Rule-writing through TPP difficult for US

Source:Global Times Published: 2016-2-14 22:28:01

Illustration: Shen Lan/GT



The Trans-Pacific Partnership (TPP), which has been five years in the making, was signed by ministers from its 12 member states in New Zealand earlier this month. The multinational trade deal will take effect after being ratified in law. Despite the fact that China is left out of the US-led trade bloc, the TPP cannot crush China's economy.

US President Barack Obama said earlier in a statement that the "TPP allows America - and not countries like China - to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific," adding that "partnership would give the US an advantage over other leading economies, namely China." For Washington, the signing ceremony in Auckland marks a substantial step toward rule-making.

Nonetheless, the trade bloc is far from enough to secure US domination of the global economy. To begin with, the TPP has "high standards" in labor rights, intellectual property rights, the share of state-owned enterprises and so forth. These high thresholds have determined that the bloc is open to a limited number of member nations. This will produce an intrinsic contradiction: To absorb more nations, the TPP may privately lower its standards to some countries, giving rise to new unfair phenomena.

For instance, compared with Vietnam, China is obviously more able to reach the "high standards." As it is a tough task for Vietnam to obey all the TPP rules, the US is highly likely to offer advantages to Vietnam in private. The high standards may give rise to unfairness.

In addition, TPP member states have their own interests. They joined the bloc for different aspirations. Admittedly, certain countries, for instance, Japan, may prioritize the desire to counter China over others. Yet, many other bloc members attach more importance to their domestic economic and trade development. More than half of them have forged free trade agreements with China. The TPP cannot prevent them from trading with Beijing. Considering concrete economic benefits, these countries will not take sides between China and the US.

More importantly, Washington's comprehensive strength seems to be witnessing a decline, making it harder for the US to write the rules. In the past, the US, given its strong clout, has offered substantial public goods and services as part of the process of rule-making. Offering significant resources to other nations is one of the biggest advantages for US-made rules to be accepted by the international community.

However, with declining influence, Washington, be it in the TPP or in the TTIP (Transatlantic Trade and Investment Partnership), is offering less public goods, and meanwhile making more requests to other member states. This serves as a significant obstacle for the White House to write the widely-accepted rules in the 21st century.

While the TPP cannot crush China's economy, it may pose some challenges to China's economic development. The bloc may bring fundamental changes to the international division of labor and trade flows. This means that while Beijing could accumulate abundant resources as a part of the industrial chain in the past, production processes may intentionally bypass Beijing after the TPP takes effect. Changes to international trade patterns may pose a challenge to China's economic development.

However, the Chinese government has the wisdom to cope with the potential challenges the TPP may generate. Some TPP rules may represent global development trends. If China strives to meet the "high standards" and follows the rules, the disadvantages brought by the TPP will be minimized. The TPP is both a challenge and an opportunity for China. It is wise for the Chinese government to seize the opportunity to accelerate institutional innovation and economic restructuring.

Above all, the TPP cannot smash China's economy. Beijing has the capability and wisdom to address the TPP's potential threats.

The article was compiled by Global Times reporter Liu Jianxi based on an interview with Ni Feng, deputy director of the Institute of American Studies at the Chinese Academy of Social Sciences. liujianxi@globaltimes.com.cn



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