Trade Wars: the Partnerships

tpp protest

The American administration is serious about its goal of realising the Trans-Pacific Partnership (TPP) this year (2013), a free-trade agreement bringing together a dozen countries, two-fifths of the world economy and one-third of all trade.Since it also involves Australia, Canada, Chile, Mexico, Peru, Singapore and Vietnam, this is ambitious… But  the secrecy that cloaks the TPP talks, fuel the anxieties of anti-globalisation protesters worldwide. They see a plot to impose American standards and products on an unwitting and unwilling world…

Each of the 12 countries [that participate in the negotiations] wants its own exemptions, known as “carve-outs” in the jargon. Vietnam resists rules that have the effect of forcing textile manufacturers to buy yarn from other TPP members rather than non-members (ie, China). Australia objects to “investor-state dispute-settlement” provisions, which it sees as a threat to the government’s ability to stand up to multinationals. In many countries politicians have expressed concern about new intellectual-property protections. And everywhere, the lack of transparency in the talks feeds conspiracy theories.

Nor is the TPP the only trade game in Asia. Also (and not coincidentally) in Brunei this week there were talks on the Regional Comprehensive Economic Partnership. The RCEP groups the ten members of the Association of South-East Asian Nations with Australia, China, India, Japan, New Zealand and South Korea. Seen as of lower “quality” than the TPP, the RCEP might for that reason have better prospects. But it is at a very early stage….

With provisions that seem aimed at ensuring China’s exclusion, many still see the TPP as the trade-policy arm of America’s strategic “pivot” to Asia. China has said it is “studying” the TPP. But for now, its involvement in the RCEP makes the two pacts look like rivals. America is trying to design a trade regime which China will eventually have to join—rather than getting to set its own rules as its clout increases. It is an ambition worth a few takeaway dinners; but not one susceptible to a quick fix.

Trade, Partnership and Politics, Economist, Aug. 24, 2013, at 40

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