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Japan-led Pacific Rim Countries Desperate to Embrace Trump Jomo Kwame Sundaram
The grandiose sounding Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be signed in Santiago de Chile today, 8 March. Instead of doing something to advance the condition of women on International Women’s Day, trade representatives from 11 Pacific rim countries will sign the CPTPP, which some critics argue will further set back the progress of humanity, including women who hold up ‘half the sky’.
The Trans-Pacific Partnership (TPP) originally involved twelve countries, including the USA, namely Japan, Brunei, Australia, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, now often referred to as the TPP11. Although originally a minor initiative not involving the US, the Obama administration led the negotiations which claimed to have created a model ‘free trade agreement for the 21st century’.
In fact, the resulting 6500 page agreement has, so far, only been used by Obama’s United States Trade Representative (USTR) to derail the already protracted Doha ‘Development’ Round negotiations under the auspices of the World Trade Organization (WTO), e.g., by ‘lame-duck’ USTR Michael Froman at the WTO ministerial in Nairobi in December 2016.
In January last year, newly elected US President Donald Trump withdrew from TPP, effectively killing the agreement. Since then, Japan has worked hard to keep it alive, with discreet help from Australia and others. Apparently, they hope to draw the US back in order to check China’s growing influence in the region while delaying other regional trade negotiations such as the Regional Comprehensive Economic Partnership (RCEP).
After signing it, at least six countries must ratify the CPTPP for the deal to come into effect. Even before signing, governments have announced plans to drag their feet, indicating they are signing under duress. Incredibly, no details of the new agreement were supposed to be released until after the signing, and few consultations have been held by the signing governments despite promises to do so.
Bad deal not improved by reheating
To make the case for the TPP, its advocates greatly exaggerated its negligible trade benefits. US government studies — by the Department of Agriculture’s Economic Research Service and the International Trade Council — projected very modest gains, even with the US in.
Despite the US absence from the CPTPP, its proponents have not hesitated to make even more exaggerated claims about supposed benefits. With already negligible trade gains from the original TPP, purported gains from the CPTPP without the US are even more paltry. Not surprisingly, the TPP11 have become even more desperate for US participation to maintain their original fictitious claims.
The old claim that trade liberalization lifts all boats is increasingly rejected in favour of more nuanced recognition that its costs may be as much as its benefits, and distributed very unevenly. Such recognition has enabled better understanding of the Brexit referendum outcome and Trump’s election following a campaign in which all major candidates were opposed to the TPP.
CPTPP losses, costs and risks are almost as great as with the TPP while actual gains are even more trivial. Meanwhile, CPTPP citizens must surely wonder why their governments are proceeding so secretively without public consultation or even the fig leaf of credible cost-benefit or other analyses.
Seducing Trump
Minor amendments have been made to the original TPP agreement, largely drafted by US corporations during the Obama presidency. But the new CPTPP Preamble can only guide its interpretation, and does not replace problematic TPP provisions. Some TPP11 countries have secured ‘side letters’, exempting them from some of its provisions.
Meanwhile, several onerous provisions have been suspended, including some of those extending the scope and duration of pharmaceutical patents. Well over a thousand provisions remain, most not even challenged by the CPTPP negotiators. The 22 suspended provisions can easily be restored if the US chooses to rejoin the TPP.
At his World Economic Forum charm offensive at Davos in January, Trump stated that he “would do TPP if we were able to make a substantially better deal” despite his anti-TPP presidential campaign and post-election rhetoric. No one can be sure what he means anymore, especially following his more recent declarations celebrating trade warfare.
US positions in the ongoing North American Free Trade Area (NAFTA) renegotiations suggest his administration will demand stronger intellectual property rights, especially pharmaceutical patent protection; this can be easily accommodated by the TPP11 by reinstating suspended TPP provisions.
However, in light of the new USTR’s pronouncements, it is likely that the White House will insist on removing ISDS provisions from the TPP to be consistent with Trump’s ‘sovereigntist’ approach of putting ‘America first’. Or worse, ISDS provisions may not be reciprocal, i.e., US corporations abroad can use ISDS, but TPP11 investors cannot make such claims against the US government.
