The Case for the United States to Join The Comprehensive And Progressive Agreement For Trans-Pacific Partnership
Speaking in Singapore in August 2021, Vice President of the U.S. Kamala Harris stressed that the United States is a “proud part of the Indo-Pacific,” a region she said that is “critically important to [the United States’] security and prosperity.”[1] Indeed, the security guarantee provided by the United States has allowed the region to enjoy relative peace and stability over the past few decades. However, with China’s assertive rise in recent years, the Indo-Pacific has developed into an arena of U.S.-China great power competition. The United States has responded with its diplomatic and military might: from partnerships such as the Quadrilateral Security Dialogue and the trilateral AUKUS, to the regular deployments of its naval assets in the South China Sea. Yet, some analysts have highlighted the weak economic component of its Indo-Pacific strategy, particularly when contrasted against China’s extensive use of economic statecraft.[2] The intertwining of economics and geopolitics means it is imperative that the United States strengthen its economic strategy for the Indo-Pacific to avoid ceding further influence to China. Specifically, the United States should consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Trans-Pacific Partnership’s (TPP) successor, for the economic and strategic benefits it provides.
From TPP to CPTPP
When negotiations concluded in 2016, the TPP was poised to be the world’s largest trading bloc, accounting for 40% of global trade. Beyond the TPP’s economic value, the TPP was designed to be the centerpiece of the American pivot to Asia: the TPP would preserve U.S. leadership in the Indo-Pacific, shape the regional order in support of its values and interests, and, critically, counter a rising and assertive China.[3] However, U.S. domestic politics and opposition from labor movements rendered ratification of the TPP unpopular for the American political leadership.[4] Thus, in 2017, then-U.S. President Donald Trump withdrew from the TPP on his first day in office.[5] Undeterred, the agreement’s remaining members concluded a revised CPTPP in 2018 that retained most elements of the original agreement. With provisions that went beyond tariff reductions to include standards for digital governance and labor protection, analysts have heralded the CPTPP as a “next generation trade agreement” that addresses limitations of existing WTO regulations.[6] Most recently in September 2021, China formally requested to join the CPTPP.[7] While seemingly ironic given that the United States originally designed the CPTPP to counter China, this development was a stark reminder of America’s diminished influence in the very region with which it sought to rebalance.
Economic and Strategic Benefits of Joining the CPTPP
In the absence of an alternative, well-defined economic strategy, there is significant value for the United States to review joining the CPTPP, China’s interest in joining the CPTPP notwithstanding. As the CPTPP accounts for around 14% of global Gross Domestic Product (GDP) and is one of the larger free-trade areas, the U.S. economy would gain increased access to a sizable market.[8] Furthermore, although nearly 80% of imports from CPTPP countries currently enter the United States tariff-free due to its open economy, American exports from industries such as machinery, automotive, and agriculture incur significant tariffs. [9] The CPTPP would resolve the trade disparity, thereby enhancing the competitiveness of these U.S. products. Modeling these effects, the Peterson Institute for International Economics projected that the CPTPP would increase U.S. annual real GDP and exports by $131 billion and $357 billion respectively.[10] In addition, though the United States has existing bilateral free trade agreements with some CPTPP countries, there are synergies in consolidating them within the multilateral CPTPP. With supply chains today traversing multiple countries, a unified trade agreement with common standards, regulations and customs procedures can result in economic efficiencies beneficial to American firms.[11] In these ways, the CPTPP can enhance American growth prospects and strengthen its economic position vis-à-vis China.
The recently announced Indo-Pacific Economy Strategy remains in its infancy and the effectiveness of a framework without a free trade component is debatable.
Beyond these economic considerations, there are several key strategic reasons why the United States should join the CPTPP. Crucially, joining the CPTPP allows the United States to reassert its influence in the Indo-Pacific against a rising China. The American withdrawal from the TPP created a strategic and economic vacuum in the region which China has since filled.[12] It has signed on to the ASEAN-led Regional Comprehensive Economic Partnership (RCEP)—the largest trading bloc to date—and formally applied to join the CPTPP. Against this backdrop of China’s active economic engagement, the conspicuous absence of the U.S. from these defining Indo-Pacific agreements is a stark contrast and risks placing it on the sidelines as China dictates the regional order.
Besides counterbalancing against China, the United States could leverage the CPTPP’s rule-making power to shape a significant portion of the global economy in line with its economic preferences.
