The country that will be the first to offer an acceptable set of rules and norms for economic development will ensure its leading position in the Asia-Pacific region
U.S. President Barack Obama, left, Chinese President Xi Jinping, right, and Russian President Vladimir Putin, center, during the 2014 Asia-Pacific Economic Cooperation (APEC) Summit in Beijing. Photo: AP
After completing the Iranian nuclear deal and re-opening relations with Cuba, U.S. President Barack Obama will likely move forward with one of the key projects of his administration – the Trans-Pacific Partnership (TPP), a massive free trade pact linking the U.S. with Asia-Pacific.
Signed in February 2016 by 12 country-members, the agreement on TPP hasn’t yet been ratified within the U.S., but it has the potential to be a new type of free trade agreement. At any rate, this is how Obama himself presents this project in a recent op-ed in the Washington Post.
The major difference between the TPP and other economic integration agreements is that its participants not only agree on decreasing trade duties and improving the investment climate – they also take responsibility in the field of economic standards, labor rights and intellectual property protection. These are all fields that weren’t regulated within previous trade agreements.
At first glance, the attractive integration model of the TPP would appear to foster progress and prosperity. Yet, it has faced a number of obstacles and resistance from other stakeholders from the outset. Although the U.S. succeeded in attracting many countries to the TPP after its rigorous promotion in 2008, the negotiations were very difficult, with the date of signing the agreement repeatedly postponed.
According to the participants of the negotiations, progress was only possible last fall because the U.S. gave up some very tough requirements for TPP’s country-members. Obama is currently trying to persuade the U.S. Congress to ratify the TPP agreement, with hopes that this will be complete by the end of his presidency. However, the odds of the TPP being ratified within the U.S. are not very high – even Obama’s peers from the Democratic Party are expressing their reluctance to sign the deal.
American congressmen and senators don’t believe that TPP members such as Vietnam, Mexico, Malaysia and Brunei will be ready to change their approaches to labor legislation in accordance with the agreement’s high standards. These countries are hardly likely to protect American intellectual property in practice and observe their commitments under the TPP deal.
It’s not just U.S. congressmen and domestic skeptics who are questioning the viability of the TPP. Their counterparts in other countries, who may not be as concerned with environmental standards or labor rights, are also raising questions.
The TPP as a powerful tool for shaping future economic development
Obama’s frequent remarks about “global leadership” reveal a more fundamental question: Who will determine the future global agenda and direction of international development over the coming decades?
Obama argues that the U.S. will remain the leader, with the TPP being the key tool of maintaining American clout in the world.
“The world has changed. The rules are changing with it. The United States, not countries like China, should write them,” Obama wrote in his op-ed. “Other countries should play by the rules that America and our partners set, and not the other way around.”
What is most interesting in this phrase is that there is no mention of the word “democracy” in it. After all, it is a term that often shows up anytime the U.S. leader starts talking about spreading American influence throughout the world. But Obama – who ascended to the presidency thanks in part to his criticism of former President George W. Bush’s messianic approaches – is well aware that the idea of imposing American political institutions throughout the world, especially via military means, doesn’t work anymore.
That might be why Obama refers to some “rules” instead of talking about “democracy.” Remarkably, these rules are not political in their nature: on the contrary, they deal with international trade and investment relations, as well as economic development.
Without doubt, by shifting the focus of American leadership from politics and security to economics, Obama takes a very smart step that his opponents might find difficult to counter. In recent years, China has been actively working on creating an alternative to the TPP in the form of the Regional Comprehensive Economic Partnership (RCEP), which is attracting members with softer requirements and the same economic benefits that the TPP offers.
However, as opposed to the TPP, the RCEP agreement has not been signed yet and what is more important, it cannot, by definition, influence the global rules of the game to the same extent as the TPP aims to. The reason for this is that the whole RCEP is based on the popular principle of “non-interference in the internal affairs of other nations.” How is it possible to improve environmental standards and give professional associations more rights without agreeing to share some part of national sovereignty with an international organization?
Russia’s view of the TPP
Russian President Vladimir Putin has also joined the ranks of those who have criticized the American-led TPP project. In his address to the United Nations General Assembly in September 2015, he outlined his objections to the deal.
“It seems that someone would like to impose upon us some new rules of the game, deliberately tailored to accommodate the interests of a privileged few, with the WTO having no say in it,” he said. “This is fraught with the prospect of utterly unbalancing global trade and splitting up the global economic space.”
From this perspective, it appears that the U.S. is once again trying to impose its will on the world. However, it is useful to remember that, due to irreconcilable differences between developed and developing countries, the Doha round of negotiations within the World Trade Organization (WTO) has achieved no significant results over the past 15 years. Moreover, signs for improvement are nowhere to be seen.
Russia itself is not a member of the TPP or the RCEP and its projects for increasing cooperation within the WTO or the Asia-Pacific Economic Cooperation (APEC) bloc do not meet enthusiasm even from the side of China. All influential actors in the Asia-Pacific region agree today that further integration should be intensive, not extensive. That means that the popularity of multilateral organizations that Putin seems to favor is a thing of the past.
Gambling on the success of the TPP, U.S. President Obama is not only following the understandable logic of ensuring American leadership, but also the realistic assessment of the current state of the global economy. Growing interdependence creates demand for new transnational institutions, rules and norms, while taking into account regional specifics. The country that will be the first to offer an acceptable set of such rules and norms fostering development and progress forward will ensure its leading position for a long period ahead.
China’s actions – aimed at forming an alternative “softer” model of integration – also seem quite rational. Only time will show which one of the two options, American or Chinese, will seem more beneficial and acceptable for the economies of the Asia-Pacific region.
Russia, which is placing its bet on ensuring national sovereignty at any cost and which is willing to cooperate only within the framework of the WTO or the UN, looks to have a less attractive vision for the future compared to China and the U.S. While criticizing the U.S. for imposing new “rules of the game,” Russia suggests keeping the old ones and introducing new ones only through common agreement.
Yet, Russia’s weak involvement in the economic networks in the Asia-Pacific region makes it a laggard when it comes to regional integration. As long as this situation remains, the Kremlin’s reproaches of the White House are unlikely to be taken seriously.
The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.