The geopolitics of the TTIP and the TPP

Abstract

As economic powers from the developing world, particularly China, have emerged in the past few decades, their weight has altered the balance in the global trading system. This has presented challenges in the World Trade Organisation (WTO), where the Doha Round of multilateral negotiations has dragged on for more than a dozen years. Frustrated by this stalemate, many countries have sought alternatives. Among these are ‘mega-regional’ trade agreements such as the proposed Transatlantic Trade and Investment Partnership (TTIP) between the US and EU, and a 16-member Trans-Pacific Partnership (TPP).

In this volume, leading commentators – including two former heads of the WTO – examine the possible consequences of this shifting trade landscape. Is globalisation in reverse, and have countries been retreating from liberalisation since the world financial crisis of 2008– 09? Are the ‘mega-regional’ deals an existential threat to the WTO regime, or can they be used as building blocks towards wider multilateral agreement on a broad range of issues, from industrial standards to intellectual property rights. And what does it all mean for the balance of geopolitical power between the developed and developing world?

Notes

1 See Aaron L. Friedberg, A Contest for Supremacy: China, America, and the Struggle for Mastery in Asia (New York: W.W. Norton and Company, 2011); and Dan Blumenthal and Phillip Swagel, An Awkward Embrace: The United States and China in the 21st Century (Washington DC: American Enterprise Institute, 2012), pp. 8–11.

2 Ashley J. Tellis, Balancing without Containment: An American Strategy for Managing China (Washington DC: Carnegie Endowment for International Peace, 2014), pp. 11–15.

3 The ITO was created by the Havana Charter signed in March 1948, but faded away after this charter was never ratified by the United States Congress.

4 For an excellent overview of the origins of GATT, see Thomas W. Zeiler, Free Trade, Free World: The Advent of GATT (Chapel Hill, NC and London: University of North Carolina Press, 1999).

5 See Ashley J. Tellis and Travis Tanner (eds), Strategic Asia 2012–13: China's Military Challenge (Washington DC and Seattle: National Bureau of Asian Research, 2012).

6 Catherine L. Mann, ‘Breaking Up is Hard to Do: Global Co-Dependency, Collective Action, and the Challenges of Global Adjustment’, CESifo Forum, vol. 6, no. 1, Spring 2005, pp. 16–23.

7 Ashley J. Tellis, Power Shift: How the West Can Adapt and Thrive in an Asian Century (Washington DC: German Marshall Fund of the United States, 2010), pp. 3–4.

8 Aaron L. Friedberg, Beyond Air–Sea Battle: The Debate Over US Military Strategy in Asia, Adelphi Book 444 (Abingdon: Routledge for the IISS, 2014).

9 See Jasen J. Castillo et al., Military Expenditures and Economic Growth (Santa Monica, CA: RAND Corporation, 2000).

10 Corelli Barnett, The Collapse of British Power (New York: Morrow, 1972), 589ff.

11 Zbigniew Brzezinski, ‘Moving Towards a Reconciliation of Civilizations’, China Daily, 15 January 2009.

12 Hugh White, The China Choice: Why America Should Share Power (Collingwood, Australia: Black Inc., 2012).

13 Only declassified in 1975, the 58-page NSC Report No. 68 was one of the most influential US government documents during the Cold War. Its authors argued that the best response to a fundamentally hostile Soviet Union that would soon acquire more nuclear and other weapons was ‘a more rapid build-up of political, economic, and military strength and thereby of confidence in the free world … consistent with progress toward achieving our fundamental purpose. The frustration of the Kremlin design requires the free world to develop a successfully functioning political and economic system and a vigorous political offensive against the Soviet Union.’ See National Security Council Report No. 68, ‘United States Objectives and Programs for National Security’, 14 April 1950, http://www.fas.org/irp/offdocs/nsc-hst/nsc-68.htm.

14 Tellis, Balancing without Containment, p. 29.

15 Melvyn P. Leffler, ‘The Emergence of an American Grand Strategy’, in Melvyn P. Leffler and Odd Arne Westad (eds), The Cambridge History of the Cold War: 1 (Cambridge: Cambridge University Press, 2010), pp. 67–73.