Exacerbating this is the Biden administration’s lack of a coherent economic strategy for the Indo-Pacific region; after nine months in office it has retained many of Trump’s transactional “America First” policies and failed to outline concrete economic initiatives to re-engage with the region.[13] The recently announced Indo-Pacific Economy Strategy remains in its infancy and the effectiveness of a framework without a free trade component is debatable. This leaves the Indo-Pacific without a reasonable alternative to China’s expanding economic clout through efforts such as the Belt-and-Road Initiative and the Asian Infrastructure Investment Bank. China has thus increased its economic leverage in the region at the United States’ strategic expense. Therefore, joining the CPTPP allows the United States to counterbalance against China, re-exert its leadership in the region and prevent Indo-Pacific countries from falling into China’s orbit. In addition, China’s espoused support for the CPTPP mitigates characterizations of the agreement as anti-China, and thus opens a window of opportunity where the U.S. can participate in the agreement without inflaming U.S.-China relations.[14]
Proposed Belt and Road Initiative. China in Red, the members of the Asian Infrastructure Investment Bank in orange. The proposed corridors are the Land Silk Road in black and the Maritime Silk Road in blue. (Wikimedia)
A China operating in a manner consistent with international law and norms would be less inimical to U.S. interests…
Besides counterbalancing against China, the United States could leverage the CPTPP’s rule-making power to shape a significant portion of the global economy in line with its economic preferences. Beyond tariff removal, the CPTPP entails several normative provisions regarding digital governance, limits on state-owned enterprises and improved labor protection regulations.[15] These provisions encourage reforms among CPTPP countries, promote the rule of law, and establish norms consistent with U.S. interests. For instance, the CPTPP’s emphasis on digital governance has shaped regional e-commerce practices by barring technology transfers from being a condition for market access, preventing forced disclosures of source codes to national authorities, and minimizing forced localization requirements.[16] That these provisions are normative is not new to the United States—it had similarly pushed for a digital governance chapter in the recently concluded United States-Mexico-Canada Free Trade Agreement to protect its interest and spur adjacent economies to adopt higher standards.[17] With its economic heft, the United States could thus lead additional reforms among CPTPP members that more closely align with its vision of global trade. This could include the 22 United States-insisted provisions, such as alignment to the American standards for drug patents and copyrights protection, that TPP members had originally acceded to, but were suspended in the CPTPP when the United States withdrew.[18] Additionally, China’s interest in the CPTPP further bolsters the agreement’s normative potential; it would provide an engagement platform to raise China’s trade standards in line with international norms and remove its unfair competitive advantages, similar to the reforms that China undertook in its accession to the World Trade Organization.[19] A China operating in a manner consistent with international law and norms would be less inimical to U.S. interests; as U.S. National Security Advisor Jake Sullivan wrote, “we are better off writing the rules.”[20]
Boats over Prat Pier in Valparaiso, Chile. (Mara)
U.S. President Biden recognizes that the U.S. network of partners is a key competitive advantage which it should harness.
Joining the CPTPP would also have the crucial benefit of reassuring regional partners that the United States remains vested in the Indo-Pacific. U.S. President Biden recognizes that the U.S. network of partners is a key competitive advantage which it should harness. Yet, the American exit from the TPP damaged its credibility and left many to question whether its pivot to Asia was enduring.[21] Although the region welcomes U.S. naval deployments, military presence does not necessarily signal as strong a commitment or staying power – the Indo-Pacific strategic rebalance rings hollow without deep and broad economic relationships.[22] Unlike military assets that the United States can redeploy with relative ease based on changing priorities, joining the CPTPP would enmesh the United States within the Indo-Pacific. By deepening trade integration and linking its economic prosperity to the stability of the region, the United States can provide stronger reassurance of its stake in the Indo-Pacific—that it has skin in the game. While detractors argue that the CPTPP benefits other members at the expense of the U.S. economy, they fail to recognize that it is an inevitable cost of U.S. leadership and sustainment of its partnerships. The Indo-Pacific’s acceptance of the United States as a benign hegemon is premised on the provision of public goods and the prioritization of regional interests over its own; conversely, a transactional approach risks further eroding America’s hard-earned standing among its partners. Should the United States fail to convince its Indo-Pacific partners that it is willing and able to take concrete actions, these countries may re-examine their strategic calculus and some may even align closer to China to secure their interests. For instance, both the Philippines and Vietnam, despite having conflicting claims with China in the South China Sea, seek to stabilize relations with China through diplomatic and economic means. The expanding gap between these partners and the United States erodes its strategic position in the region. For regional partners, joining the CPTPP will signal that the Trump administration’s withdrawal was but an aberration of America’s longstanding commitment to the region.
