Trans-Pacific Partnership: More Than The Economy, Stupid

President Donald Trump has signed an executive order to withdraw the United States’ involvement in the Trans-Pacific Partnership (TPP).

Putting into practice his protectionist “America first” rhetoric, Trump signed the order on his first full day in the White House, effectively burying the already problematic trade policy of former President Obama’s “pivot” to Asia.

The TPP was a multilateral free trade agreement (FTA) between twelve Pacific-rim nations, which represent about 40% of the global economic output (GDP). The agreement included the US, Japan, and Australia. The pact aimed to strengthen economic ties between these nations and reduce trade barriers, in order to eventually create something of an EU-style single market.

However, the TPP was never just about economics. Significantly, China was excluded from the deal. This has fuelled claims that the agreement, negotiations of which developed against the backdrop of growing Chinese influence and assertiveness, was a tool for preserving US economic and strategic interests in the Asia-Pacific.

Since the Second World War, the United States has viewed itself as the guarantor of peace and security in the Asia-Pacific. With the collapse of the Soviet Union, it became the lone superpower and has held an unchallenged economic hegemony in the region. However, with rapid Chinese economic growth being followed by an increasingly assertive strategic policy, the geopolitical landscape is shifting.

The flashpoint of these forces is the South China Sea, a key trading route and the site of disputed territorial claims, over which the Trump administration has already asserted the US will defend its interests. In his confirmation hearing, Trump’s nominee for Secretary of State, Rex Tillerson, said that the US will clearly signal to China that the island building will stop and that access to the disputed islands is “not going to be allowed.”

Whilst the risk of premeditated provocation is low, the potential for escalating Sino-US tensions lies with a series of downward spiraling strategic maneuvers, which could ensue if a trade war were to develop between China and the US. To date, the Chinese reaction to what it deems as provocative action by the US has been to raise the stakes. If the Chinese government were to be pushed into a corner and its legitimacy is challenged, the repercussions could be alarming.

In the wake of the TPP collapse, South-East Asian nations have expressed fear at being further caught between China and the US. Philippine Defence Minister Delfin Lorenzana warned at an ASEAN security forum in Singapore that South-East Asia is not a “proxy” for superpower rivalry between the US and China.

Malaysia’s Defence Minister Hishammuddin Hussein has also spoken about regional nations that are too often being wedged between China and the United States. “Look beyond tired and childish notions of winners and losers for the simple fact that peace is a universal good and not a zero-sum game,” he said.

With that said, this all has significant implications for Australia. For example, China is Australia’s biggest trading partner, whilst the US is our greatest ally and strategic partner.

Scrapping the TPP is a win for China, who will hope to fill the vacuum by leading its own trade agreement, the Regional Comprehensive Economic Partnership (RCEP), thereby writing the ground rules for future trade in the region.

Australian Prime Minister Malcolm Turnbull suggested that ratification of the TPP can continue, with China taking the place of the US. However, other state parties to the TPP see no hope of salvaging the agreement. Reiterating Japanese Prime Minister Shinzo Abe’s words that the deal is “meaningless” without the US, Deputy Cabinet Secretary Koichi Hagiuda told the Japan Times that “[t]he fundamental balance of interests is lost without the US.” Canadian Foreign Affairs Minister Chrystia Freeland also told reporters that the TPP deal “cannot happen” without the US.

Instead of multilateral accords, the Trump administration will be seeking to strike up bilateral trade deals with nations in the Asia-Pacific. Having already vowed to strengthen the US military presence and capability, it is important that the US has an economic dimension to its Asia policy, in order to balance relations with and avoid destabilizing the region.

Lucas Hafey