With Democrats now gone from the White House, the ambitious plan to integrate many Asia-Pacific economies into one trade bloc through Trans Pacific Partnership (TPP) seems to probably reaching its end too, and with it may come a serious setback to the US’ “pivot” to Asia, the hallmark of US’ dominant military presence in the region.
Two recent developments have clearly indicated the likely fate TPP is going to face amid transition from president Obama to president-elect Donald Trump.
Last Thursday, the US Senate’s soon-to-be top Democrat, Charles E. Schumer, told the executive council of American Federation of Labor and Congress of Industrial Organization (AFL-CIO) that the TPP will not be ratified by Congress due to Republican opposition.
Following this meeting and announcement came an official recognition of the ‘demise’ of TPP from the White House on Friday, conceding that president’s ‘hard-fought-for’ trade deal would not pass Congress, as lawmakers there prepared for the ‘anti-global trade’ policies of the new president.
While Donald Trump’s opposition to such multilateral deals was quite obvious during his election campaign and his emphasis on doing bi-lateral deals was equally evident, the deal had not, first and foremost, invoked much support from within the Democrats’ ranks either.
Only 28 of 188 House Democrats and 13 of 44 Senate Democrats had supported granting Obama the authority to negotiate and finalize a deal last year, indirectly allowing the Republicans to more vigorously oppose the deal. And while Democratic candidate Hillary Clinton had initially supported the deal, she, too, expressed her opposition during the election campaign, creating an awkward situation for her party and the president-in-office.
Back in 2012, Clinton had described the TPP as the “gold standard” in trade agreements, she did change her mind later, asking the question, “Does it create jobs, raise incomes, and further our national security?” she said in her October 19 debate. “I’m against it now. I’ll be against it after the election. I’ll be against it when I’m president.”
That TPP has lost attraction in the US Congress is evident from the fact that House Speaker Paul D. Ryan, who has previously supported many trade deals, said that “the votes aren’t there” in the House to pass the TPP in its current version and that he has no plans to bring it to a vote in the House.
With the trade deal now unlikely to be ratified by the US Congress, at least unless it is re-negotiated (read: republican senator Mitch McConnell has not signaled an altogether scrapping of the deal), it is quite obvious that the deal would fail to materialize without the US being part of it.
The reason for this is that it not possible for the other eleven countries to forge ahead without the US on board. This is because of a condition that the TPP will not enter into effect unless at least six of the original signatories have ratified the deal, and only if their combined GDP amounts to at least 85 percent of the total GDP of all the original signatories, rendering this condition almost impossible to be met without both the US and Japan.
While Japan has shown eagerness to ratify the deal to keep China’s economic and political influence in check and reboot Japan’s lackluster economy, a number of other partner countries have adopted a rather cautious approach.
While a senate inquiry on TPP is in in process in Australia, Chile’s government is yet to introduce the bill to its Congress for ratification.
Similarly, while Vietnam has decided to hold off the issue of ratification—at least for now, no legislation for the implementation of TPP has been introduced in Singapore despite the fact that its Prime Minister Lee Hsien Loong has been one of its chief cheerleaders and had unequivocally expressed his support during his August visit to the US.
What explains the delay in the partner countries is the rising opposition to the deal within the US, coming most prominently from the president-elect who had, during his election campaign, went to the extent of calling this deal rape of America.
Interestingly enough, it is not only the TPP that Donald Trump has opposed. He has vocally expressed his opinion against other multilateral agreements that the US has signed with other countries. This opposition, emphasis on re-negotiation and even threat of scrapping such agreements have sent waves of skepticism in countries that have been, and still are, US’ traditional allies.
For instance, In Seoul, there has been observed mounting concern that Trump might demand the scrapping and renegotiating of the Korea-US trade deal that took effect almost five years ago.
Were this to happen, South Korea would lose US$30 billion over the next five years, estimated the Korea Economic Research Institute in a recent study.
The failure to ratify and implement the deal is likely to leave a vacuum, open for exploitation by US competitors in the region, particularly China.
This is evident from the fact that while both presidential candidates were expressing opposition to the deal, leaders from 14 Asian countries, including Australia and New Zealand—signatories to the TPP—were busy in the last month in the Chinese city of Tianjin on a 15th round of negotiations for an alternative trade deal, the Regional Comprehensive Economic Partnership.
Although this is a much less ambitious undertaking than the TPP, the very fact that the talks are being driven by China and exclude the US is not lost on anyone involved.
While it would be naïve to expect China not to exploit the situation to its advantage, it would be equally naïve to expect that the countries, currently considering TPP, would not find attraction in other deals that potentially undercut TPP’s strategic rationale: containment of China’s economic influence.
Nothing else could better explain the grim situation the TPP has found itself in than New Zealand’s ambassador to US’s recent remarks that countries involved in the TPP had Plan B’s: “The tragedy would be that the Plan B’s we have would not include the United States.”
While the Plan B may not mark a US-exit from the region, it would certainly indicate, what John Kerry ha called, “a giant step backward” for the US “leadership” in the region.