CPTPP—Better Late than Never
At the 76th UN General Assembly, U.S. President Biden stressed that amidst great power competition, the United States needs to deepen ties with its partners, promote global economic growth and establish a level playing field for global trade. [23] The economic and strategic benefits of the CPTPP contribute to all these objectives. Compared to the nascent Indo-Pacific Economic Framework—which some may argue as reinventing the wheel – joining the CPTPP is a more expedient approach for the United States in a strategic competition it cannot afford to lose more ground in. While China has seized the initiative by requesting to join the CPTPP, it is not a done deal. Accession requires unanimous approval from all active CPTPP members, and the United States can influence its key allies—Australia, Canada and Japan—to delay or deny China’s entrance. Yet should China succeed in joining the CPTPP ahead of the United States, it could effectively veto the United States from accession in the future and shun it from the regional economic order. In that regard, it would be better late than never for the United States to join the CPTPP.
Stanley Lim is an officer in the Singapore Army and is currently attending the U.S Marine Corps Command and Staff College. In addition to command appointments at the platoon and company levels, he previously worked on enhancing Singapore’s defence diplomacy efforts in the Singapore Ministry of Defence. This essay reflects the author’s views alone and does not reflect those of the U.S. Marine Corps, the Singapore Armed Forces, the Singapore Ministry of Defence, or the Singapore Government.
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Header Image: Trans-Pacific Partnership (Wikimedia)
Notes:
[1] Kamala Harris, “Remarks by Vice President Harris on the Indo-Pacific Region,” The White House, August 24, 2021, https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/08/24/remarks-by-vice-president-harris-on-the-indo-pacific-region/.
[2] Richard N. Haass, “U.S. Policy toward the Indo-Pacific: The Case for a Comprehensive Approach,” Council on Foreign Relations, March 19, 2021, 3, https://cdn.cfr.org/sites/default/files/report_pdf/haass-richard-prepared-statement-3-19-21.pdf.
[3] Barack Obama, “President Obama: The TPP Would Let America, Not China, Lead the Way on Global Trade,” Washington Post, May 2, 2016, https://www.washingtonpost.com/opinions/president-obama-the-tpp-would-let-america-not-china-lead-the-way-on-global-trade/2016/05/02/680540e4-0fd0-11e6-93ae-50921721165d_story.html; Hillary Clinton, “America’s Pacific Century,” Foreign Policy, October 11, 2011, https://foreignpolicy.com/2011/10/11/americas-pacific-century/; John Kerry, “Remarks on the Trans-Pacific Partnership,” U.S. Department of State, September 28, 2016, https://2009-2017.state.gov/secretary/remarks/2016/09/262551.htm.
[4] Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two-Level Games,” International Organization 42, no. 3 (1988), 434; James McBride, Andrew Chatzky, and Anshu Siripurapu, “What’s Next for the Trans-Pacific Partnership (TPP)?,” Council on Foreign Relations, September 20, 2021, https://www.cfr.org/backgrounder/what-trans-pacific-partnership-tpp.
[5] Peter Baker, “Trump Abandons Trans-Pacific Partnership, Obama’s Signature Trade Deal,” The New York Times, January 23, 2017, https://www.nytimes.com/2017/01/23/us/politics/tpp-trump-trade-nafta.html.
[6] Jonathan Lesh and Jack Caporal, “The CPTPP: (Almost) One Year Later,” Centre for Strategic and International Studies, November 5, 2019, https://www.csis.org/analysis/cptpp-almost-one-year-later.
[7] Kristen Hopewell, “Would China’s Move to Join This Transpacific Trade Pact Push the U.S. to Rejoin? It’s Complicated.,” Washington Post, September 27, 2021, https://www.washingtonpost.com/politics/2021/09/27/would-chinas-move-join-this-transpacific-trade-pact-push-us-rejoin-its-complicated/.
[8] Zachary Torrey, “TPP 2.0: The Deal Without the US,” The Diplomat, February 3, 2018, https://thediplomat.com/2018/02/tpp-2-0-the-deal-without-the-us/.
