Playing the China Card Wisely Is Obama’s Last Best Chance to Sell the Trans‐Pacific Partnership
The Trans-Pacific Partnership is the economic centerpiece of the Obama administration’s much ballyhooed “strategic pivot” to Asia, which – in 2009 – heralded U.S. intentions to extricate itself from the messes in Iraq and Afghanistan and to reassert its interests in the world’s fastest-growing region. After six years of negotiations, the comprehensive trade deal was completed last year and signed by its 12 charter members earlier this year. But the TPP must be ratified before it can take effect – and prospects for that happening in 2016 grow dimmer with each passing day.
One would assume TPP ratification a policy priority of President Obama. After all, he took office promising to restore some of the U.S. foreign policy credibility that had been notoriously squandered by his predecessor. If Congress fails to ratify the agreement before Christmas, Obama will leave office with American commercial and strategic positions weakened in the Asia-Pacific, and U.S. credibility further diminished globally. The specter of that outcome would keep most presidents awake at night.
In Newsweek today, I put most of the blame for this precarious situation on a president who, throughout his tenure, has remained unwilling to challenge the guardians of his party’s anti-trade orthodoxy by making the case for trade liberalization generally, or the TPP specifically:
Superficially, one could blame election-year politics and a metastasizing popular antipathy toward trade agreements for the situation, but the original sin is the president’s lackluster effort to sell the TPP to his trade-skeptical party and the American public. In the administration’s division of labor, those tasked with negotiating the TPP kept their noses to the grindstone and brought back an agreement that reduces taxes and other protectionist impediments to trade…
Meanwhile, those responsible for explaining the deal’s merits domestically spent too much time on the golf course. With scarcely greater frequency than a couple of sentences in his past two States of the Union addresses has President Obama attempted to articulate the importance of trade and the TPP to the American public. Even then, his “advocacy” has been grudging and couched in enough skepticism to create and reinforce fears about trade and globalization.
When Hillary Clinton – the president’s former secretary of state, co-architect of the Asian pivot, and champion of the TPP – announced her opposition to the negotiated deal because it became a political liability for her, President Obama remained silent. If the president really believes in the trade agenda his administration has pursued for eight years, his decision not to challenge Clinton was a significant tactical error – and a profoundly lamentable display of cowardice. Foregone was a prime opportunity to inject an affirmative case for the trade deal into the fact-deprived election debate. And how could Obama let Clinton’s political ambitions take priority over his policy agenda? How could the President of the United States be so cavalier about actions and inactions that amount to kneecapping the U.S. foreign policy agenda and subverting American commercial interests?
The president’s near total absence of promotion of the TPP explains why, in the waning months of his tenure, ratification of the economic centerpiece of the vaunted Asian pivot is unlikely. In this absence emerged a fallacious, hysterical narrative about the allegedly deleterious effects of the TPP on jobs, the environment, public health, and even cancer rates, which became the dry tinder that fueled the fiery antitrade rhetoric of this year’s demagogic presidential campaigns.
Lately, it has become convenient for the president’s apologists to point to Donald Trump’s bluster and the dampening enthusiasm for the TPP among Republicans in Congress as the major obstacles to ratification. But that is all a consequence of President Obama’s failure to rebut the trade fallacies and tall tales concocted by groups on the left, like the Sierra Club, the AFL-CIO, and Public Citizen, and his abject deference to Harry Reid, Nancy Pelosi, and then candidate Hillary Clinton in helming his party’s platform on trade and the TPP. I warned of this problem over the years, and unless things change in a New York minute, we will soon be reaping the whirlwind.
Late in the 11th hour, selling the TPP for its immediate economic benefits will not be enough. The president must make a compelling, comprehensive case to Congress and the public about what is really at stake. This is what I suggested in Newsweek:
There is a strategic rationale for trade agreements and those kinds of arguments can be more politically persuasive than the economic ones. Indeed, the post-WWII liberal global trading order reflects the lessons of history: commerce and economic interdependence are the best guarantors of peace. Or, as the French economics writer Fredric Bastiat is alleged to have quipped a century earlier: “When goods don’t cross borders, armies will.”
It was with those lessons in mind that President George W. Bush paid a visit to the Senate in June 2005, with legislation to implement his Central American Free Trade Agreement facing uncertain prospects. Citing the rise of Hugo Chavez in Venezuela and the return of Daniel Ortega in Nicaragua, Bush urged his colleagues to consider CAFTA an agreement that would serve long-standing U.S. strategic interests – with a sprinkling of economic benefits to boot. The following day the agreement was ratified.
President Obama is down to his last chance to fulfill his obligation to posterity. Success requires that he put the TPP into its broader geopolitical and geoeconomic contexts and describe a world with and without its ratification. The president attempted as much in a Washington Post opinion piece last month, describing the TPP as an opportunity for the United States to write the new rules of global trade before China does. It was a laudable start, if not too reliant on the myth of trade as a competition between the United States and China.
With so many Americans leery of China’s rise and U.S.-China relations growing more contentious over economic and security issues, the president may be tempted to describe the TPP as an agreement that “excludes,” “contains,” or “isolates” China. That characterization would certainly resonate with members of Congress looking for cover to support the TPP. But portraying the TPP as a weapon of economic warfare essential to “beating” or “defeating” China is short-sighted and fraught with the perils of self-fulfilling prophesy. Our economic relationship with China is more collaborative than competitive and the costs of estrangement would be felt deeply in the United States.
Instead, President Obama should argue that U.S. leadership, and immersion in the process of crafting the 21st century rules that will govern the trade of China’s most important partners, will leave Beijing with no better alternatives than to embrace those rules. Accession to the TPP is open to all newcomers that can meet the deal’s relatively high standards, and that, importantly, includes China.
The president’s comprehensive case for the TPP must go well beyond the static benefits estimated by the ITC. It must include the benefits associated with the liberalizing policy reactions of other countries in the region, as they aspire to become parties to the agreement. It must include the benefits associated with TPP expansion to include South Korea, the Philippines, Indonesia, Thailand, Colombia, Taiwan, and China. It must include the benefits of TPP as a catalyst for an eventual Free Trade Area of the Asia Pacific to include countries like India and Russia. And it must include the benefits of the TPP as an inducement to Europe, Brazil, South Africa, and the rest of the world to resuscitate the process of multilateral trade liberalization, which has been mostly defunct for over 20 years.
These enormous potential benefits of TPP ratification this year are also the costs of failure to ratify this year. If the United States fails to ratify the agreement this year, TPP members that are also party to the China-centric Regional Comprehensive Economic Partnership negotiations will be drawn more deeply into China’s ambit. While that doesn’t mean that U.S. entities will be excluded from engaging in commerce with entities in those countries, it does mean that existing China-centric investment and supply chain relationships will be reinforced, new ones will emerge and become established, and the costs of reorienting those relationships in the event of some future TPP implementation will increase with each passing year.
But at a deeper, institutional level, failure to ratify would impair U.S. commercial and diplomatic interests in the region. Foreign governments that incurred political costs to push the TPP in their countries with expectations of U.S. participation wouldn’t soon forget that the United States proved to be an unreliable partner. Expectations that the United States is still capable of leading the world to the economic liberalization it so desperately needs would erode, and with that diminished credibility, U.S. policy objectives would become more difficult or, in some cases, impossible to meet.
Those would be the costs of a U.S. failure to ratify the TPP this year. Avoiding that outcome is President Obama’s obligation to posterity.
