Behind the Trans-Pacific Partnership talks

By Dan Steinbock
0 Comment(s)Print E-mail, June 8, 2015
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Instead of "free trade," preferential regional pacts

Originally, the Trans-Pacific Partnership (TPP) was a more inclusive free trade agreement (2005) among Brunei, Chile, New Zealand and Singapore. Since 2010, Washington has led to talks for a significantly expanded FTA, which is to be a "high-standard, broad-based regional pact." It excludes China.

Reminiscent of the proposed Free Trade Agreement of the Americas (FTAA), which in the early 1990s failed to open South America to free trade and effectively split the region, the TPP, in its current form, has the potential to split Asia into two rival blocs. That, in turn, could undermine the promising economic integration in the region.

With Brussels, President Obama initiated the talks on the Transatlantic Trade and Investment Partnership (TTIP) in early 2013. In contrast to the proposed TPP, the U.S.-EU talks have lingered longer than anticipated.

For all practical purposes, both deals are less about "free trade" than about "preferential regional trade", as the free trade economist Jagdish Bhagwati has argued, or simply about geopolitical alliances rationalized in the name of trade, as political realists believe.

Nevertheless, in each case, the White House has achieved some success in the past few weeks.

Last week, members of the European Parliament gave thumbs up to the EU-U.S. trade talks backing away from the expected confrontation with the Commission over the controversial issue of investor/state protection rights (ISDS) – although 97 percent of the public opinions requested opposed the inclusion of the ISDS in the final deal.

In order to complete the TPP talks in Asia, the White House requires the fast-track Trade Promotion Authority (TPA), which ensures President Obama the authority to negotiate trade agreements that Congress can accept or decline but not amend or delay. Right before the Memorial Day, after months of nerve-wracking political games, President Obama got his TPA after the Senate passed the trade bill.

While it had bipartisan support, the successful outcome can be attributed mainly to the Majority Leader Mitch McConnell and the Republicans. The 62-to-37 vote was not the kind of awesome demonstration effect that Obama needed to ensure an overwhelming victory in the House.

Like the majority of the Republicans, the Speaker of the House John Boehner supports the TPP agreement. However, only days before the critical vote, barely 10 percent of the House Democrats had come out in favor of the TPA.

Overall, the deal is splitting and alienating Democrats. Most believe the TPP supports big business rather than public interest, including such presidential candidates as the progressive former Governor of Maryland Martin O'Malley; Senator Elizabeth Warren popular for her stress of Americans' financial protection; and the self-described democratic socialist, Vermont Senator Bernie Sanders.

Of the current frontrunners, former Secretary of State Hillary Clinton has tried to shun the issue, which she and other Democratic centrists regard as a form of political plague. However, her nemesis, former Governor of Florida Jeb Bush, does support free trade but more inclusive approach toward China.

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