THE TTALK QUOTES 

On Global Trade & Investment

 

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No. 17 of 2015 

TUESDAY, MARCH 10, 2015      

 

   

Filed from Portland, Oregon  

     

Click here for Saturday's quote on energy from Prime Minister Abe.
TPP - THE NATIONAL SECURITY ARGUMENT

"Not every trade agreement puts America's prestige, influence and leadership on the line, but the TPP does."

Michèle Flournoy and Ely Ratner
March 9, 2015 (Publication Date)
CONTEXT
With negotiators from the 12 TPP countries meeting now in Hawaii and the predictions of a deal in the next few months more credible than ever before, everyone - the Administration, the pro- and con-factions in Congress, business, labor, and environmental groups - everyone is cranking up his or her rhetoric on the Trans-Pacific Partnership.  And that certainly includes the foreign policy community. 

Today's quote is from an opinion piece in yesterday's Wall Street Journal by Michèle Flournoy, a former Under Secretary of Defense for Policy and Dr. Ely Ratner.  Both are on the staff of the Center for a New American Security.  Ms. Flournoy is the Center's chief executive and Dr. Ratner is a senior fellow.  The title of the article was A Trade Deal [TPP] With A Bonus for National Security, and in this case the title is a fair summary of the thesis.

To be sure, developments affecting the Americas are an important part of the TPP story.   Still, from the U.S. perspective, TPP is largely about Asia, including FTAs with Japan, Vietnam, and New Zealand.  U.S. security policy with respect to Asia is the focus of the article by Flournoy and Ratner. They note, for example, that "no region will affect U.S. prosperity and security more in the coming decades" than Asia.  And they argue that "Bipartisan congressional action on fast-track authority [for TPP] would provide a welcome counter to skeptics who question the U.S. commitment to the Asia-Pacific."

COMMENT
Trade and security are like two labels on the handles of French doors that open to a packed salon.  Everyone is talking about trade and security, but no two views are exactly the same.  Some deny the connection altogether.  Among that group are historians who talk about the burgeoning trade in 1913 among the soon-to-be combatants of World War I.  It did nothing to stop the slaughter.

We are not in that camp.  Neither were the Bretton Woods architects, who gave us the GATT and other post-World War II institutions.  And neither were some of those who fought on the ground.  Indeed, we can think of no one who so forcefully embodied the notion that trade is a pathway to peace than former Congressman - and former Ways and Means Committee Chairman - Sam Gibbons of Florida, a decorated Army paratrooper who fought in Normandy.  He died in 2012, and his obit picked up on his passion for trade.  The Washington Post quoted Mr. Gibbons saying, "A world bound together by the ties of trade is a world strongly inclined toward economic growth and peace."

If Congress manages to pass first Trade Promotion Authority and then, later, legislation implementing the Trans-Pacific Partnership Agreement, some of those votes will come from Senators and Representatives concerned about TPP's importance to national security.

But if we salute those like Sam Gibbons who make the national security argument, we also salute those like Derek Scissors who don't.  When Mr. Scissors debated the merits of TPP with Lori Wallach last July, he said, "I don't really like the foreign policy argument," because it puts the cart before the horse.  It takes the emphasis off the importance of a good commercial agreement.

We think Mr. Scissors was right on that score.  TPP is going to have to be a good commercial agreement and ultimately sold on that basis whatever the foreign policy benefits.

All of that said, TPP is now a factor in a complicated and deadly serious drama that plays out daily in the Asia Pacific.  China's building up of island specks in the South China Sea is only the most recent flash point.  So, at least in one sense, the world of TPP is very different from the world that Mr. Gibbons was intent upon shaping.  In those earlier scenarios, trade was a counterweight, an alternative, to other rivalries.   France, Germany, and the UK are all part of a single European Union that began as a customs union.
 
TPP, however, is at least in part an instrument of the rivalry between the United States and China.  Don Lee of the LA Times underscored that in his article over the weekend with the headline "China is Obama's trump card in push for Pacific Rim trade pact."   In it, he quotes Agriculture Secretary Tom Vilsack:  "We want to make sure we don't cede ground to China," and rehearses the well-known Administration argument that, if the United States doesn't help to write this century's trade rules, starting with TPP, China will.

As we have said, the national security argument plays out a little bit differently with TPP in Asia than it did with other trading partners and other agreements.  But there are two elements that are common to them all. 

One is the human connection.  Phil O'Reilly, the chief executive officer of BusinessNZ got it right when he told a GBD audience a year ago.  "You [the United States] are not going to get the kind of influence you seek ... in the Asia Pacific ...just through sending aircraft carriers," he said.  "Most of the [U.S.] engagement in Asia Pacific will be through trade and people contacts."

The other is the vital issue of credibility.  The U.S. has been negotiating a TPP agreement for more than six years.  As a country, America has been saying it will do this for a very long time.  Eleven other countries have, to varying degrees, built their politics around that American promise.  Even some who are not part of the TPP negotiations - South Korea for example - are nevertheless, counting on a successful TPP outcome. 

And then there are those non-parties who may be watching the TPP negotiations with a different eye, wondering what opportunities a U.S. failure in TPP might open up for them.

The outcome of the current TPP processes - the negotiations in Hawaii and the negotiations on Capitol Hill - will influence them all.
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