(What’s Left of) Our Economy: Evidence from Supporters that Obama’s Anti-China TPP Case is Phony

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China, fast track, FTAAP, Obama, rules-based trade, TPP, Trade, Trans-Pacific Partnership, U.S. Chamber of Commerce, {What's Left of) Our Economy

It’s a good thing for President Obama and supporters of his trade agenda that reporters seem to ignore U.S. Chamber of Commerce material when it debunks one of his main stated rationales for the Trans-Pacific Partnership (TPP) trade deal and fast track negotiating authority.

The President and his trade allies repeatedly have argued that the TPP is needed to ensure that China doesn’t have the field to itself in “shaping the rules of the road” for doing business in the Asia-Pacific region. But recently, the Chamber reported that Mr. Obama is now OK with a China-led effort to engage in that very same rule-writing – its proposed Free Trade Area of the Asia Pacific (FTAAP). According to the lobby group, “The U.S. government now publicly supports FTAAP, after opposing it earlier.”

I haven’t found official U.S. statements of support for the FTAA. But at last November’s Asia Pacific Economic Cooperation (APEC) summit, Washington did agree to a Chinese proposal for this group to launch an FTAAP feasibility study (while succeeding in blocking any endorsement of a time-line for the deal). The Chamber’s claim indicates that Mr. Obama’s views of the FTAAP have softened further, and given how multinational corporations dominate the U.S. trade policy advisory system, it’s hard to believe that its assessment is far off base.

In principle, the Obama administration could have warmed to China’s plan in hopes of influencing rule-writing there as well. That’s the Chamber’s take. But if so, then why in Washington’s eyes are both FTAAP and TPP needed? Alternatively, why does the president now seem to believe that America’s rule-writing interests can be served in a trade negotiation that includes China, whereas for months he has insisted (and keeps claiming) that these interests require the rules to be written before China joins? Similarly, how could a finished TPP (without China, at least at first) ensure U.S.-friendly commercial rules for the Pacific Rim when America and most of the other countries involved are working with China to write another set of rules (albeit one that presumably wouldn’t get finished until much later)?

It’s important to note that, even without this FTAAP complication, the American notion of excluding China from an East Asia/Pacific trade zone is a fool’s quest. The region’s manufacturing in particular is too tightly integrated, and China plays too central a role in the system. Moreover, the idea that any of Asia’s main trading powers take seriously the idea of rules even for governing their own countries ignores millennia of history. But unless the Chamber’s report is flat wrong, this FTAAP news is compelling new evidence for a more important proposition – that the next accurate statement the president makes about fast track and TPP will be the first.

(What’s Left of) Our Economy: The Washington Post’s Embarrasingly Bad Pro-TPP Editorials Just Keep Coming

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Asia, China, escalation dominance, exports, Japan, Jobs, North Korea, pivot, rules-based trade, TPP, Trade, Trans-Pacific Partnership, Uruguay Round, Washington Post, World Trade Organization, WTO, {What's Left of) Our Economy

It’s a good thing for the offshoring lobby and other mindless American trade cheerleaders that the fate of President Obama’s Trans-Pacific Partnership (TPP) and other new trade deals won’t depend significantly on Washington Post editorials. If it did, the proposed Pacific rim agreement and the new negotiating authority also being sought by the president would be DOA in Congress.

The Post‘s latest missive on behalf of the TPP stumbled practically out of the gate. According to Post editorialists, the president’s claims that the Pacific deal and a roughly similar pact with Europe would boost American exports and create high wage domestic jobs were a welcome breath of fresh air. Huh?

The editorial then proceeded to careen ever faster downhill. According to the Post, listeners shouldn’t take literally Mr. Obama’s contention that “as we speak, China wants to write the rules for world’s fastest growing region. That would put our workers and our businesses at a disadvantage.” According to the Post, taking the president’s words at face value would amount to believing a “conspiratorial” charge that “Beijing’s bureaucrats are plotting to impose a whole new set of laws and regulations on East Asia’s economy.”

What Post writers evidently have forgotten is that turning the world trading system into one that’s governed by the rule of law instead of the law of the jungle has long been a central aim of U.S. policy. We know this, and we know that the TPP is Washington’s latest effort to achieve this goal, in large part because not only do Presidents keep highlighting its importance. So do major newspaper editorials – like this very same Post offering, which insists that the deal would “organize trade in the Pacific Rim according to U.S. free-trade principles rather than China’s mercantilist goals.”

Nor is this a standalone Post position. Last April, its editorial board wrote that TPP would:

“ensure that this huge area, including giants such as Japan, Canada, Mexico and Australia, conducts business according to U.S.-style rules on tariffs, regulation and intellectual property. China would be left on the sidelines, along with its mercantilist model of international commerce — unless and until it modifies that approach.”

What the Post – and the president – need to understand is that this quest for rules-based trade, as I’ve argued before, is actually counter-productive for Americans because so many of its trade competitors, especially in Asia, reject the idea of rules-based governance in their own countries. Believing that their governments will apply it to Americans (and other foreigners) when they deny this benefit to their own people is simply daffy.

At the same time, because American political culture is based on the rule of law, while U.S. competitors merrily keep ignoring new trade rules, the United States will keep respecting them – which has been a sure-fire recipe for super-charged trade deficits, slower growth, mounting job loss, lower wages, and astronomical national debt. Doubters should consider that these have been the unmistakable results of Washington pushing and signing the Uruguay Round agreement, which created a new organization – the World Trade Organization – aimed at writing and enforcing strong global trade rules, as well as bilateral deals like the free trade agreement with Korea, which is Mr. Obama’s so-called “high standards” model for the TPP.

But the Post‘s exercise in incoherence doesn’t stop there. Readers are told that the president’s reference to trade rules is really an allusion to:

“the wider strategic rationale for the Trans-Pacific Partnership, which would link North and South America, Australia and New Zealand more closely, and on more equitable terms, with Japan and other key Asian nations. By and large, these Asian countries seek to maintain a strong U.S. presence in their region as a counterweight to Chinese influence.”

TPP success “is therefore a vital interest for them — and for the United States. Both economically and geopolitically, the ­Trans-Pacific Partnership would perpetuate the United States’ stabilizing role in Asia….”

What these passages reveal is that the Post‘s editorialists don’t know the first thing about power politics, leverage, and bargaining chips – or even about the strategic situation in the East Asia/Pacific region. The United States has maintained a “strong presence” there since 1945 in the form of the Seventh Fleet and other military forces. It’s not going anywhere, and in fact, the administration’s military “pivot” away from the Middle East and toward Asia signals the aim to reinforce these units (even though little progress has been made so far on this front – at best).  

Not that big threats to America’s grand strategy in the Pacific region aren’t easy to identify apart from actual U.S. force levels.  As I’ve argued, the nation’s seemingly impending loss of nuclear escalation dominance against both North Korea and China is a far bigger worry.  TPP is completely irrelevant to solving this problem. 

And however important this region’s security and independence is to America strategically and economically, it’s obviously more important to local countries. Which means that they have a much greater need to demonstrate their usefulness to the United States than vice versa. That so many of these countries, especially Japan, have balked for so long at American proposals to open their markets wider says loud and clear that the Obama negotiating team has ignored these realities, and that anyone linked to this strategy should be fired for sheer incompetence. Editorial writers who parrot this nonsense of course can do no such damage to U.S. interests. But shouldn’t they be shown the door too?