The Trans-Pacific Partnership and World Trade Rules

The US has regarded the TPP as the most promising project to create a multilateral free-trade area in the Asia Pacific (ATR) since 2010, becoming the main driving force behind the negotiating process.

The Trans-Pacific Partnership (TPP) agreement has been reached by 12 countries, US President Barack Obama announced on Monday, October 5, arguing that “we can’t let countries like China write the rules of the global economy. We should write those rules.” What do these words mean?

This was not the first time that Obama highlighted the geopolitical and geostrategic importance of the TPP. He has been doing this throughout the negotiating process with the participating countries. For example, during his January 2015 State of the Union Address in US Congress Obama said that unlike other countries at the negotiating table (in particular China), the US would benefit from setting new regional trade rules, and that the TPP is an important element of America’s Asia comeback.

The US has regarded the TPP as the most promising project to create a multilateral free-trade area in the Asia Pacific (ATR) since 2010, becoming the main driving force behind the negotiating process. It was the United States that insisted that on top of lowering and removing trade barriers, the agreement should include provisions on investment, industrial and trade activities within every country joining the partnership.

The TPP is all about expanding borders and strengthening inter-state agreements with a view to devising a unified legal framework. In accordance with free trade agreements, treaties aimed at liberalizing trade in goods and services are to be supplemented by investment regulations, innovation exchanges, intellectual property protection mechanisms, labor protection, management of migrant flows, environmental standards and rules for competition.

By the scope of agreed upon issues and ambition, the TPP leaves behind any other trade negotiations or agreements to liberalize trade and investment in the region, including the ASEAN free-trade area, talks on the creation of the ASEAN Economic Community, negotiations on a free-trade area by China and Japan, and the establishment of the China-backed Regional Comprehensive Economic Partnership (RCEP), etc.

In pushing for the TPP, the US was guided not only by its own regional interests, but was also seeking to undermine China’s bid for regional dominance. It is for this reason that China is not a party to the agreement. Facing the TPP challenge, China is forced to step up international cooperation within APR, and promote institutions that can back its Asian strategy.

The fact that the TPP agreement features multiple mandatory requirements could prevent Russia from joining the negotiation process. This goes for tariff restrictions on key products sold by Russia, as well as non-tariff restrictions, since there is a substantial gap between Russian regulations and TPP rules, which applies to competition rules, e-commerce, government procurement, intellectual property, and sanitary measures.

Even more importantly for Russia is that unlike trade and economic powerhouses like the US and China, Russia is currently interested not so much in trade liberalization as in transparency, trade facilitation, and creating a fair, sustainable and balanced trade and economic framework within the APR that would promote the priorities and development level of the Russian economy, especially in terms of export-oriented industries.

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