What is Next for the TPP?
During the run-up to the U.S. presidential elections, three of the four candidates openly came out against the Transpacific Partnership agreement, which had been signed by representatives of the U.S. and other eleven governments, including Japan, on February 4, 2016.
While the opposition to the TPP by Dr. Jill Stein, head of the Green Party, was understandable, that of Democratic Party candidate Hillary Clinton and Republican Party candidate Donald Trump was far from predictable.
In the case of Clinton, who served as Secretary of State for four years during much of the time the TPP was negotiated, described the TPP as the “gold standard” in trade agreements. During a visit to Australia in 2012, Secretary Clinton stated, “This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field, and when negotiated, this agreement will cover 40 percent of the world’s total trade and build in strong protections for workers and the environment.”
In 2015, however, in the run-up to the elections, candidate Clinton came out in opposition to it due to some provisions of the final agreement she did not like. This was not her only flip-flop on trade deals. She had supported the North American Free Trade Agreement ratified during her husband’s presidency, but stated later in 2008, during her initial run to become president herself, that she was opposed to it. She also changed her stance on other trade arrangements as well when she served as a U.S. Senator representing New York.
In light of the fact that most of her major donors were in favor of the TPP, as was her major political benefactor, President Barak Obama, Clinton was seen as likely to support the TPP if she won the presidency (an element that added to public perceptions of her untrustworthiness and lack of principles), but in the end she lost.
With regard to President-elect Trump, his political position on the TPP was always consistent. In fact, even before he was officially a candidate in April 2015, he announced his opposition to the TPP as bad for American workers. And thus, he actually ran “to the Left” of Clinton, whose party was once known as supporting the working class but is now seen as “establishment” and “corporatist” and in favor of the status quo.
However, because Trump has personally benefitted in his business from trade deals and because he was likely to become the nominee for president from the Republican Party, which is seen as pro-business, it was believed that he would actually come out in support of the TPP. He did not, and berated some of the big corporations, such as Ford, to bring back jobs and factories back to the United States. He stated during the campaign he would renegotiate NAFTA, and withdraw from the TPP on the first day of his administration, which begins January 20 next year. And in a video released on November 21, less than two weeks after the election, he announced his intent to carry through with his pledge to leave the TPP.
This pledge effectively ends the TPP because the agreement requires that for it to go into force, countries that ratify the agreement through their domestic legislative processes must represent 85% of the total Gross Domestic Product of the twelve original signatory countries. As U.S. GDP represents 62% of TPP signatory nations, that criteria cannot be reached and the agreement will not go into force without U.S. participation.
One way to address this issue if the signatory countries still desire the agreement is to renegotiate it in a way that would ensure U.S. participation. However, this is politically unlikely in the United States (as Trump has stated he prefers to work bilaterally), and may be difficult politically as well in other countries where delicate domestic balances were created in order to be able to sign the original agreement in the first place.
A second option is to quickly renegotiate the related clauses in the agreement and exclude U.S. GDP from the calculations. Of course, a TPP without the United States has less economic and trade merits, but it would allow for the TPP to go forward and hold out the hope that the United States, and perhaps others, would wish to join again in the future.
In that sense, Prime Minister Abe Shinzō’s comment to the press on November 21, just before Trump’s video, but several days after their meeting in New York on November 17, that the “TPP without the U.S. is meaningless,” was a grave mistake, just like his premature meeting with candidate Clinton in New York two months before.
A TPP without the United States might be economically meaningless, but a TPP agreement today without Japan is politically meaningless. Making a rugby comparison, Japan now needs to carry the ball since the U.S. dropped it or otherwise handed it off.
This is particularly important regionally. The remaining ten countries, most of whom are quite worried about a hegemonic China with its large and growing GDP, look to Japan to fill the leadership vacuum, but Prime Minister Abe’s comment seems to have self-negated it. As such, it is highly likely that the other countries will be forced to go along with a China-centric regional trade arrangement, such as the Regional Comprehensive Economic Partnership or others. In fact, it will undermine regional governments that supported the TPP and possibly cause change in administrations or the domestic balance of power to those parties and politicians who did not, many of whom are already close to China.
The problem is not necessarily the issue of trade, but the terms of that trade, and more specifically, the ability of China, a country that is undemocratic, does not respect human rights, the rule of law, transparency, copyrights, environment, etc., to influence countries in the region. In this sense, TPP is as much about security as it is economics and trade. The U.S.’ not ratifying the TPP is akin to turning the region over to China.
Indeed, as a historian, I find the U.S. effort to negotiate the TPP and the subsequent decision itself not to join it akin to the creation of the League of Nations and the non-participation by the United States after World War I.
Those in the U.S. denouncing the TPP, including Trump, do not seem to understand that the TPP is more than a trade pact. It sets out the framework for an open, liberal arrangement as a counterweight to a Chinese dominated and closed market, with rules and norms that are embraced internationally and not dictated by an economically powerful neighborhood bully. It is, in other words, a soft security arrangement.
Japanese supporters of the TPP understand this, especially in light of the growing negative influence of China. In addition, its supporters understand that accession to the TPP, while somewhat long and difficult in Japan, brought about needed reforms here. Japan should move forward with taking the lead regionally, not give up.
Specifically, Japan should take the lead in mustering the remaining countries to go ahead with the TPP, redesigned for that market, while leaving room for the U.S. to “rejoin” and other countries, such as Taiwan, to access it. Furthermore, it should embrace and promote the October 2015 proposal by the Kansai-based Asia-Pacific Institute of Research (http://www.apir.or.jp/en/research/policybrief/3767/) to invite a future TPP secretariat to Osaka, which would give Japan greater influence in the region. This not only sets at ease the minds of the Japanese public, but that of a majority of the countries in the region as well.
In both of these efforts, Japan has to move quickly. The future of the region, and thus the world, is at stake.