16 For a detailed elaboration of this four-pronged strategy, see Tellis, Balancing without Containment, pp. 35–84.

17 See Glossary.

18 Daniel S. Hamilton and Joseph P. Quinlan, The Transatlantic Economy 2013: Annual Survey of Jobs, Trade and Investment Between the United States and Europe (Washington DC: Center for Transatlantic Relations, 2013), p. 18.

19 See ‘Transatlantic trade talks: Opening shots’, The Economist, 6 July 2013; and Joseph Francois, Miriam Manchin, Hanna Norberg, Olga Pindyuk and Patrick Tomberger, Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment, Final Project Report for the European Commission (London: Centre for Economic Policy Research, 2013).

20 Michael Froman, remarks at the Transatlantic Trade and Investment Partnership First Round Opening Plenary, Washington DC, 8 July 2013, www.ustr.gov/about-us/press-office/speeches/transcripts/2013/july/amb-froman-ttip-opening-plenary.

21 Marta Dassù and Charles A. Kupchan, ‘Pivot to a Trans-Atlantic Market’, New York Times, 13 June 2013.

22 ‘The United States in the Trans-Pacific Partnership: Increasing American Exports, Supporting American Jobs’, Office of the US Trade Representative Press Office Fact Sheets, June 2012, https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2012/june/us-tpp-increasing-american-exports-supporting-american-jobs/.

23 See ‘Annual Trade Highlights: 2013 Press Highlights’, US Census Bureau, https://www.census.gov/foreign-trade/statistics/highlights/annual.html; and ‘Trade in Goods with Pacific Rim’, US Census Bureau, https://www.census.gov/foreign-trade/balance/c0014.html.

24 Peter Petri and Michael Plummer, ‘The Trans-Pacific Partnership and Asia-Pacific Integration: Policy Implications’, Peterson Institute for International Economics, June 2012.

25 Jagdish Bhagwati, Free Trade Today (Princeton, NJ: Princeton University Press, 2003), pp. 91–109.

26 Arvind Subramanian, ‘Too Much Legitimacy Can Hurt Global Trade’, Financial Times, 13 January 2013.

27 C. Fred Bergsten, Competitive Liberalization and Global Free Trade, Working Paper 96–15 (Washington DC: Peterson Institute for International Economics, 1996).

28 Susan E. Rice, ‘America's Future in Asia’, remarks at Georgetown University, Washington DC, 21 November 2013, http://www.whitehouse.gov/the-press-office/2013/11/21/remarks-prepared-delivery-national-security-advisor-susan-e-rice.

29 Bai Gao, ‘From Maritime Asia to Continental Asia: China's Responses to the Challenge of the Trans-Pacific Partnership’, Conference Paper presented at ‘The Trans-Pacific Partnership and Taiwan's Future Development Strategy’, Stanford, CA, 11 October 2013, http://iis-db.stanford.edu/evnts/7924/Gao.TPP_paper.pdf.

30 I am grateful to Fred Bergsten for sharing this data with me. It derives from Peter A. Petri, Michael Plummer and Fan Zhai, ‘The Effects of a China–US Free Trade Agreement’, subsequently published in Fred Bergsten and Gary Hufbauer (eds), Bridging the Pacific: Toward Free Trade and Investment Between China and the United States (Washington DC: Peterson Institute for International Economics, 2014). The data is based on simulations for the year 2025 on the assumption that the TPP would have 16 members (with Korea, Indonesia, the Philippines and Thailand as the additional four).

31 See Glossary.

32 Douglas A. Irwin, ‘Historical Aspects of US Trade Policy’, National Bureau of Economic Research, Summer 2006, http://www.nber.org/reporter/summer06/irwin.html; and Pietro S. Nivola, ‘The New Protectionism: US Trade Policy in Historical Perspective’, Political Science Quarterly, vol. 101, no. 4, 1986, pp. 577–600.