7 TPP, HONG KONG, AND THE FUTURE OF SINO-AMERICAN RELATIONS: A CONVERSATION WITH GOV. JON HUNSTMAN Jon Huntsman Jr. is an American politician, businessman, and diplomat who served as the 16th Governor of Utah from 2005 to 2009, and as United States Ambassador to Singapore from 1992 to 1993, and China from 2009 to 2011. He has served in the administrations of fve U.S. Presidents and was a candidate for the 2012 Republican presidential nomination. In January 2014, Huntsman was named chairman of the Washington-based foreign policy think-tank the Atlantic Council. [World Outlook] Troughout your career, you’ve overseen a lot of trade deals and recently you’ve been very vocal about your support for the Trans-Pacifc Partnership, or TPP. So our question is, why do you think TPP has been so controversial lately, and what do you see as its biggest economic and political benefts? [Jon Huntsman] Well, it’s a very good question. I’d say that TPP has been controver- sial because, in politics, fear sells. You can easily create a fear narrative around things that are not well understood. International trade, I’ve come to fnd, because it’s nego- tiated out of the hallways of Congress, in a sometimes non-transparent environment, that’s just the way trade negotiations are handled. Trade deals include a lot of content that, for most people, would seem to be a bit abstruse. So you can take a trade deal or a trade negotiation and build it into something that is quite distant from reality. In an election cycle you can equate trade into something that is fear-based. And you don’t have to explain it, as we’ve seen in this election cycle. So one thing this nation needs is a full-blown conversation about trade, and I don’t think we’ve had that and I think it’d be very benefcial for the American peo- ple. Tere’s upside and there’s downside, and we haven’t had that kind of full-blown, comprehensive conversation about trade. And I think we’d altogether arrive at a dif- ferent place if we had one such opportunity. But in politics you really don’t have time to have those conversations, so you get right to the talking points, the sound bytes, that in this case have blamed some of our economic slackness on trade. I think trade is responsible maybe for a portion of dislocation, I think technology is largely respon- sible for a whole lot more. But we ought to let the data drive us. Let the economic facts, the export numbers, the import numbers, the investment numbers really drive our conversation about trade. When you talk about TPP specifcally, what are the economic benefts? Very simply, the economic benefts would include enhanced ex- port opportunities, because we’re looking at 11 other countries other than the United States, representing 40% of the world’s GDP...fve of whom we already have free trade agreements with, so let’s just take those of the table. And that leaves another... many countries that are behind in terms of economic liberalization. Tat ultimately, you’re Interview with Gov. Huntsman 8 going to have larger consumer societies that we’re going to want to have the kind of re- lationship that allows us to promote American exports which are good for every town, every county, every state in America. So that is the most immediate beneft, the job creation and the economic lift associated with exports. Te second economic beneft really would be along the lines of additional economic liberalization which will take place in countries like Indonesia, which has a vast population, natural resources, trade links with a lot of key countries across the world, but growing slowly and reforming slowly. So this kind of arrangement would advance economic liberalization in ways that would be good for the local economy and the regional economy. Te political benefts? Let me just say that nations that trade usually cooperate in other areas. Tey usually don’t go to war with one another. So those are the most immediate benefts of trade, the relationship is enhanced, it’s deepened, it’s broadened, and it usually leads to political cooperation in areas that maybe hadn’t been imagined originally. When you’ve got economics at stake on both sides in a large, healthy trading relationship, I think you’re much less likely to engage in a political theater and the drama of war because there’s too much to lose, too much at stake. And I think people generally are on better behavior. [WO] Great, thank you. Related to the diferent trade-ofs that take place with trade itself, and the political implications of TPP, does Asia’s attempt at establishing RCEP, the Regional Comprehensive Economic Partnership, complicate the diplomatic situation sur- rounding TPP negotiations? Are the two trade deals mutually exclusive, and what would a world with both partnerships look like? [JH] You’re deep into the weeds if you’re already learning about RCEP, which is a really interesting arrangement if you look at it. You know, it includes ten countries, the Association of Southeast Asian Nations. Plus six of the countries with agreements - Australia, China, India, Japan, New Zealand, South Korea - would be the initial six. So when you look at RCEP, in its totality, based upon its GDP, it’s estimated that by 2050 it will likely have a GDP size roughly twice the size of the TPP countries. So it’s a major economic grouping. Te diference is their standards of trade — when you look at intellectual property protection, trade facilitation, labor, the environment — are lower than what a US agreement would seek to achieve. So it isn’t exactly a gold-plated agreement. Te standards are lower, and therefore it really becomes hard to bring TPP and RCEP together in any reconcilable way. Does it mean there’s no way to connect them in the future? I don’t think so. I think as economies mature, and as RCEP gets up and running, you’ll see additional economic globalization. But there are two diferent arrangements. Tere are two diferent arrangements complete- ly. And I’m not sure how far RCEP is actually going to get. You’ve got a lot of dispa- rate economies lumped into one, and I’m not sure how far TPP is going to get in terms of a legitimate political opening to ratify it. And remember, all eleven other countries in TPP are having the same political discussions in their home capitals. Te political lift is signifcant for TPP, and RCEP is just sort of foating out there. But make no Interview with Gov. Hunstman 9 mistake, if TPP were to fail, and never take fight, the Chinese would use RCEP as a tool with which to fll the void, the vacuum which would be created by the disap- pearance of TPP. And trade is very real in that it occupies the relationship between nations, and when trade is not there, when an agreement like TPP doesn’t materialize or come to fruition, something flls the vacuum. And the Chinese would very much desire to fll whatever is left by the disappearance of TPP which also, just on the po- litical side, if I can get back to the original question which asked about the political benefts...I have to say that TPP is unusual in that it really represents the resolve of the United States towards the Asian-Pacifc region. And for years and years, as long as I’ve been involved — three, fve years in the Asian-Pacifc region — our resolve has been questioned...are we going to be around, are we gonna engage in trade and regional security, and in general help to promote American values that we aspire to? Tat question has been asked for a very long time, and TPP has really been representative of our resolve towards the region more than anything else, and if it were to disappear it would really would have a devastating impact on the way that the region sees the United States, our state power and our commitment towards Asia. [WO] So speaking of US commitment to Asia, some Asian nations have been concerned about the United States’ commitment to countering Chinese territorial expansion in the South China Sea. What is your take on China’s motivation for these aggressive actions, do you believe it’s an attempt to challenge the US as a global hegemon, is it merely a belief that their cultural heritage is at stake and needs to be reclaimed, or do you believe that there is a third reason for this aggressive behavior? [JH] Well, everything you’ve said is right, and in addition the third reason would be because they can. Tey are at a point in time economically and militarily and diplomatically where they can make such a move. Before, it just made no sense, it wasn’t part of their strategy, and the experience in [Deng Xiaoping’s] years as head of China, went way back to the 70s when asked about the South China Sea. He said, “We’ll leave that to future generations to fgure out.” Well, we’re now at the future generations, and they’re trying to fgure it out. But it does represent something fun- damentally important about the challenge that we have in the United States in dealing with China. Tey recently back in 2009, 2010 made the South China Sea issue a core issue.