WASHINGTON, Nov. 23, 2016 - The death of the Trans-Pacific Partnership has given new life to another multinational trade pact, but this one is being led by China and doesn’t include the U.S.
The Regional Comprehensive Economic Partnership (RCEP) offers China the opportunity to exert leadership in the Pacific Rim, where the Obama administration had hoped to guide how international trade is conducted. And that could be bad news for American agriculture, U.S. government and industry officials say.
U.S. Trade Representative Michael Froman has been saying for months that if Congress does not ratify TPP, with its built-in protections for environment and labor standards, the way would be paved for China to take the lead in commerce with the dozens of nations that border the Pacific Ocean.
“Many of the TPP countries are also involved in that (RCEP) negotiation and we’re already seeing accelerated efforts by the Chinese to try and move that negotiation forward,” Froman told Agri-Pulse in an interview.
That could be a problem for the U.S., said Joe Glauber, a senior research fellow with the International Food Policy Research Initiative, and a former USDA chief economist and one-time USTR chief agriculture negotiator.
By ditching TPP and allowing RCEP to take its place, he said, the U.S. would be ceding its leadership not just to China, but also to other major trading competitors that are also part of TPP.
“I think we are losing out over the longer term,” Glauber said in an interview. “Australia and others are going to benefit from other trade agreements, and I think we need to be part of that, not standing outside looking in.”
Earlier this year Froman confirmed that other countries were lining up to join in what was planned to be a 12-member TPP: the U.S., Japan, Vietnam, Australia, Malaysia, Singapore, Peru, Mexico, Canada, New Zealand, Chile and Brunei. There was even talk that China might eventually seek to enter the pact.
On Sunday, President Barack Obama concluded what will likely be his last official overseas trip in Lima, Peru, where he attended the annual Asia-Pacific Economic Cooperation (APEC) meeting. Under different circumstances, he might have been planning the implementation of the TPP with other leaders, as all of the TPP member countries were represented at the summit.
But the international spotlight has shifted to the RCEP, where China is already a participant, along with several countries that were in the final stages of ratifying TPP. The 16 countries negotiating RCEP are China, the Philippines, Japan, Australia, India, South Korea, New Zealand, Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Singapore, Vietnam and Thailand.
At APEC, Peru President Pedro Pablo Kuczynski addressed the rising tide of anti-globalism that played a role in the U.S. election campaign, during which both Trump and Hillary Clinton bashed the TPP.
“The world today values human and social development,” Kuczynski said on Sunday. “Growth by itself is not enough. We have to do more. In this APEC meeting, facing a rapidly changing international context, we are going to try to emphasize, strongly, the points we think are important for the inclusive, sustainable growth of the Asia-Pacific.”
For now, though, there seems little hope of revival of the TPP any time soon.
Floyd Gaibler, director of trade policy for the U.S. Grains Council, said in an interview Monday morning that he was still hopeful TPP could be revived. But that was before President-elect Donald Trump announced that night that he would start the withdrawal process from TPP on his first day in office.
“On trade, I am going to issue a notification of intent to withdraw from the Trans-Pacific Partnership, a potential disaster for our country,” Trump said in a video statement. “Instead, we will negotiate fair bilateral trade deals that bring jobs and industry back onto American shores.”
That would be a setback on the international stage, Froman said.
“There’s no problem with (RCEP) moving forward as long as TPP does,” he said. “But if RCEP moves forward and TPP doesn’t, we’re going to find ourselves facing a set of rules in the region that don’t necessarily reflect out interests and our values.”
Gaibler said the TPP would be key in allowing the U.S. to set the international trade standards.
“I think whoever has the broadest group of support for a trade policy over there is going to set the standard for the rest of Southeast Asia and possibly in this hemisphere,” he said. “The TPP was designed to be a free trade policy for Asian and Pacific countries and that includes our hemisphere and Asia, so it’s critically important that whichever trade architecture is going to win out is going to set the rules of the road. That’s why it’s important for economic, but also geopolitical reasons.”
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