RandomGuy
01-25-2018, 06:11 PM
The U.S. ditched a massive trade agreement—which turned out slightly better without it.
President Donald Trump did not kill the Trans-Pacific Partnership. Although he withdrew the U.S. from the trade deal in the first week of his presidency, on Tuesday—exactly a year after the American withdrawal—the remaining 11 countries announced that they had completed renegotiating a new TPP without Washington. That sets up a perfect natural experiment about American influence in the world. And, at least as far as this one trade deal is concerned, the results are clear: Even in the absence of U.S. leadership, the world’s democracies will continue to trade and make rules for dealing with one another, but without some of the worst excesses of America’s corporate-influenced foreign policy.
For many of the leading lights of the American foreign-policy establishment, the greatest tragedy of the Trump administration’s posture abroad is that it undermines the liberal international order the United States has been instrumental in building since World War II. Richard Haass, the president of the Council on Foreign Relations, warns that under the Trump administration, “the United States is no longer taking the lead in maintaining alliances, or in building regional and global institutions that set the rules for how international relations are conducted.” The decision to walk away from TPP—an Asian-focused trade deal originally meant to include countries representing 40 percent of the global economy—is central to that assessment, which is shared widely among foreign-policy experts in both parties.
The humanitarian nonprofit Doctors Without Borders put it more bluntly. The original TPP “would have extended pharmaceutical company monopolies, kept drug prices high, and prevented people and medical treatment providers from accessing lifesaving medicines by blocking or delaying the availability of price-lowering generic drugs in many countries,” the organization wrote in a statement in November.
The revised TPP—now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—includes almost none of those controversial provisions on intellectual property. “The removal of a number of provisions from the CPTPP that are harmful to people’s access to medicines is a major victory,” concluded Doctors Without Borders.
What changed? “Canada took the lead on seeking amendments to the TPP’s deeply problematic intellectual property chapter,” wrote Michael Geist, a Canadian law professor. “The IP chapter largely reflected U.S. demands and with its exit from the TPP, an overhaul that more closely aligns the agreement to international standards was needed.” These issues were included in the deal because major American companies—not just pharma but also the software and entertainment industries—rely on strict intellectual property rules to make money, and their interests set the terms for the American negotiating team. Without America making those demands in exchange for access to its markets, it no longer made economic sense for other countries to accept them, said Malcolm.
“What may be most remarkable—given the U.S.’s absence from the table—is how much of the original deal struck in October 2015 has stuck,” wrote Financial Times trade editor Shawn Donnan. A controversial arrangement whereby companies can sue countries over their domestic laws, known as the investor-state dispute settlement system, remains in a reduced fashion. Labor and environmental protections are largely unchanged. The EFF’s Malcolm pointed to e-commerce provisions that provide only weak privacy protections, among other issues, as still being problematic. But overall, the new deal is so similar to the original that Canadian labor unions are furious that their government is still advancing it, just as labor groups in the U.S. objected under Obama. The non-American architects of global trade, in other words, will come to pretty similar agreements even without the U.S.
The biggest change is that the deal is much smaller. Without the U.S., it covers 14 percent of the global economy, down from 40. That means China will have less incentive to join in, as the deal’s architects had hoped. But membership is open to other countries—South Korea and Indonesia are near-term possibilities, and the U.K. has said it wants in, post-Brexit—which could still sway China’s calculus.
China is certainly eager to put its stamp on the world’s economic rules. Around the time Trump was withdrawing from the original TPP a year ago, Xi Jinping told the elites assembled at Davos that his country was ready to to push globalization forward. That struck a lot of listeners as hypocritical, given China’s authoritarianism and state-run economy. But this week’s renewal of TPP—including plenty of liberalized trade rules minus a few damaging handouts to America’s biggest corporations—is a reminder that America can be plenty hypocritical, too.
