No tariffs, no barriers, no protectionism. This is the mission statement of the Trans-Pacific Partnership (TPP), a United States (U.S.) led multilateral free trade agreement that encompasses economies big and small in the Asia-Pacific region. However, the TPP is currently facing vehement opposition in the U.S., the uncontested spearhead of the partnership, for undermining the welfare of U.S. workers and citizens. Faced with these charges, one has to ask; “Is the TPP all that it seems?”
The TPP started in 2005 as the P4, a multilateral free trade agreement (FTA) among four Pacific nations –– Brunei, Chile, New Zealand and Singapore. Spying an opportunity to consolidate U.S. firms’ economic influence in the Pacific region, the U.S. joined the fray, soon seizing control of the agreement. As the U.S. began to entice more nations into joining the P4, it was transformed into the TPP, the influence of which extended to Asia and South America. The Obama administration finally took the first step in the implementation of the TPP in October 2015 after spending years ironing out disagreements.
Unfortunately for President Obama, U.S. public opinion toward the TPP has taken a turn for the worse, owing to allegations that the TPP would detrimentally affect employment and net exports in the U.S. Both Presidential candidates have vowed to dismantle the TPP, with Donald Trump being especially vociferous on the matter. Faced with this opposition, is the TPP truly a boon for the U.S.?
TPP: Made in America
It is easy to see the thought process that led to the U.S. deciding to spearhead the TPP. According to the United States Trade Representative (USTR), TPP “(will) level the playing field for American workers and American businesses.” The TPP, which aims to eliminate trade barriers and make it easier to exchange goods and services among its constituents similar to the European Union (EU), will bring nothing but benefits to the U.S., the USTR claims. Lower taxes and tariffs are the key; once implemented, they will decrease the price of American exports and facilitate American firms’ globalization.
Another reason why the Obama administration pushed forward with the TPP lies with the untapped potential of the Asia-Pacific region. So far, the U.S. has established FTAs with seven of the TPP participants, and the TPP presents a great opportunity for the U.S. to seal the deal with the remaining five nations, emergence of a new economic bloc in the Asia-Pacific region would, as USTR puts it, “firmly establish the U.S. as a leader in the Pacific,” along with the added perk of keeping China in check.
The major criticism against TPP, as put forth by politicians such as Bernie Sanders and Donald Trump, is that the TPP would lead to higher unemployment in the U.S. This is unsurprising, since the TPP would intensify labor competition among the participant nations, and U.S. workers, who command high wages, would be at a disadvantage against their foreign counterparts. The TPP has also been criticized for only benefitting big multinational corporations and being shrouded in secrecy, which some people perceive as a means to alter trade regulations without voters’ explicit consent.
There is a fundamental and disconcerting trend that underlies America’s opposition to the TPP, specifically the nation’s nascent protectionist tendency. “The people are weary of America’s signature free trade approach,” Professor Lee Jae-Seung (Division of International Studies) elaborated. “They want the government to push for protectionism, mostly out of a creeping suspicion that they are being detrimentally affected by free trade.” This protectionist slant has become more heavily supported in concert with a rise in isolationist sentiment. Trump’s diatribes against free trade, which are usually accompanied by slanderous comments directed at immigrants, testify to the fact.
On a brighter note, Professor Lee argued that it is unlikely that the TPP will founder in spite of the uproar against it. “The backlash against protectionism will be too great for the U.S. to abandon its free trade policies now,” he said. “At most it will make a few changes to the TPP agreement, but eventually the TPP will be ratified.” Pointing to the TPP as an example of the multilateral FTA model that the U.S. has been striving for, Professor Lee emphasized that the TPP is of paramount importance to the U.S.
▲ A map of TPP participants (members colored in red). Provided by ustr.gov
South Korea’s Quandary
If the TPP is as great an economic force as the USTR purports, then one may wonder why South Korea, arguably one of the largest economic powers in Asia, is not a part of it. Indeed, the U.S. extended an invitation to South Korea in 2008, but the latter turned it down to focus on its FTA with the U.S. This choice returned to haunt South Korea in the months that followed; South Korea has belatedly opened its eyes to the benefits of the TPP and is frantically playing a catch-up game.
As anticipated, the U.S. response has been indifferent at best, rejecting South Korea’s advances in favor of undergoing talks with other nations. Other constituents of the TPP seem intent on exacting all they can from South Korea before letting it into the fold. Declining to join the TPP, Professor Lee pointed out, has additionally robbed South Korea of a great opportunity to form a lasting trading partnership with Japan, arguably its closest but also most distant ally.
Despite the ruckus surrounding the TPP and the handicaps that will be imposed on South Korea during renegotiations, the nation is poised to join the trade partnership sooner or later. The press continuously emphasizes the merits of free trade, and the government has launched a forum that will expedite South Korea’s entry into the TPP. A vocal minority has raised concerns that China perceives the TPP as a threat to the Asian Infrastructure Investment Bank (AIIB), but Professor Lee advised not to pay heed to such worries. “The TPP and AIIB are fundamentally different, like apples and oranges,” he said. “China will eventually have to recognize this.”
All things considered, it is only a matter of time before the TPP, with South Korea as one of its members, comes to fruition. The only remaining question is “When?” and the answer comes down to one thing––communication. To borrow Professor Lee’s words, “South Korea must possess political flexibility and strategic insight to juggle various trade and financial partnerships. It should be able to rationally explain its position to other nations in a way that incurs minimal repercussions.” South Korea must be willing to communicate with its neighbors, with its citizens, and make them understand why the government has decided to do what it plans on doing. Otherwise, it will always sow, and never reap.