Reassessing Free-trade Prospects after the APEC Meeting

01 Feb 17

Reassessing Free-trade Prospects after the APEC Meeting

By Wu Zhenglong, China Foundation for Int'l Studies

On the sidelines of the APEC Economic Leaders' Summit, President Obama summoned all of the Trans-Pacific Partners Agreement signatories' leaders to reassure them, and galvanize a last-ditch effort to keep the agreement alive. Yet the absence of a joint statement after the 12 TPP signatories’ meeting is tantamount to a deafening silence, so to speak, which sends a potent message to the watching world.

What is in the message then? First and foremost, there is no panacea for TPP, albeit some countries proposed a TPP minus US model where the other 11 countries should go ahead with the ratification without the US, as a fallback plan to save the deal. Something is better than nothing for them, a rationale endorsed by Japan, among others.

But from where the US stands, a TPP minus the US would lose all its economic and geopolitical significance and purpose, and makes no existential sense whatsoever. Naturally, it finds no support from the US. The fate of TPP now seems to rest with President-elect Donald Trump and the Republican-controlled Congress, while other concerned parties watch with anxiety.

The second point is Japan's wish to take the driver's seat and replace the US fell short outright. With the announcement that the Obama administration would not seek passage of TPP in the Congress, it is widely assumed TPP is dead. Prime Minister Shinzo Abe of Japan put forward an alternative proposal with Japan steering the wheel of TPP, and made a futile appeal to TPP signatories in Peru to press ahead with domestic ratification in spite of all the vicissitudes. The proposal found scant support, other than from President Obama and Prime Minister Lee Hsien Loong of Singapore. Vietnam, for one, announced it would cease ratification efforts. Without broad-based support, Japan's plan to seek an early entry-into-force of TPP fell apart.

Third, with TPP hanging in the air, the Regional Comprehensive Economic Partnership (RECP) was brought into the limelight. Both Prime Minister Abe and Australian Foreign Minister Bishop both expressed such an intention, assuming TPP is going down. Peru has become keener to join the RECP negotiation. Vietnam said it would stick to the policy of opening up its economy with or without TPP. All indicate a promising and expeditious process for RECP.

Fourth, China has been championing the establishment of a Free Trade Area of the Asia-Pacific (FTAAP), and the fading prospects of TPP may open up a window of opportunity for substantial progress of the initiative. All the prospective TPP members and wider Asia-Pacific community will rally around RECP. The FTAAP collective strategic report endorsed at the Peru APEC meeting reiterated the goal of establishing the FTAAP as a major driver to deepen regional integration of the region. The FTAAP report is a landmark in its establishment process, which will catapult the initiative forward.

Regardless of how TPP evolves, the loss of momentum has damaged the leadership and credibility of the US as a global power, and taken the wind out of the sails of President Obama's Pivot to Asia strategy. The erosion of the US' global standing is irreversible. It will go down as a watershed moment in America’s political annals.

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