[9] Office of the US Trade Representative, “The Trans-Pacific Partnership: Economic Benefits,” https://ustr.gov/sites/default/files/TPP-Economic-Benefits-Fact-Sheet.pdf.
[10] Peter A. Petri and Michael G. Plummer, “The Economic Effects of the Trans-Pacific Partnership: New Estimates,” Peterson Institute for International Economics 16, no. 2 (January 2016).
[11] Deborah Elms, “The Origins and Evolution of the Trans-Pacific Partnership Trade Negotiations,” Asian Survey 56, no. 6 (2016), 1026; Robert D. Blackwill and Theodore Rappleye, “Trump’s Five Mistaken Reasons for Withdrawing from the Trans-Pacific Partnership,” Foreign Policy, June 22, 2017, https://foreignpolicy.com/2017/06/22/trumps-five-mistaken-reasons-for-withdrawing-from-the-trans-pacific-partnership-china-trade-economics/.
[12] Orville Schell and Susan L. Shirk, U.S. Policy Toward China: Recommendations for a New Administration (New York: Asia Society Center on US-Asia Relations, 2017), 64.
[13] William Reinsch, “Washington Still Searching for a China Trade Policy,” East Asia Forum, October 31, 2021, https://www.eastasiaforum.org/2021/10/31/washington-still-searching-for-a-china-trade-policy/; “Biden’s Trade Strategy That Isn’t,” Wall Street Journal, October 4, 2021, https://www.wsj.com/articles/bidens-trade-strategy-that-isnt-katherine-tai-us-trade-representative-china-center-for-strategic-and-international-studies-11633386034.
[14] William Reinsch, “To TPP or Not to TPP: That Is the Question,” Centre for Strategic and International Studies, July 27, 2021, https://www.csis.org/analysis/tpp-or-not-tpp-question.
[15] McBride, Chatzky, and Siripurapu, “What’s Next for the Trans-Pacific Partnership (TPP)?”
[16] Robert Holleyman, “Data Governance and Trade: The Asia-Pacific Leads the Way,” The National Bureau of Asian Research, January 9, 2021, https://www.nbr.org/publication/data-governance-and-trade-the-asia-pacific-leads-the-way/.
[17] Matthew Goodman, “Overcoming the Tragedy of TPP,” Centre for Strategic and International Studies, September 28, 2021, https://www.csis.org/analysis/overcoming-tragedy-tpp; “Comparison of Selected Digital Trade Provisions in the United States-Mexico-Canada Agreement (USMCA) and the Trans-Pacific Partnership (TPP),” The Software Alliance, April 11, 2019.
[18] Jeffrey Schott, “Rebuild the Trans-Pacific Partnership Back Better,” Peterson Institute for International Economics, November 30, 2020, https://www.piie.com/blogs/trade-and-investment-policy-watch/rebuild-trans-pacific-partnership-back-better.
[19] Schell and Shirk, U.S. Policy Toward China, 26.
[20] Jake Sullivan, Daniel Baer, and Jennifer Harris, “Trump Is Partly Right About Our Trade Deals. He’s Wrong About How to Fix Them.,” Politico Magazine, March 15, 2018, https://www.politico.com/magazine/story/2018/03/15/trump-is-right-about-our-trade-deals-hes-wrong-about-how-to-fix-them-217642/.
[21] Malcolm Cook, “The TPP and CPTPP: Truths about Power Politics,” in The Comprehensive and Progressive Agreement for Trans-Pacific Partnership: Implications for Southeast Asia, by Cassey Lee and Pritish Bhattacharya (Singapore: ISEAS Publishing, 2021), 40; Timothy R. Heath, “Strategic Consequences of U.S. Withdrawal from TPP,” The RAND Blog, March 27, 2017, https://www.rand.org/blog/2017/03/strategic-consequences-of-us-withdrawal-from-tpp.html.
[22] Ian Bremmer, “Singapore’s Lee Hsien Loong on the U.S. Election, Free Trade and Why Government Isn’t a Startup,” Time, October 26, 2016, https://time.com/4545407/lee-hsien-loong-singapore-globalization/.
[23] Joe Biden, “Remarks by President Biden Before the 76th Session of the United Nations General Assembly,” The White House, September 21, 2021, https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/09/21/remarks-by-president-biden-before-the-76th-session-of-the-united-nations-general-assembly/.