Back in December, I argued in the Huffington Post that the Trans-Pacific Partnership (TPP) is really not about “free trade,” but about serving the strategic interests of Washington.
Negotiations are still ongoing (mostly in secret, somewhat notably) and many of the details are not known (except for a leaked chapter published by WikiLeaks). While some smaller countries in the Asia Pacific are likely to get a boost economically, the economic gains for the U.S. are minimal: “only 0.13 percent, $27 billion, by 2025,” according to Samuel Rines at the National Interest. “But,” Rines notes, “realizing an immediate economic benefit is not the American goal.”
It’s more about engaging with emerging Asia and being present while the rules of trade are set. Exports and privileged access to the US market benefit emerging Asia, as the terms of trade will favor them over trading partners not at the table. The US and Japan could also act an economic counterbalance to China in the region—helping the smaller, less-developed countries compete for export growth.
While China has said it would like to be part of the discussions, it has yet to sit at the table. China would stand to lose about 1.2 percent in exports, but only about 0.3 percent GDP—translating to only $57 billion in export losses and $47 billion lower GDP. These losses are easily surmountable, and China does not lose enough to be convinced to participate in discussions surrounding state-owned enterprises (SOEs) and governmental participation in the economy.
If one wants free trade, one should encourage open and free commerce across borders without protective tariffs, subsidies, or strictures that crowd out competition for favored corporations. The TPP may lower some tariffs over time, but U.S. lobbyists are pushing for provisions that would keep tariffs, subsidies, and protectionism for big businesses in the U.S. while subjecting everybody else to the grind of competition (for details, see my HuffPost article).
China is being effectively excluded from involvement in the supposed “free trade” deal thanks to provisions that single out specific structures of the Chinese economy for reform. One example cited by Rines is the provisions on targeting state-owned companies, of which China has many.
“Some proposed definitions would go so far as to define an SOE as any business in which a government has a stake, limits the amount of competition, or acts on the company’s behalf,” Rines explains. This is too broad and would target lots of U.S. companies, so Washington is pushing for more specific language to single out Chinese companies, thus discouraging China’s involvement in the deal.
“When it comes to TPP clearly the focus is not the economics for the U.S.,” Rines asserts. “Hailed as part of the Asian pivot, the TPP is more political than anything for the U.S.”
So really the TPP isn’t about free trade. It’s about global power and corporate favors for U.S.-based companies. It’s about boosting Washington’s geopolitical leverage in the Asia-Pacific. It’s about staving off China’s inevitable rise for the sake of preserving America’s global hegemony.