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Will China’s Gambit to Undermine the Trans-Pacific Partnership Succeed?

Yves Smith, Naked Capitalism

Thursday, October 10, 2013

While eyes in the US have remained focused on the budget cliffhanger in Washington, in Bali, two sets of meetings were taking place. The first was the latest set of Trans-Pacific Partnership negotiations. The US, led by John Kerry (Obama was supposed to make an appearance but the budget drama kept him away) met with representatives of the 12 nations it is pressing to agree to this deliberately mis-branded “trade deal”. The reason the label is misleading is that trade is already substantially liberalized; the real point of the TPP and its cousin, the pending EU-US trade agreement, is to weaken the power of nations to regulate, which will allow multinationals to lead a race to the bottom on product and environmental safety.

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he second meeting in Bali this week was for Asia-Pacific Economic Cooperation (APEC). And the two intersected in intriguing ways. Remember, the terms of the TPP are shrouded in secrecy that is utterly inconsistent with the notion of democratic rule. Draft chapters have not been released. In the US, the US Trade Representative has given briefings on the general terms of the pact’s chapters, but as anyone who has worked on contracts or legislation, reading the detailed terms is critical to understanding an agreement, and those are being kept firmly secret.

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Not only has the US been pushing remarkably hard on the secrecy front, it’s being remarkably aggressive on timing. It got a commitment from the prospective signatories in Bali for the pact to be finalized by year end, when a State Department briefing immediately afterward met with skeptical questions (if you have time, you really should read the session in full. The obstinacy and disingenuousness of the State Department mouthpiece is way too obvious).

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In fairness, the Forbes article points out that one set of issues that was seen as a major stumbling block for Japan, that of five types of agricultural products it wanted held out of the deal, may not be such a problem after all because the Japanese Prime Minister Abe, who talked up the deal this week, looks to be able to play the sellout of domestic farmers so as to disadvantage an LDP rival.

However, the US has been ruffling the potential signatories.

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And the State Department Q&A also indicated that Indonesia, which was also hosting the APEC leaders’ meeting, had the US trying to upstage that session.

Now bruised official egos are likely not enough in and of themselves to derail a trade deal. But the Asian nations are also playing a careful balancing act between the current hegemon, the US, and its presumed successor, at least in the region, if not globally, China. Now remember, the whole point of the TPP is that it is an “everybody but China” deal. So what did China do at the APEC summit when Obama was detained in Washington? Step up its efforts to undermine the TPP.

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It’s not clear that China’s efforts to throw sand in the TPP gears will work. But the year end timetable looks like a bizarre Administration fantasy (why push for an empty commitment to a deadline that clearly can’t be met?). And the parallel ASEAN trade talks could give countries that wanted to drag their feet on the TPP an excuse to do so (note that one country being reluctant is likely to be insufficient to derail the deal, but two or three could change the equation. Reporters in the State Department briefing were making comparisons to the failed Doha round).

A final factor that could work against the TPP is a continuation of a destabilizing budget battle. As we’ll discuss in our accompanying post today, there was progress of sorts Wednesday, in at least the two sides have agreed to talk. But they aren’t even at the stage of discussing terms, beyond a vague idea of putting the debt ceiling on hold while the two parties work out a bigger budget deal, with deficit cutting measures included. The problem is given the failure to reach a Grand Bargain Great Betrayal last year, I don’t see why there is any reason to believe a six week delay will pave the way for a deal coming together, given the increased hostility between the two camps and the hard core Republican right insisting on throwing Obamacare into the talks. The longer Washington is in disarray, the weaker its position in pushing for a trade deal. As we’ve said before, that may be the one silver lining of the damaging Federal shutdown.

(Yves is running a fundraiser and while things are going well she would certainly appreciate a token of your support.  ek)