By Fulton Armstrong and Eric Hershberg

President Barack Obama and President Pedro Pablo Kuczynsky at the APEC 2016 summit / Ministerio de Relaciones Exteriores – Peru / Flickr / Creative Commons

The Obama administration’s failure to win U.S. approval for the Trans-Pacific Partnership is a disappointment for Latin American countries on the Pacific Rim – and such a big opportunity for China to expand its influence that President-elect Donald Trump, despite his theatrical pledge to withdraw from it, might eventually consider rescuing the accord. The Asia-Pacific Economic Cooperation (APEC) summit in Lima last weekend was the last chance for Latin American leaders to say goodbye in person to President Obama and to mourn the passing – for at least the short term – of his TPP-centered vision for trans-Pacific trade.  In a meeting with leaders of the 11 other TPP countries, Obama tried hard to convince them of “the United States’ continued strong support for trade” despite growing evidence to the contrary.  Both U.S. President-elect Donald Trump and Hillary Clinton, who was Obama’s Secretary of State for four years, firmly and repeatedly stated opposition to TPP.  The White House continued efforts all the way up to election day (November 8) to persuade the U.S. Senate to approve the deal in a lame-duck session, but the Republican leaders – like Clinton champions of free trade until it became a 2016 campaign issue — slammed the door on it.

With the collapse of TPP, several Asian countries have already signaled a willingness to sign on with China’s own free trade initiative, the Regional Comprehensive Economic Partnership (RCEP) – which Latin America is not yet part of. Malaysian Prime Minister Najib Razak, angry with the United States over trade and other issues, threw his lot with China during a visit to Beijing last month.  (The Philippines, which has also moved aggressively to ally itself with China in recent months, is not in TPP.)  Japanese Prime Minister Shinzo Abe met with Trump last week and said his country “could have great confidence” in the President-elect, but he has nonetheless warned his parliament that RCEP will prevail.

• Latin Americans are also slowly but surely gravitating toward China as trans-Pacific leader in trade. Just days before the Lima summit, Peruvian Foreign Minister Eduardo Ferreyros announced that, while Lima still hoped TPP would become reality, his government has begun talks with China over accession to RCEP. His Chilean counterpart, Heraldo Muñoz, last Friday also expressed preference for TPP but told the Wall Street Journal that his country was leaning toward joining RCEP. Chinese President Xi Jinping, in Lima for the summit, was also making stops in Ecuador and Chile. (He’s visited Mexico, Argentina, Brazil and Venezuela on previous trips.) In an op-ed in Peru’s El Comercio just before the summit, Xi said, “United by the same dream, there isn’t a more timely moment for the deepening of our multidimensional cooperation.”

The APEC forum may have been trying to counter Trump and others’ criticism of the lopsided impact of global trade by issuing a statement – titled “Quality Growth and Human Development” – emphasizing the benefit of global trade to all citizens in all countries. It was certainly in this spirit that the host of summit, Peruvian President Pedro Pablo Kuczynski, warned that proponents of trade barriers would do well to revisit the history of the 1930s, singling out for unusually sharp criticism the stance taken by the U.S. President-elect.  On its face, Trump’s campaign rhetoric suggests TPP is totally dead; he’s many times called it a “disaster” being “pushed by special interests who want to rape our country.”  Free-traders found a glimmer of hope in an organizational chart reportedly leaked by the Trump transition team last week that listed a former lobbyist from the U.S. Chamber of Commerce, which has strongly supported TPP, as head of his “trade reform” team.   Yet if the new U.S. Administration is going to reengage on TPP, the primary reason would probably be to undercut China’s RCEP initiative.  Much of the U.S. foreign policy establishment of both parties believes fervently that the impact of U.S. disengagement with the Pacific Rim would be harmful to U.S. global and hemispheric leadership.  Should those concerns sway the incoming President, he could opt to set aside his caustic rhetoric on TPP, negotiate face-saving adjustments to the accord, and instead focus his tough talk on China. TPP’s flaws may ultimately appear minor and manageable compared to the competing scenario of Latin American governments seeking commercial prosperity through a Chinese-led Pacific economic bloc. That is certainly the hope of most Pacific Rim governments across Latin America, whose alarm at developments in the U.S. already has them eying alternatives across the pond.

November 22, 2016

By Fulton Armstrong

In more than 10 cities across the U.S. activists used guerrilla light projection to illuminate monuments and building facades with slogans like “Don’t Let Comcast Choke Your Freedom,” “No Slow Lanes, Open & Equal Internet For All,” and “TPP Dismantles Democracy.” Photo Credit: Backbone Campaign / Flickr / Creative Commons

The chairmen of key U.S. Congressional committees agreed on legislation allowing President Obama to negotiate a Trans-Pacific Partnership (TPP) trade accord, but major political and substantive obstacles to an agreement remain. The leaders of the Senate and House tax-writing committees announced the move, with the key Democratic senator involved claiming that the Obama Administration had addressed his deep concerns about the secrecy of the talks. If passed, their bill would give the President “fast-track” trade authority – power to negotiate an accord that the Senate would eventually vote on but without the power to amend it, which would significantly increase chances of passage. Obama’s advisors have called TPP the “cornerstone” of his Asia policy, and the President said last week that it would help “make sure that we, and not countries like China, are writing the rules for the global economy.” Supporters estimate that TPP would stimulate growth by eliminating tariffs and non-tariff barriers affecting $2 trillion of goods and services (about one-third of global trade) each year among its 12 members.*

Opposition in the U.S. Congress and elsewhere remains intense, however. The Senate Democratic whip, charged with tallying support and opposition, stated that only one-quarter of Senate Democrats support the measure – and those opponents have made clear their concerns about the implications for U.S. workers and consumers. Although tariffs are on the table, most observers say the focus of the negotiations is on “harmonizing” regulations, which big multinational corporations – which have access to the talks that citizens’ groups lack – systematically seek to eliminate. Pharmaceutical companies, for example, are pushing hard for extending patents and trademarks so that cheaper generic medications cannot be sold. Critics say revisions to copyright and trademark provisions would also have implications for public information and the internet. Industry is seeking to roll back environmental protections in place since the early 1970s. The negotiations have been secret, but a leaked chapter of the draft agreement revealed that companies were gaining the right to sue governments if any regulatory action ever caused their profits to fall short of target – a massive burden on budgets.

The lack of transparency, which the leading Senate Democrat claims has been addressed, may have stoked opponents’ concerns. But the differences between U.S. backers and opponents appear significant and unlikely to fade without some serious political horse-trading, which the Obama Administration has been unwilling to do. In his statement last week, Obama admitted that “it’s no secret that past trade deals haven’t always lived up to their promise” – particularly regarding job creation – but neither he nor the Congressional chairmen have provided hard data showing that dismantling a host of regulations to accommodate corporate agendas will help consumers and un- or under-employed U.S. workers. If history is any guide, the Latin American signatories – Mexico, Chile and Peru – may see a favorable impact regarding employment in certain sectors, and others may see it as the only game in trade right now and thus worth trying to join, but Washington’s vision of TPP as primarily an Asia policy – to counter Chinese influence – suggests that they too see the advantages of participation accruing across the Pacific rather than to the north.

* Currently envisioned as members are the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam: Korea last week expressed interest in joining the talks, but the United States told it to wait. Colombia is interested, and Panama and Costa Rica seek membership in the “Pacific Alliance,” which is related to TPP.

April 20, 2015