Anyone who says that China's President Xi Jinping does not have a sense of humour is definitely not following the news from the Pacific these days.
China last week applied for membership in the Trans-Pacific Partnership — the trade deal that was originally negotiated by President Barack Obama precisely to counter China's economic power in the Pacific. Unfortunately, President Donald Trump promptly tore it up rather than learn what it was about and get Congress to ratify it, and the Democrats have since then made no move to revive the deal, known as the TPP.
Beijing applying to join the TPP is the diplomatic equivalent of the US asking to be a member of China's "belt and road" trade and investment initiative in Asia, or Russia applying to be a member of the new NAFTA because it controls part of the Arctic north of Canada. In other words, a deliciously mischievous ploy.
But it's a ploy that exposes a real weakness in US foreign policymaking toward China, which has become the biggest challenger to American preeminence in setting the rules of today's international system in both trade and diplomacy.
China's announcement came the day after Britain, the US and Australia took geopolitical competition with China to a new level by announcing a historic security pact to help Australia deploy the most advanced nuclear-powered submarines, to counter Beijing's growing naval clout in the Asia-Pacific region.
But we need a strategy for not just containing China with submarines that could take years before going on patrol. We need a strategy for changing China's behavior today, which is what the TPP was partly designed to do.
China was never formally excluded from the TPP by its Obama administration designers. But the message to Beijing was: If you want to be part of this American-crafted 21st-century trade pact, you have to play by our rules. That's why reformers in China were intrigued by the TPP — they saw it as a lever to open the Chinese system — and hard-liners feared it more than submarines.
But after the US-UK-Australia sub deal, the Chinese obviously said to themselves: "Let's have some fun. After the Americans were so stupid as to never join the trade pact that they designed to keep us out, America in and its Pacific allies close, the 11 other partners went ahead without them. They even renamed it the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). So, let's try to use the attraction of easier access to China's giant market to take over the TPP on our terms instead of America's! And what better way to counter the American submarine deal with Australia?"
It was a brilliant move. As The Wall Street Journal reported last Friday: "A decade ago, it was a trade club led by the US seeking to limit the influence of China's economic model. Now Washington is out of the Trans-Pacific Partnership and Beijing wants in — as the group's biggest member."
While China's admittance is not likely anytime soon (it requires unanimous consent of the members), just by applying Beijing is exposing how unserious the American far left and far right are when it comes to China. They rail against Beijing's human rights policy and then they block one of America's most effective tools to nudge — and that is the most we can ever do — China toward more transparency and the rule of law, i.e., TPP.
"Reformers in China carefully monitored the original TPP negotiations with the hope that China joining the TPP could lead to domestic reforms,'' said James McGregor, chairman of the consultancy APCO Worldwide, Greater China. "Those days are gone. In its new bid to join, China will likely try to use the lure of its huge market to entice the other members to live with China meeting some TPP requirements while muddying others.''
What makes this Chinese manoeuvre more ridiculous is that Trump was so ignorant about the contents of the TPP before he tore it up — his main objection was surely that Obama had negotiated it — that when he was first asked about it in a campaign debate in November 2015, Trump incorrectly suggested that China was in it from the start. Trump was just ahead of his time!
But Trump's foolishness had a lot of tacit support from Bernie Sanders and his fellow progressives with their knee-jerk opposition to the pact — even though it was designed by Obama to address all the core labor and environmental issues that the left did not like about free trade.
Let's go to the videotape and recall what the Obama team — not Trump, not the GOP — O-B-A-M-A — built into the original TPP, which also included Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
One of the largest multilateral trade agreements ever negotiated, it included restrictions on foreign state-owned enterprises that dumped subsidised products into our markets. It detailed intellectual property protections for the newest and most advanced American-made tech products — like free access for all cloud computing services, which China restricts. It set out explicit anti-human-trafficking provisions that prohibited turning guest workers into slave labor. It banned trafficking in endangered wildlife parts, a practice still common in China that may have played a role in the pandemic. It required signatories to permit their workers to form independent trade unions to collectively bargain and to eliminate all child labor practices.
Indeed, speaking on a trip to Australia in 2012, then-Secretary of State Hillary Clinton said that "this TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field." It would build in "strong protections for workers and the environment. … Respecting workers' rights leads to positive long-term economic outcomes, better jobs with higher wages and safer working conditions."
Typical of a Democrat, though, candidate Clinton ran away from the deal when she ran against Trump, rather than explain that some 80 per cent of the goods from our 11 would-be TPP partners were already coming into the US duty-free, while our goods and services were still being hit with some 18,000 tariffs in their countries — tariffs that the deal would have eliminated. By accounting for 40 per cent of global GDP, the original TPP would have become a real standards-setter in the Pacific.
The Peterson Institute for International Economics estimated that US national income would also have grown by some US$130 billion a year by 2030 with the TPP. Not huge, but a nice bump.
This is all the more a tragic comedy because our Pacific allies actually gave America trade concessions to create the agreement that they would not do before — precisely because they wanted us in the neighbourhood as a bigger economic counterweight to China's growing domination. And then we walked away, and now China wants to take our place — on its terms.
It is not too late for America to get back into the TPP and even strengthen it by insisting on stricter rules of origin (which Trump added to the new NAFTA). This would ensure that if somehow China were admitted to the partnership, it could not get around US tariffs on certain Chinese exports by moving their final assembly to Vietnam, while keeping the core value chain in China.
I'll take America joining the TPP today over helping to deploy submarines years from now. By then, if America continues to stay out, the CPTPP surely will be renamed again. It will have the same initials but they will stand for the "Chinese People's Trans-Pacific Partnership."
Now wouldn't that be funny. …
This article originally appeared in The New York Times.
Written by: Thomas L. Friedman
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