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Back in Asia: the US's TPP Initiative and Its Implications for China

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Back in Asia: the US's TPP Initiative and Its Implications for China Southeast Asian Journal of Social and Political Issues, Vol. 1, No. 2, March 2012 | 126 Back in Asia: the US’s TPP Initiative and its Implications for China Zhang Zhen-Jiang 张振江 (Institute of Southeast Asian Studies, Jinan University, Guangzhou, China) Abstract Trans-Pacific Partnership develops from the Pacific Three Closer Economic Partnership (P3-CEP) initiated by Chile, Singapore and New Zealand in 2002 and joined by Brunei in 2005. The four countries finally finished their talks and singed the Trans-Pacific Strategic Economic Partnership Agreement (P4) on June 3rd, 2005. American President George W. Bush announced that the US would join TPP in late 2008. It was suspended by new American President Barrack Obama for his trade policy review. However, the US government restarted its joining efforts in late 2009 and was quickly joined by several other countries. This paper aims to investigate the origin, nature and development of TPP, analyze America’s motivations, and study its possible impacts upon the East Asian Regionalism in general and upon China in particular. Finally, the author calls for China to take the active policy to join the TPP negotiating process. Keywords: TPP, America’s Trade Policy, East Asian Regionalism, China Introduction On December 14 2009, the Office of the United States Trade Representative formally notified the Congress that Obama Administration is planning to engage with the “Trans-Pacific Partnership” (thereafter “TPP”). American government formally started the first round negotiation with Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, and Vietnam in March 15-18, 2010 in Melbourne. Up to now, seven rounds of negotiations have been held (Round 2 in San Francisco in June 11-18 2010, Round 3 in Brunei in October 7-8 2010, Round 4 in Auckland in December 6-8, 2010, Round 5 in Santiago in February 14-18 2011, Round 6 in Singapore in April 2011, and Round 7 in Ho Chi Minh City in June 19-24 2011). There will be two more rounds of negotiations will be scheduled in this year in the United States in September and in Peru in October. Actually, the TPP members have set a goal of reaching the outlines of an agreement by the APEC Leaders’ meeting in Honolulu in November this year. (Office of the United States Trade Representative, 2011) Among the TPP negotiating members, Australia, Malaysia (joined the process in October 2010), Vietnam, and the already members of TPP New Zealand, Singapore and Brunei Darussalam are all participants of the East Asian Summit (10+6, the US will join the EAS this year), thus the expanding TPP will have the direct impacts on the East Asian regionalism. The following parts of the paper will respectively investigate the origin and nature of TPP, America’s motivations to engage Southeast Asian Journal of Social and Political Issues, Vol. 1, No. 2, March 2012 | 127 with TPP and its possible impacts on the East Asian regionalism in general and on China in particular. What is TPP? During his first visit to Japan as American President, Obama declared his plan to engage TPP in his speech in Tokyo on November 14, 2009. He said: “The United States will also be engaging with the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement.” (Obama, 2009) After President Obama’s policy declaration, at the same day, in his keynote speech at the APEC CEO Summit, United States Trade Representative Ron Kirk send more detailed message, “I am pleased to report that just this morning in Tokyo, President Obama announced that the United States will engage with the Trans-Pacific Partnership. This will be done in close consultation with the United States Congress and with stakeholders at home. We will seek with current and future Trans-Pacific Partnership participants to shape a platform with the scope, coverage, and standards to successfully integrate the Asia-Pacific economies.” (Kirk, 2009) The forerunner of TPP is the Pacific Three Closer Economic Partnership (P3- CEP). It was raised by the former Chilean President Ricardo Lagos, Singaporean PM Goh Chok Tong and the former New Zealand MP Helen Clark at the APECT Summit in Los Cabos, Mexico in 2002. This idea was quickly coming into being and these countries formally began to negotiate. Brunei joined the process at the fifth round of negotiation in April 2005. These four countries finally finished their talks and singed the Trans-Pacific Strategic Economic Partnership Agreement (P4) on June 3rd, 2005. A binding Environment Cooperation Agreement and a binding Labor Cooperation Memorandum of Understanding, which had been negotiated as part of the Trans-Pacific