“America First” has been the rule in trade negotiations for decades; it’s the foundation of the international order that seemed to be threatened by Trump’s withdrawal from the TPP. Now trade rules are being written without America, and the result seems likely to be smaller but more equitable economic gains for the participants. The new TPP poses to a direct challenge to the defenders of America’s traditional role in the world: just what international order do you want?
https://www.theatlantic.com/international/archive/2018/01/new-tpp/551405
President Donald Trump did not kill the Trans-Pacific Partnership. Although he withdrew the U.S. from the trade deal in the first week of his presidency, on Tuesday—exactly a year after the American withdrawal—the remaining 11 countries announced that they had completed renegotiating a new TPP without Washington. That sets up a perfect natural experiment about American influence in the world. And, at least as far as this one trade deal is concerned, the results are clear: Even in the absence of U.S. leadership, the world’s democracies will continue to trade and make rules for dealing with one another, but without some of the worst excesses of America’s corporate-influenced foreign policy.
For many of the leading lights of the American foreign-policy establishment, the greatest tragedy of the Trump administration’s posture abroad is that it undermines the liberal international order the United States has been instrumental in building since World War II. Richard Haass, the president of the Council on Foreign Relations, warns that under the Trump administration, “the United States is no longer taking the lead in maintaining alliances, or in building regional and global institutions that set the rules for how international relations are conducted.” The decision to walk away from TPP—an Asian-focused trade deal originally meant to include countries representing 40 percent of the global economy—is central to that assessment, which is shared widely among foreign-policy experts in both parties.
The humanitarian nonprofit Doctors Without Borders put it more bluntly. The original TPP “would have extended pharmaceutical company monopolies, kept drug prices high, and prevented people and medical treatment providers from accessing lifesaving medicines by blocking or delaying the availability of price-lowering generic drugs in many countries,” the organization wrote in a statement in November.
The revised TPP—now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—includes almost none of those controversial provisions on intellectual property. “The removal of a number of provisions from the CPTPP that are harmful to people’s access to medicines is a major victory,” concluded Doctors Without Borders.
What changed? “Canada took the lead on seeking amendments to the TPP’s deeply problematic intellectual property chapter,” wrote Michael Geist, a Canadian law professor. “The IP chapter largely reflected U.S. demands and with its exit from the TPP, an overhaul that more closely aligns the agreement to international standards was needed.” These issues were included in the deal because major American companies—not just pharma but also the software and entertainment industries—rely on strict intellectual property rules to make money, and their interests set the terms for the American negotiating team. Without America making those demands in exchange for access to its markets, it no longer made economic sense for other countries to accept them, said Malcolm.
“What may be most remarkable—given the U.S.’s absence from the table—is how much of the original deal struck in October 2015 has stuck,” wrote Financial Times trade editor Shawn Donnan. A controversial arrangement whereby companies can sue countries over their domestic laws, known as the investor-state dispute settlement system, remains in a reduced fashion. Labor and environmental protections are largely unchanged. The EFF’s Malcolm pointed to e-commerce provisions that provide only weak privacy protections, among other issues, as still being problematic. But overall, the new deal is so similar to the original that Canadian labor unions are furious that their government is still advancing it, just as labor groups in the U.S. objected under Obama. The non-American architects of global trade, in other words, will come to pretty similar agreements even without the U.S.
The biggest change is that the deal is much smaller. Without the U.S., it covers 14 percent of the global economy, down from 40. That means China will have less incentive to join in, as the deal’s architects had hoped. But membership is open to other countries—South Korea and Indonesia are near-term possibilities, and the U.K. has said it wants in, post-Brexit—which could still sway China’s calculus.
China is certainly eager to put its stamp on the world’s economic rules. Around the time Trump was withdrawing from the original TPP a year ago, Xi Jinping told the elites assembled at Davos that his country was ready to to push globalization forward. That struck a lot of listeners as hypocritical, given China’s authoritarianism and state-run economy. But this week’s renewal of TPP—including plenty of liberalized trade rules minus a few damaging handouts to America’s biggest corporations—is a reminder that America can be plenty hypocritical, too.
“America First” has been the rule in trade negotiations for decades; it’s the foundation of the international order that seemed to be threatened by Trump’s withdrawal from the TPP. Now trade rules are being written without America, and the result seems likely to be smaller but more equitable economic gains for the participants. The new TPP poses to a direct challenge to the defenders of America’s traditional role in the world: just what international order do you want?
https://www.theatlantic.com/international/archive/2018/01/new-tpp/551405