TPP on the Rocks: End of US Pivot to Asia Pacific?
Andrei AKULOV | 26.08.2016 | FEATURED STORY

TPP on the Rocks: End of US Pivot to Asia Pacific?

The US administration is making an all-out push to win passage of the Trans Pacific Partnership (TPP) in the lame-duck session of Congress.

The agreement will enter into force after ratification by all signatories, if this occurs within two years. If not ratified by all before 4 February 2018, it will come into effect after ratification by at least 6 states which together represent at least 85% of the total GDP of the original 12.

The deal, which is opposed by most Democrats and lacks the support of key Republican lawmakers, is coming under harsh criticism from Donald Trump and, increasingly, from Hillary Clinton. Both major presidential candidates have attacked it. The Democratic presidential candidate has recently even toughened up her position to repudiate the proposed agreement.

In his turn, Donald Trump has called for an overarching isolationist foreign policy and abolishing NAFTA.

The present administration has failed to do a good job of selling the idea to the people. The TPP deal is hitting snags on the way having become too politicized – too much about foreign policy and not enough about economic issues. There is a widespread concern with declining employment opportunities in the national economy. The middle class and workers believe that too many American jobs have been lost to countries with lower costs of doing business, especially wages. Many people hold the opinion that the rejection of the pact would protect American workers from an inflow of detrimental imports or an outflow of good-paying jobs. The criticism of controversial TPP has become widespread in US politics to make its passage far from certain.

On August 12, President Obama signaled his commitment to getting the deal done by effectively notifying lawmakers he would submit the trade bill later this year, probably after the November 8 election.

But lame-duck sessions last typically no more than 30 days, and often less. That’s a very compressed timetable for getting any legislation through.

The administration’s push is expected to reoccur at Capitol Hill in September, when lawmakers return from their summer break.

Meanwhile, administration officials, including Commerce Secretary Penny Pritzker, are holding events with business and agriculture executives in a bid to bring the message home and drum up support for the deal.

The failure to push the deal through Congress will be a great setback undermining the US credibility in the region, where Washington loaded the accord with strategic significance as a counterweight to the rise of China. China, not part of the Trans-Pacific deal, is negotiating a separate Asia pact – the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement comparable to the TPP, but led by Beijing. China is also pledging more regional loans through a new bank and a $40 billion Silk Road fund. Without the TPP, the US could be left out. Pacific nations seeking foreign trade and investment will look east, to Beijing.

The administration believes the deal is central to a shift of American military and other resources to the region.

«For America’s friends and partners, ratifying [the trade pact] is a litmus test for your credibility and seriousness of purpose», Singapore Prime Minister Lee Hsien Loong said during his recent visit to Washington, speaking in the name of Pacific Rim signatories.

The 12-nation TTP covers about 40 percent of the global economy and one-third of world trade bringing together Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. The Singaporean Prime Minister’s comments carry additional weight as he was in effect talking on behalf of all of the TPP’s Asian partners. Regional leaders who spent political capital to support the pact will be less likely to do so again if it fizzles. In particular, the Prime Minister of Singapore spoke for Japan, saying «Relations between the United States and Japan will suffer if US President Barack Obama fails to win Congress approval of a Pacific free trade agreement before leaving office in January». According to him, the failure to ratify the agreement would hurt Prime Minister Shinzo Abe domestically and affect Washington’s security agreement with Tokyo.

The TTP is not the only alternative the Pacific Rim nations have. Besides the above mentioned talks on the agreement with China, there are other developments to be mentioned. In late July, the Eurasian Economic Union (EAEU) ratified its first-ever free trade agreement with a country outside of the Union – Vietnam.

This is a start of a journey. Recently the EAEU has received around 40 proposals for free trade agreements (FTA). Many of them come from Asia-Pacific countries. This year the Union has signed memoranda of cooperation with Cambodia and Singapore. With regard to Singapore, the EAEU intends to launch a joint feasibility study group before the end of this year in order to identify potential benefits for both sides. The fact that the EAEU market is not yet as deeply integrated into global economy as many others makes it specifically attractive. During the Russian President’s visit to China in June, the EAEU signed a joint declaration on transition to the negotiation stage for development of the Agreement on Trade and Economic Cooperation between the Eurasian Economic Union (the EAEU) and the People’s Republic of China. If an economic cooperation deal with China is reached, it’ll be a huge step forward.

Russia is interested in drawing all Asia Pacific countries, not only China, into projects to develop Siberia and Russia’s Far East. For those unwilling to make a definitive choice between the US and China, Russia and the EAEU would become a truly independent center of power. In 2016, the process of rebalancing Russia’s Asian policy got underway with a sequence of milestone summits: the Russia-Japan Summit on May 6 and the ASEAN-Russia Summit on May 19-20. No breakthroughs reached, but the events produced tangible results. As ASEAN member states expand their economies, the demand for traditional Russian exports (energy, raw materials and energy infrastructure), as well as agricultural products increases. The idea of ASEAN and EAEU forming a free trade area was broached for the first time at the summit, while the talks about setting up FTAs between the EAEU and specific ASEAN countries, such as Singapore, Cambodia, Thailand and Indonesia, and are already underway. The ASEAN-Russia Summit declaration mentions the need to explore ways for Russia to join RCEP. In a broader sense, the idea to bring together the EAEU, ASEAN, the Shanghai Cooperation Organization and the Silk Road Economic Belt has great prospects.

Russia’s intention to expand the Greater Eurasian community to encompass its EAEU partners, China, India and Iran, ASEAN countries and the China-led RCEP will create a major Euro-Asian political and economic arc. The mega community will no doubt have every chance of becoming the backbone of the world order in the 21st century covering a major part of the Eurasian space and most Asian countries to overshadow US-led projects, which now have a slim chance to ever materialize anyway.