had previously been subject to an annual congressional vote) and in 2001 to admit China to the WTO, lessening the ability of the United States to deploy protective tariffs against China.

Continue reading Pulling out of TPP: the first major foreign policy error of the Trump administration

Three ways that Xi Jinping, Davos man, undermined Trump today

Xi Jinping appeared this morning at the World Economic Forum, a first for a Chinese leader, with a full-throated defense of globalization. (Gian Ehrenzeller / European Pressphoto Agency)

Three days before Donald Trump takes office as the most protectionist and nationalist American president since before World War II, and on the same day that British prime minister Theresa May outlined her vision of a ‘hard’ Brexit from both the European Union and the European single market, Chinese president Xi Jinping (习近平) made an audacious claim for China’s global leadership in the 21st century. 

Xi, who delivered a landmark speech at the World Economic Forum in Davos, Switzerland, made that claim by embracing the values that American leaders have globally championed for decades (at least prior to Trump’s rise): a stable world order, free trade among nations and the notion that globalization, for all its faults, makes everyone better off.

Xi’s speech, the first ever by a Chinese leader at the World Economic Forum, is the most high-profile response so far from China’s president to Trump’s election. Despite Xi’s generally measured and cautious prose — he never once mentioned Trump by name — there’s no way to view Xi’s remarks other than as a warning and a rebuke to the rise of populist nationalism and protectionism in the United States and Europe over the last 18 months.

There’s a lot of justified ridicule of Davos as the gathering of self-important global ‘elites,’ but Xi’s speech today is perhaps the most important one that’s ever taken place during the forum.

Opening with a line from Charles Dickens, Xi pledged to keep opening China’s economy to the world, and he committed China to a stabilizing role in the world, including to the Paris accord on climate change, and to reforming the global financial system to smooth its bumpiest elements.

But the key point from Xi’s speech is this: ironically, jaw-droppingly, and likely not for the first time in the Trump era, the head of the world’s largest and most durable Communist Party took to the international stage to defend some of the fundamental principles of global capitalism.

Make no mistake, Xi Jinping is not coming to Davos to embrace those other values that remain a hallmark of what American global leadership projects — individual liberty, political freedom and liberal democracy with broad-based protections of civil and minority rights. Notably, no one today can claim that the People’s Republic of China under Xi enjoys the same political freedoms as Americans and Europeans do.

In 2016, China ranked 176 out of 180 countries in the Reporters Without Borders press freedom index (only Syria, Turkmenistan, North Korea and Eritrea were worse). Under Xi, Chinese censorship of the Internet has worsened, with fewer VPN networks still available to circumvent state controls. Under Xi, political dissent has been less tolerated than at any time in the recent past, even in traditionally liberal Hong Kong. Critics allege that Xi’s wide-ranging anti-corruption campaign amounts to a power grab designed to eliminate Xi’s internal enemies. Taiwan’s rejection of a services trade agreement with Beijing and the election of a nominally pro-independence president in Tsai Ing-wen (蔡英文) have worsened cross-straits relations. China’s east Asian allies are increasingly on alert over Chinese aggression in the South China Sea.

Nevertheless, Xi’s remarks were a consequential turning point for a country that is home to the world’s largest population (1.3 billion) and its second-largest economy, and a sign that China very much expects to take a stronger global leadership role in the years ahead.

In three key ways, Xi challenged Trump’s world view even before the incoming US president has taken the oath of office. Xi’s gauntlet comes just days after Trump blasted both NATO and the European Union in interviews over the weekend, alienating traditional US allies across the continent and stirring anxiety over the future of the trans-Atlantic alliance. Continue reading Three ways that Xi Jinping, Davos man, undermined Trump today

Trade blocs form the new borders of the 21st century global order

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The most underreported aspect of the current crisis over the Crimea annexation is the extent to which Russia was willing to go to the brink of international crisis for the goal of a future trade bloc. USflagEuropean_Union

Why does Russian president Vladimir Putin care so much about the vaunted Eurasian Union, even though it’s a rewarmed version of the existing economic customs union among  Russia, Belarus and Kazakhstan?

To turn Michael Corleone’s words on their head, ‘it’s personal, not business.’

Putin hoped that the revamped union could attract a few more stragglers in central Asia, Azerbaijan or Armenia and perhaps Ukraine — until February 22.

There are certainly potential gains from greater free trade, and negotiating multilateral trade blocs seems both more efficient than one-off bilateral agreements and more productive than pushing for greater global integration through the World Trade Organization (WTO) process.

Also unlike bilateral treaties or WTO-based agreements, regional trading blocs are also emerging as strategic geopolitical vehicles for advances regional agendas that have just as much to do with politics as with trade.

Ultimately, it’s same reason that the two South American customs unions, the Mercado Común del Sur (MERCOSUR, Suthern Common Market) and the Comunidad Andina (CAN, Andean Community) joined to form the even larger Unión de Naciones Suramericanas (UNASUR, Union of South American Nations), which came into existence in 2008 and covers the entire South American region.

It’s the same reason that Kenyan president Uhuru Kenyatta has put so much pressure on Tanzania to choose between the East African Community (EAC) or the Southern African Development Community (SADC) over the past year by accelerating plans for greater political cooperation within the EAC — with or without Tanzania. Or why admitting South Sudan into the EAC back in 2011 could have helped prevent its slide into civil war.

It’s the same reason that defining ‘Europe’ has been such a  strategic and existential issue for the European Union and its predecessor, the European Economic Community, since its inception. Does the United Kingdom belong? (In the 1960s, according to French president Charles de Gaulle, it didn’t). How to handle Turkey? (Enter into a customs union with it, then slow-roll accession talks since 1999, apparently). Should Ukraine join? Moldova? Georgia? If Azerbaijan can win the Eurovision contest, why not bring it into the single market? What about, one day, Morocco and Tunisia, which both have association agreements with the European Union?

That’s why it’s worth paying close attention to the Trans-Pacific Partnership (TPP), but also the Transatlantic Trade and Investment Partnership (TTIP). TTIP would create a super-free-trade-zone between the United States and the European Union, which together generate between 45% and 60% of global trade.

Continue reading Trade blocs form the new borders of the 21st century global order