The American Gambit: Did the US Really Quit the TPP?

The United States’ foreign trade priorities was the key issue during Donald Trump’s electoral campaign, and quiting the Trans-Pacific Partnership was one of his main promises. On March 8, the Chilean Foreign Ministry reported that the new version of the agreement was signed without the United States’ participation. Nevertheless, as Valdai club expert Alexander Rogozhin supposes, nothing prevents the US from signing an updated version of the agreement in the future – and that is what it is most likely to do.

I would like to draw attention to some subtle points related to the diplomatic history of the Trans-Pacific partnership(TPP).

First, having declared the United States’ withdrawal from the TPP in line with his campaign promiseTPP, Donald Trump in fact only authorized the beginning of the procedure. Having no clear timeframe, it leaves the US the opportunity to interrupt the process when circumstances change. As the legal status of the TPP agreement does not presuppose its liquidation due to withdrawal of a signatory state, the US has sufficient legal grounds to return to the agreement in an updated format.

Second, it is noteworthy that the negotiation process, which ended in the signing of a new version of the TPP agreement, was led by Japan, a US ally, which clearly understands its interests in Asia-Pacific. Japanese diplomacy has made considerable efforts to ensure that the new document retains all the agreements on tariffs which were contained in its original version, signed in 2016 with the US participating. At the same time, the new agreement suspends the operation of 22 other provisions of the previous version, including some rules related to the protection of intellectual property – mostly the ones, which caused the United States’ dissatisfaction . Afternegotiations between the US and the participants of the new TPP, an agreement could be reached on the immediate implementation of these yet controversial articles.

Third, the process of forming a new TPP agreement will take quite a long time: having signed it, the member states are to begin the ratification procedure . The agreement will come into effect as soon as it is approved by at least 11 member states, and only after the ratification, talks on other countries’ joining the agreement will begin. The United Kingdom, Taiwan, South Korea and Indonesia have already expressed their interest in participating. As for Trump, he did not deny the possibility of entering the new agreement on “fair and reciprocal terms”, after appropriate negotiations. Accession to the new agreement will allow the US to regain some trust of its partners in Asia-Pacific, lost when it walked out of the original deal.

Broader Aims of Trump’s Revisionist Geoeconomic Project Alan W. Cafruny
Contrary to the conventional wisdom, Donald Trump's decision to withdraw from the TPP does not indicate that the United States is disengaging from Asia or adopting isolationist policies. The National Defense Strategy (NDS) of January 2018 identifies China as a “strategic competitor” and “central challenge to U.S. prosperity and security” while calling for a “free and open Indo-Pacific region.” The United States is not retreating from Asia either militarily or economically, and the project of neoliberal globalization remains the core, non-negotiable strategy of corporate America.

What are the reasons for the US position to change, which could ultimately allow it to join the renewed TPP?

First, opposition is growing in the United States to Trump’s foreign economic course as a whole, and his decision to withdraw from the TPP in particular. Undoubtedly, Trump’s policy aimed at reducing the deficit in trade operations with all foreign partners, was taken positively in the US. His limited protectionism was also welcomed – primarily by the representatives of the industrial and agricultural sectors. But the new policy significantly reduced the ability of American exporters, especially in the lucrative East Asian markets. Their competitiveness in these markets has decreased sharply.

Indeed, the focus on bilateral relations bring some results, but it was profitable only for the manufactures of certain goods (like the production of the military-industrial complex), while the exporters of consumer products and services (like IT) were left out of work. They initiated a campaign for the US to “return” to the TPP, declaring the withdrawal from it “President Trump’s greatest mistake”. Twenty-five US senators signed an appeal to the president demanding the US to return to the TPP.

Second, the administration itself seems to have come to understand that the US cannot limit itself to the benefits of bilateral trade relations, while ignoring the advantages of participating in international trade agreements. in addition, it has become clear that such agreements can be created and operated without the US. Accordingly, its leadership there is put under doubt, which is of a special concerns to the American political elites.

Considering the arguments given above, I suppose that the US is very likely to join the new TPP. I should emphasize that this is not a “return”, but reentry on the basis of some “clarifying” negotiations.

The Changing World Order in 2017. 'New Era' in Chinese Policy David Lane
Outside the core of the capitalist bloc of the world system, the emerging powers continued to move in a contrary direction with the formation of new economic and political regional associations. The Eurasian Union, the Shanghai Cooperation Agreement and the Chinese-led One Belt One Road initiative all gathered momentum. A new configuration of regional states is taking shape. Ironically perhaps, unlike developments in the core capitalist states, these states still subscribe to the general principles of free global markets and economic liberalism. The new regional associations seek to widen markets rather than to bring them under state control.

As for China, both the former and the updated TPPs significantly undermine its competitive positions in the agreement’s operational zone. They are not flawless. Suffice it to recall the reality of the PRC-ASEAN Free Trade Zone: since it was established in 2010, the aggregate negative trade balance of the ASEAN countries with China has increased 14 times (only Malaysia and Thailand have had a surplus in trade with China). The huge Chinese market is truly attractive because of its scale, but it is open mainly for raw materials, and when exporting industrial products and consumer products to China, all Asia-Pacific countries face tough and ingenious protectionism. So we are not talking about some mythical US-China “confrontation”, but about the acute and constantly growing competition of two these giants in Asia-Pacific. Both seek to defend their “rules of the game.” China could only influence the former TPP by offering more favorable for to the market access terms – which it failed to. So the PRC has even less opportunity to influence the new TPP, especially if the US, with its much larger market, will join it. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.