Advertisement
Trump has one more weapon in his US-China trade war arsenal – the Trans-Pacific Partnership
- A resurrection of the Obama-era pact would put the US back in the driver’s seat in the Asia-Pacific, with the power to divert trade away from China
- Supported by the Democratic Party and US allies, the TPP would be more effective in containing China than Trump’s current suite of tariffs and export bans
Reading Time:3 minutes
Why you can trust SCMP
The trade war between the United States and China is not going as planned for the Trump administration, with tariffs and investment controls proving ineffective in bringing China to heel. Given that a new front is needed in what is expected to be a long and protracted battle, do not be surprised if the Trump administration revives the Trans-Pacific Partnership (TPP).
Advertisement
The trade war is at an impasse, with no side able to claim any sort of victory. Though China is slowing economically, the major impacts are not evident. The US’ greatest fear would be China normalising trade war-related measures through structural adjustments, like Russia has, which would over time neutralise US President Donald Trump’s containment strategy.
The Obama-led TPP involved 12 countries along the Pacific Rim, excluding China. These countries constitute 40 per cent of world gross domestic product. The proposed free-trade agreement’s geopolitical purpose was to economically isolate China and, in hindsight, would have been a more powerful tool than the current suite of tariffs, investment controls and export bans.
Advertisement
The TPP offered the elimination of up to 18,000 tariffs, advantages to large corporations’ on labour standards, environmental regulations and intellectual property, and favourable terms for corporations in investor-state disputes. Additionally, the US agricultural and services sectors were expected to be big winners.
Overshadowing the above, US critics of the TPP cited the manufacturing sector as its largest casualty. Balancing the needs of America’s manufacturing workers, not prioritised by the Obama administration, with US geopolitical requirements was Trump’s conundrum. Given that Trump ran on an “America first” promise, it’s clear why he negated the TPP – further offshoring of jobs to the likes of Vietnam and Mexico would have obliterated his voter base.
Advertisement