The >Trans-Pacific Partnership pact reached this week between the United States and 11 Pacific Rim nations including Canada and Japan, has raised both hopes and concerns. The commercial value of the deal, when it is approved, is immense, tying together as it does almost 40 per cent of the world’s GDP. It seeks to eliminate or reduce about 18,000 tariff and non-tariff barriers. Its supporters, including President Barack Obama and Japanese Prime Minister Shinzo Abe, say the pact would boost growth in the U.S. as well as the Asian economies. But it faces opposition inside and outside the U.S. Several members of Mr. Obama’s Democratic Party oppose the deal, saying it would only help American companies send jobs abroad. Presidential hopeful Bernie Sanders calls it a “trade disaster”. Critics in other countries say it would benefit large corporations, particularly American big pharma, with the common people at the receiving end. Health advocacy groups say it would reduce access to generic medicines in developing countries; Internet freedom campaigners see it as a big threat.
Mr. Obama has made the TPP the centrepiece of his trade and foreign policies, and seems determined to push it in Congress and persuade other governments to accept it. The strategic potential of the deal is clear. The U.S. started pushing for a Pacific free trade agreement at a time China was emerging as an economic super power in the region. Defending the accord, >Mr. Obama said : “We can’t let countries like China write the rules of the global economy. We should write those rules, opening new markets to American products”. The strategic ambitions of the U.S. are clear. Traditionally, the U.S. has tried to isolate its enemies and integrate allies with its own worldview. With Beijing it couldn’t do either. China is now the world’s second largest economy, which has invested trillions of dollars in U.S. treasury bonds; “isolating” such an economy is next to impossible. Though the U.S. reversed its hostile China policy in 1972 in order to exploit internal rivalries in the communist bloc, China never became a U.S. ally. And the chasm only widened after the collapse of the Soviet Union. Now, with China emerging as an economic powerhouse with new institutions such as the Asian Infrastructure Investment Bank in place, the U.S. is trying to form a grand alliance that would shore up its influence in Asia. But will this strategic push be at the expense of its own workers, and the poor in the developing world? If it is, as economists such as Joseph Stiglitz have pointed out, the TPP would hardly meet either its declared commercial goals or its undeclared strategic ambitions, and could turn counterproductive.
