Trans-Pacific Partnership

During his campaign, Donald Trump said he wanted to get out of the TPP and certainly followed through. He doesn’t think it’s a good deal. He thinks he can do better. He also thinks “America First” means ‘America Only’ and putting us on an island. We’ve not done well internationally when we’ve abandoned other countries. He talked about leaving NATO, as well. Not good.

A little background on TPP: The Trans-Pacific Partnership was supposed to be the most expansive free-trade agreement, stretching from Chile to Vietnam and including smaller nations like Brunei and larger nations like Australia. It also covers several crucial industries like telecom, tech, financial services, and labor-intensive textile industries. It also set commitments to environmental standards and the extremely important intellectual property standards. In competition with China and especially their RCEP agreement with ASEAN nations, which includes several would-be would’ve-been TPP members, the TPP would’ve been very formidable as an opposing force in Asia, broadly uplifting for countries like Vietnam, and modernizing for certain key industries in more developed or advanced developing countries. Instead, Trump backed out.

Historically, the evolution of similar agreements started with contiguous nations. They were trade blocs. The member countries bordered each other. They looked more like the RCEP but with fewer nations. These agreements have evolved as more countries ratified international standards and more countries have become industrially similar. Thus, we were able to form a monumental agreement stretching across continents and oceans. However, most Americans on both sides of the aisle are against it. Even Hillary was for it and then switched being against it when polls showed even Democrats didn’t want it. We’re disillusioned about trade agreements even if we’re not against international trade. However, the reality and the complex math behind the reality, as well as the competitiveness of trade agreements when you consider where we stand competitively at the moment internationally and what happens if we don’t continue to pursue TPP and others, is unknown to most. That’s no insult to anyone. The arithmetic isn’t hard. The partial differential equations are a foreign language to most Americans. Still, the economic theory, if understood conceptually, is still complex enough to prohibit most from arriving at results that a Ph.D. in Trade Economics would find in his or her research. Thus, it’s hard to gain support for such an agreement when the country is suffering economically compared to decades past and when the thought is that the international community is getting more hostile so why join it? In reality, we need to join it more when it’s filled with more hostility. Otherwise, we’re not there and only the hostile actors are there.

Aside: I tell everyone, “If you’re a Democrat and you don’t want Texas to vote Republican, DON’T LEAVE TEXAS! Vote there as a Democrat. Moving to New York won’t do anything more in the Electoral College than it’s already doing. Same here. We need to be involved in combatting poor and/or illegal trade practices, labor abuses and human rights violations, and corruption. We can’t do that if we’re not involved. If international trade was fun when we were in charge, then now it’s dangerous if there is a perceived obstacle. However, we need to get over that. TPP is also a defensive tactic, and we need to understand what happens to the economic pressures and vulnerabilities not entering the TPP creates. There is a huge competitor out there. China is very eager to go wherever we’ve left or refuse to go, and there’s already been progress made via the RCEP to visualize economic potential for countries that were slated to be in both RCEP and TPP. They’re predicted to improve, and one has to wonder what abusive political and security measures are attached and what unspoken strings attached come along with China-led RCEP as well as possible loans from AIIB. The Asian Infrastructure Investment Bank (AIIB) is China’s defense against the IMF. The TPP was supposed to be a defense against China, and we didn’t do it. Trade, for us, was to spread our good governance. For China, trade is defense, and if we lose the dominant position, we’ll have to be play defense. Do you want that? Or are you ready to fight? We’ve gotta start considering that being #1 is god-given or a birthright. It was earned a long time ago but must be maintained.

One of the countries set to grow regardless of the TPP is Vietnam. Their allegiance to the United States, despite also only being in the RCEP is strong. Politically, there are some issues, but there is nothing to indicate that Vietnam would choose to align with China as a zero-sum exchange of allegiance from the United States to China. In fact, Vietnam seems to be employing a miniature version of though a less abusive but still calculating Chinese methodology of hedging by being, or attempting to be, part of agreements led by two rivaling nations (TPP and RCEP). They have also been reticent to publically denounce either of those nations, only superficially or privately expressing support for either one. Therefore, there’s less trust in what Vietnam will do. Regardless, the Vietnamese economy is squarely aligned for double-digit and longer-term economic growth. Even China has discussed the “unthinkable” action of bringing labor from Vietnam to Chinese provinces as wages of Chinese laborers keep rising.

That probably won’t happen.

1 comment

Leave a Reply

%d bloggers like this: