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What Does the TPP Mean for the World as a Whole? Can It Contain China?

I am a classics scholar and former physicist (and of late, aspiring political blogger), not an economist. I will readily cede hosting the comments thread below to anyone who is more qualified. But someone has to make a start at understanding the Trans-Pacific Partnership (TPP, on which the current wiki admits being over a year out of date) from a progressive standpoint at the macro level. At the micro level, an excellent primer on the effects the initiative will have on labor rights and the like in the participating countries was given a year ago by Jane Hamsher (who handily summarized the thing as “NAFTA on steroids”). A more up to date analysis appeared in HuffPo last month. There are also studies of more specific issues within that framework, in particular that of intellectual property by the Electronic Frontier Foundation (h/t karenjj2). But what does it mean for the global balance of power? I have only seen vague intimations that it has to do with containing China, so there we need some work.

First, some basics. The negotiations have been conducted in secret, so that what we know about the TPP is based on leaked documents. For example, for the intellectual property section we have a US proposal dated February 10, 2010, just before the 5th round of negotiations in Santiago, Chile. That’s pretty out of date since there have now been 16 rounds (the latest in Singapore just last month, with the 17th coming up on May 15-24 in Lima, Peru). Currently the countries taking part are: US, Canada, Mexico, Peru, Chile, Vietnam, Malaysia, Singapore, Brunei, Australia and New Zealand, but it was announced today that Japan (which would be a significant addition to say the least) and the US have “agreed on a deal paving the way for Tokyo to join [the] talks.” As the HuffPo article notes, Obama will attempt to get the eventual agreement through Congress with “fast track authority,” so that amendments cannot be offered. This could happen as early as late this year.

For a global analysis we can begin with an article in the Washington Post’s business section from last September. One point it makes is that Vietnam and Malaysia are direct competitors with China for investment by foreign companies, so that it would be hurt by the relaxed rules they would enjoy under the TPP. (What about the impact of Japan coming in? It does not have much foreign investment at present, but at least the WSJ is urging it to do something about that, and PM Abe may be close enough to its politics to listen.) And the WaPo article asserts that “top Communist Party figures” have said they want more foreign investment, granted that this was before Xi Jinping took over the leadership.

As to that. Xi has at least indicated that he likes foreign investment, telling a forum held on Hainan Island on Monday that China would “protect the rights” of the investors. To be sure, representatives of some major multinationals were expressing concerns to him at this meeting to the effect that China needed to relax restrictions stemming from the state-oriented economy in order to make investment more feasible. Apparently this one is in the category of wait and see.

Indeed, it is possible that China thinks its economy is doing fine without any help from further foreign investment, thank you very much, so that the TPP can’t do much to hurt it. (In fact, its annual growth rate was 9.3% of GDP for the period 2008-2012.) That would be good from the standpoint of progressives in the US because any weakening of the corporate hegemony makes it less difficult to fight at home.

And of course, China is at least attempting to counter US world economic influence by working within the BRICS group of countries. This coalition is an ambitious undertaking, most recently proposing a new “Development Bank” to rival the West-dominated World Bank. Whether it can overcome the centrifugal forces within it (such as territorial disputes between India and China) is a question, but it is certainly acting boldly enough to suppose that its members at least think so.

I am conscious of the point that we could use more information to fully understand the situation. Still, if the forces within the US who are behind the TPP indeed think it will undermine China’s influence, based on this preliminary analysis they could well be mistaken.

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E. F. Beall

E. F. Beall