Don’t write off the TPP trade deal as dead in the water too soon

By Xue Li Source:Global Times Published: 2016/11/30 23:18:41

US President-elect Donald Trump announced recently that he will issue a notification of intent to withdraw from the TPP on his first day in the White House. The Office of the US Trade Representative also suggested on November 11 that sitting President Barack Obama will not try to pass the TPP during the remainder of his presidency.

This has led to the emergence of voices in China saying the TPP is dead, and the era of the Regional Comprehensive Economic Partnership (RCEP) and the Free Trade Area of the Asia-Pacific (FTAAP) will come.

But as far as I am concerned, it's possible that the TPP will still be approved by the US Congress after amendments added by the Trump administration. Each of the three deals has their own space to thrive and will develop toward the same direction.

The development of the TPP is closely linked to globalization. Service industries such as the IT and financial service sectors, and advanced manufacturing industries in developed nations support globalization, but traditional manufacturing, mining and agriculture industries that lost comparative advantages in the process are against worldwide integration.

Take the US. Trump has won a large number of votes while standing against the TPP. According to statistical analysis, many people who voted for Trump have several things in common - male, not well-educated, over 45 years old, making $50,000-$100,000 a year. These people mainly live in the middle and western part of the country, and work in the manufacturing, mining, agriculture industries. They are victims of globalization.

Studies show that normally 70 percent of campaign promises in presidential elections can be carried out. However, Trump may only implement half of his proposals, and quitting the TPP will be one that is hard to really implement. He lacks administrative experience and stands against US elites that support globalization.

Washington had three goals in joining the TPP in the first place - containing China economically, maintaining its economic influence in the Asia-Pacific region, and continuing to dominate global trade mechanisms with the help of the Transatlantic Trade and Investment Partnership (TTIP). Abrogating the TPP will thus be seen as sending a signal to the world - the US is ready to give up its leadership in global economic systems. This will severely impact the US' reputation and status while hurting its interests.

Of course, Trump won't accept the whole of the TPP as it currently stands. There are rare cases of starting old policies all over again in a completely different way.

Obama objected to the US-South Korea Free Trade Agreement during his presidential campaign, yet eventually signed it in 2011 after three years of renegotiations in which the two sides reached a deal by only adding some clauses in favor of the US, without big changes to the agreement. The same thing might happen again to the TPP.

That said, Trump can be flashy now over issuing the notification of intent to withdraw from the TPP. However, he might in the end fail to actually replace the deal with a series of bilateral agreements.

Adding clauses which will be in the US' favor or kick starting renegotiations are more likely.

Trump's video speech is a beginning of political game over the TPP, rather than a bell tolling for the TPP. A rising China should cast a cold eye to all the ups and downs of the TPP and focus on its own business like promoting the One Belt and One Road initiative, upgrading China-ASEAN Free Trade Area, supporting the ASEAN-led RCEP and establishing the FTAAP.

The author is director of the Department of International Strategy at the Institute of World Economics and Politics, Chinese Academy of Social Sciences. Follow us on Twitter @GTopinion

Posted in: VIEWPOINT

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