KUALA LUMPUR and SYDNEY, Jul 19 (IPS) – Joining or ratifying dubious trade deals is supposed to offer silver bullets to lackluster recent economic progress. Such a naive defense is misleading at best and downright irresponsible, even reckless, at worst.
TPP ‘pivot to Asia’
US President Barack Obama’s ‘pivot to Asia’ after his re-election in 2012 sought to curb China’s sustained economic growth and technological progress. The economic centerpiece of it was the Trans-Pacific Partnership (TPP).
The ITC report found that TPP’s projected growth gains would be negligible in the long run. Their finding was in line with previous 2014 findings from the US Department of Agriculture’s Economic Research Service.
Meanwhile, many US manufacturing jobs have been lost due to corporate automation and relocation abroad. Worse yet, Trump’s rhetoric has largely transformed American public discourse. Many Americans now blame globalization, immigration, foreigners and, increasingly, China for the problems they face.
The TPP was believed to be dead and buried after Trump withdrew the US immediately after his inauguration in January 2017. After all, most of the contenders for the November 2016 election, including Hillary Clinton, once a cheerleader for the TPP, had opposed it in the presidential election. Campaign.
The director of Trump’s National Economic Council, Gary Cohn, accused presidential confidants of “dirty tactics” to escalate the trade war with China.
Cohn acknowledged that he “didn’t resign because of the tariffs per se, but because of the totally shady and damned way Commerce Secretary Wilbur Ross and economic adviser Peter Navarro talked the president into implementing them.”
Cohn, a former chairman of Goldman Sachs, insisted that “it was a terrible idea that would only hurt the United States and not get the concessions from Beijing that Trump wanted, or do anything to reduce the trade deficit.”
This was later renamed the Integral and Progressive TPP (CPTPP), with no changes to justify its ‘progressive’ pretensions. After its earlier support for the TPP, the PIIE has been the main cheerleader for the CPTPP in the West.
Although US President Joe Biden was loyal as vice president, he made no effort to revive Obama’s TPP initiative during his campaign, or since entering the White House. Apparently rejoining the TPP is politically impossible in the United States today.
Overview of Trump’s approach, Biden’s US Trade Representative has emphasized: “Addressing the China challenge will require a comprehensive strategy and a more systematic approach than the piecemeal approach of the recent past.” Now, instead of backing down from Trump’s belligerent approach, the United States will do whatever it takes.
Favor foreign investors
Instead of promoting trade, the TPP prioritized rules favorable to transnational corporations (TNCs). The CPTPP did not even eliminate the most onerous TPP provisions demanded by US transnationals, but only suspended some, for example, on intellectual property (IP). Suspension was favored to induce a future US regime to rejoin.
Onerous provisions of the TPP remain, for example for investor-state dispute settlement (ISDS). This extrajudicial system replaces national laws and judiciaries, with secret rulings by private courts that are not subject to precedent or subject to appeal.
Lawyers have been advising transnational corporations on how to sue host governments for resorting to extraordinary measures against COVID-19 since 2020. Most countries can rarely afford to incur huge legal costs to fight the powerful transnational corporations, even if they win.
The Trump administration cited vulnerability to onerous ISDS provisions to justify the US withdrawal from the TPP. Now the citizens of the smallest, weakest and poorest nations are being told to believe that ISDS poses no real threat to them!
After ratifying the CPTPP, TNCs can sue governments for alleged loss of profits due to policy changes, even if it is in the national or public interest, for example, to contain the spread of COVID-19 or ensure food security.
Therefore, the alleged gains from the CPTPP come mainly from additional foreign direct investment (FDI) expected due to higher returns to investors, not from more trade. This implies more concessions in the host economy and, therefore, less net benefits for them.
Those who have seriously studied the CPTPP agree that it offers even fewer benefits than the TPP. After all, the main attraction of the TPP was access to the US market, which is now no longer a member of the CPTPP. Therefore, the CPTPP will mainly benefit the exports of Japanese transnational companies subject to lower tariffs.
Unsurprisingly, South Korea and Taiwan want to unite so their TNCs don’t lose out. China also wants to join, but presumably also to ensure that the CPTPP is not used against it. However, the closest American allies are expected to block China.
The Soviet Union sought to join NATO in the 1950s before calling the Warsaw Pact to counter it. Russian President Vladimir Putin also tried to join NATO years after Vaclav Havel ended the Warsaw Pact and Boris Yeltsin dissolved the Soviet Union in 1991.
Unlike the countries of Northeast Asia, the economies of Southeast Asia seek FDI. But when foreign investors are favored, domestic investors can move abroad, for example to ‘tax havens’ within the CPTPP, often benefiting from special incentives for foreign investment, even if it is ’round trip’.
The ‘pivot to Asia’ has become more explicitly military. As the new Cold War unfolds, foreign policy considerations, rather than serious expectations of significant economic benefits from the CPTPP, have become more important.
Trade protectionism in the North has grown since the 2008 global financial crisis. More recently, the pandemic has disrupted supply chains. With the new Cold War, the US, Japan and others are demanding their TNCs ‘onshore’, that is, to stop investing and subcontracting to China, also harming cross-border suppliers.
That’s why, net The gains from joining the CPTPP, or ratifying it for those who signed up in 2018, are dubious for most, especially with its paltry benefits. After all, trade liberalization only benefits everyone when the ‘winners’ compensate the ‘losers’, which neither the CPTPP nor its requirements do.
With the great powers facing each other in the new Cold War, developing countries must remain ‘non-aligned’, however appropriate for these new times. They should not take sides between the dominant West and its adversaries, led by China, by far the biggest trading partner for more and more countries.
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© Inter Press Service (2022) — All rights reservedOriginal source: Inter Press Service