Hillary Clinton and Donald Trump seem to disagree on everything, but they possess surprising unanimity on the Trans–Pacific Partnership (TPP). Obama’s deal is easy for them to attack with patriotic rhetoric, but the candidates are dead wrong to undermine this free trade deal.
“Right now, China is pushing hard to create their own trade agreement. I promise you that China’s not going to be setting up a bunch of rules that are going to be to the advantage of American companies and American businesses.” – President Obama
The United States, Mexico, Japan, and nine more pacific-rim countries have concluded negotiations of the TPP. It encompasses over 40% of the world’s GDP as the largest economic alliance ever created. Why form an alliance? To defend against a feared bogeyman by amassing strength in numbers, right? If that logic stands firm, China is the bogeyman Obama has grown to fear, and with good reason. The communist superpower is forming its own alliance called the Regional Comprehensive Economic Partnership (RCEP) to rival the TPP.
The Chinese Bogeyman
China is a legitimate contender for the world’s largest economy. With $4 trillion in reserves flocking to infrastructure outside the state, the isolationist Ming dynasty would be appalled at the Communist regime. The Asian Infrastructure Investment Bank, the BRICS bank, and the ‘One Belt, One Road’ initiative have pushed China firmly into a leadership role in regional trade. The IMF accepted the Yuan as a global reserve and trading currency. Suddenly the Chinese reliance on the US dollar has vanished, much to the dismay of American debtors.
Since 2006, Chinese production sectors have experienced overcapacity; that is, industries produce too much. For instance, between 2011 and 2013 China produced more cement than the US did during the entire 20th century. Chinese industries are desperate for consumers, hence why the state is investing in greater Asian integration.
Many criticize the TPP for benefiting multinational corporations at the expense of American sovereignty. But, the United States would dominate the TPP economic order. Our democratic institutions are strong enough that the TPP Commission would ultimately reflect the will of American workers. Beijing’s practice of neomercantilism endorses free trade while also pursuing a government-led globalization strategy to accumulate capital and wealth for the nation. It’s undemocratic, it’s authoritarian, and it’s what we are fighting against with this deal.
The TPP Alliance
While your favorite GOP candidate fell out of the race this July, the Department of Justice seized over $3.5 billion of assets from the Malaysian company 1MDB. These are the people who funded The Wolf on Wall Street film and have an intimate relationship with Goldman Sachs. They are also crooks. The DOJ caught Malaysian officials siphoning money from citizen development projects to luxurious New York City penthouses. As a result corporate Malaysia has become more financially responsible to its people, and thus more democratic. But more importantly, America has tightened its grip on Malaysia’s economy, a key TPP member on the South China Sea.
The TPP relinquishes tariffs and trade barriers between members. Pharmaceutical companies with U.S. patents have huge potential in markets overseas for revenue growth and to offer unprecedented health opportunities to developing nations like Vietnam. Vietnam stands to gain 11% in gross domestic product (GDP), or $36 billion, by 2025 according to the Eurasia Group. Consequently, 89% of Vietnamese view the TPP positively.
The benefits of industrial integration and political harmony will be seen from Chile to Singapore. But as the United States suffers from a lack of strong leadership, previously US-devout nations are having doubts. According to a 2015 Pew Poll, the Philippines is the most pro-American country in the world with close to four million Filipino immigrants inside our borders. However, Filipino President Dutrete has called for an end to US relations in favor of China. “America has lost now. I’ve realigned myself in your ideological flow,” he told Chinese oligarchs last Thursday.
The Philippines now sits firmly in the Chinese camp with its absence from the TPP, but affiliation in China’s RCEP. Every emerging state on the Pacific Rim is an economic battleground between the East and West. Obama knows passage of the TPP is essential to keep Asian nations from joining the Chinese camp. The agreement will create a flourishing economic stronghold in Asia the next US President cannot afford to lose.