Our directory of things of interest

University Directory

US trumping China in Pacific trade race

US trumping China in Pacific trade race Shutterstock
12 Nov
2014
US free trade bloc, the Trans-Pacific Partnership, trumps a rival Chinese initiative – for now

Almost ten years ago, the United States launched the Trans-Pacific Partnership (TPP) with hopes to contain Chinese commercial influence in the region. Meanwhile, China has been pursuing its own model for a free market framework in the Pacific. The Regional Comprehensive Economic Partnership (RCEP), launched in 2012.

The TPP was a sorry affair at first, with only four relatively small players involved: Brunei, Chile, New Zealand and Singapore. But today, despite US economic weakness, the TPP is in good health. Mexico, Canada and Japan are on board, while Taiwan and South Korea have both also expressed an interest in joining. 

That means the TPP now covers almost half of the world's wealth production, along with a third of the world’s population.

The TPP is about more than just opening financial barriers, though. The deal is a whole package connected to diplomacy, ideology and defence in the Pacific known as the ‘pivot to Asia’.

‘At the centre of the Pivot is the decision to increase the presence of the US Navy’s fleet in the Asia-Pacific from 50 to 60 per cent by 2020,’ said Vince Scappatura in a research paper for the Asia-Pacific Journal. ‘Today, 104 of the US Navy’s 290 ships are deployed around the world, with 50 of them in the Asia-Pacific region. The Pivot will see the number of ships deployed there in 2020 increase to approximately 67, notably including a majority of US aircraft carriers.’ Japan has also strengthened military activity in the region with naval forces sent to the Philippines, Vietnam and Indonesia.

US progress on building the free trade bloc has not been without problems, not least being revelations from Wikileaks. The TPP has far-reaching implications for products as diverse as pharmaceuticals and agriculture.

‘If instituted, the TPP’s IP [Intellectual Property] regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons,’ said Wikileaks founder, Julian Assange. ‘If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs.’

The Australian Medical Association (AMA) was among many groups to voice concern over the TPP. An AMA resolution on the TPP noted ‘Free trade agreements which prioritise investor protections, including through invest-state dispute settlement, allow foreign investors to challenge existing and future Australian health policy measures on grounds that they may constitute ‘barriers to trade’. Trade and investment agreements should not adversely impact on public health or access to quality and affordable health care and medicines.’

China's RCEP has some crossover with the TPP, but also includes the ten Association of Southeast Asian Nations (ASEAN) members as well as India. Although participants are keen to present RCEP as complimentary to the TPP (‘mutually-reinforcing parallel tracks for regional integration,’ as Singapore’s Ministry of Trade and Industry puts it), the different approaches also reflect tensions between China and the US.

For now the TPP seems to be approaching a final agreement, but there are still potential difficulties from pressure groups within member countries and possible resistance from congress.

RECP might have a late start, but it could still catch up if the TPP becomes overly controversial in US domestic politics.

Ultimately, the two models could converge to create a Pacific ‘free trade area’, but much will depend on how wider US-China relations develop.

NEVER MISS A STORY - Follow Geographical on Social

Want to stay up to date with breaking Geographical stories? Join the thousands following us on Twitter, Facebook and Instagram and stay informed about the world.