package, were signed concurrently. The Trans-Pacific Agreement entered into force on 1 May 2006 for New Zealand and Singapore, 8 November 2006for Chile and July 2009 for Brunei. According to the agreement, duties were eliminated on 90% of New Zealand’s exports to Chile and on 92% of New Zealand’s exports to Brunei. All of Chile’s remaining tariffs on New Zealand’s exports will be phased out by 2017 and to Brunei by 2015. In return New Zealand will phase out all its tariffs by 2015. As for Singapore and New Zealand, they have an existing New Zealand-Singapore Closer Economic Partnership (NZSCEP) already and tariffs between them have been already zero. (New Zealand Ministry of Foreign Affairs and Trade, 2009) All these four countries are small (no more than 16 million inhabitants) and are trade-orientated. Thus the TPP is a relatively comprehensive agreement on promoting free trade. A binding Environment Cooperation Agreement and a binding Labor Cooperation Memorandum of Understanding, which had been negotiated as part of the Trans-Pacific package, were signed concurrently. The formal treaty has 20 chapters including 196 articles. They are Initial provisions, General Definitions, Trade in Goods, Southeast Asian Journal of Social and Political Issues, Vol. 1, No. 2, March 2012 | 128 rules of Origin, Customs Procedures, Trade Remedies, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Competition Policy, Intellectual Property, Government Procurement, Trade in Services, Temporary Entry, Transparency, Dispute Settlement, Strategic Partnership, Administrative and Institutional Provisions, General Provisions, General Exceptions, and Final Provisions. (New Zealand Ministry of Foreign Affairs and Trade 2005) Although TPP is a small country imitative, it caused the attention from the United States of America. In February 2008, American government tried to start the preliminary negotiation on liberalizing financial service. In September 2008, it declared to start the formal talks to join TPP. (Oliver, 2008) According to the schedule, American government, along with Australia, Peru and Vietnam (as an observer) should formally start the first round of talks to join TPP in March in 2009. However, due to its national election, Obama’s new administration and the returning of the trade protectionism under the background the international financial crisis in 2009, Obama decided to postpone the talk. And his decision caused disappointments in New Zealand. (Kelsey 2009, Jacobi 2009). Eight months later, Obama eventually decided to continue George W. Bush’s decision to join TPP. After the policy declaration, Office of the United States Trade Representative (ISTR) quickly began its domestic arrangements. Trade Representative Kirk, Deputy United States Trade Representative Demetrios Marantis and Assistant U.S. Trade Representative Barbara Weisel - the lead U.S. negotiator for the Trans-Pacific Partnership - and Assistant U.S. Trade Representative Luis Jimenez actively met with Senate Finance Committee staff, House Ways and Means Committee staff, and House and Senate Agriculture Committee Staff, as well as with the House APEC Caucus, to discuss the Trans-Pacific Partnership. In January, USTR expanded regular consultations with congressional committees to include other key panels and has also briefed the chairs of trade advisory committees and the advisers representing states. All these consultations aim to develop its comprehensive and realistic objectives for the coming TPP negotiations. (Office of the United States Trade Representative, 2010) According to related arrangement, United States International Trade Commission will hold first hearings on TPP and the first round of negotiations will be started from the middle of March, 2010. America’s Motivations The current TPP member states are all small nations and TPP’s influences are not big. Why the US decided to join such a group? Answers came from domestic, global and regional levels. On the domestic level, the direct motivation is to expanding domestic exports, increase domestic employment and to prosper its economy. This was clearly indicated in US Trade Representative’s speech when he declared this decision: “As the Office of the United States Trade Representative approaches this effort, we recognize that American workers, farmers, ranchers, manufacturers, and service providers face different challenges Southeast Asian Journal of Social and Political Issues, Vol. 1, No. 2, March 2012 | 129 today than they have in the past. Therefore, further engagement in the Trans-Pacific Partnership gives us the opportunity to address gaps in our current agreements, and to set the standard for 21st-century trade agreements going forward. A high-standard regional trade agreement under the Trans-Pacific Partnership could
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