“For those who worry that, after the TPP, the United States would have to compete against low-wage countries — it’s too late. As Zachary Karabell notes, we are already living in a free-trade world. The average tariff in the developed world is about 3 percent. And in the past three decades, developing countries have cut their tariffs substantially as well. The World Trade Organization notes that China’s average is less than 10 percent today, down from about 40 percent in 1985.” – Fareed Zakaria, 2015
The primary US motivation for passing the TPP given the minimal gains to domestic economic growth is geopolitics. The TPP is cornerstone of the Obama Administration’s economic aspect of the Asian rebalance, which seeks to assert and preserve US influence in the Pacific as a hedge to China’s increasing military and economic influence. The greatest beneficiaries of the TPP are countries whom both the United States and China are vying for influence rather than traditional stalwart US allies such as Japan and Australia. Vietnam and Malaysia are expected to benefit disproportionately from the TPP with 28% and 6% additional GDP growth, respectively, by 2025 (Petri, Plummer and Zhai, 2013). Proponents of the TPP, such as former Undersecretary of Defense for Policy Michèle Flournoy, argue the TPP is a means to demonstrate long-term US commitment to Asia and prevent China from creating trade policies in the region contrary to US interests. Secretary of Defense Aston Carter made similar remarks and stressed, “Passing TPP is as important to me as another aircraft carrier”.
The Obama Administration has been hard-pressed to continue with the economic and diplomatic aspects of the re-balance given the series of crises in the Middle East and Ukraine, but the Military aspect of the re-balance is well underway. The Navy will base 60% of all its ships in the Pacific by 2020 including additional forward deployed ships and both the Navy and the Air Force will prioritize their most modern equipment to PACOM including all DDG-1000 destroyers and the first F-35s to be deployed overseas.
- Senate advances fast-track trade bill sought by Obama, Richard Cowan, 2015. http://www.reuters.com/article/2015/05/21/us-usa-trade-idUSKBN0O61WJ20150521
- The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, Ian F. Fergusson, Mark A. McMinimy, and Brock R. Williams, 2015.
- Trans-Pacific Partnership: Geopolitics, Not Growth, Samuel Rines, 2014. http://nationalinterest.org/commentary/trans-pacific-partnership-geopolitics-not-growth-10157
- A Trade Deal With a Bonus For National Security, Michèle Flournoy and Ely Ratner, 2015.
- Protecting the Future of Trade in Asia, Cathy Holcombe, 2015. http://www.wsj.com/articles/protecting-the-future-of-trade-in-asia-1432140387?KEYWORDS=TPP
- White House Threatens to Veto Trade Bill Over Currency Measure, William Mauldin, 2015. http://www.wsj.com/articles/white-house-threatens-to-veto-trade-bill-over-currency-measure-1432068819?KEYWORDS=TPP
- You can’t stop the trade machine, Fareed Zakaria, 2015. http://www.washingtonpost.com/opinions/you-cant-stop-the-trade-machine/2015/05/14/208d74a2-fa6e-11e4-a13c-193b1241d51a_story.html
- On TPP, it looks like 1993 all over again, Raoul Lowery Contreras, 2015. http://thehill.com/blogs/pundits-blog/finance/242347-on-tpp-it-looks-like-1993-all-over-again
- Reid: Obama 'loves' the Export-Import bank, Jordain Carney, 2015. http://thehill.com/policy/finance/overnights/242734-overnight-finance-moderate-dems-deal-blow-to-shelbys-bill