The Trans-Pacific Partnership is a step
backwards to the days before the World Trade Organisation when the US and
Europe controlled the global trading system to the detriment of developing
economies, says a former director-general of the WTO, Supachai Panitchpakdi of
Thailand.
In New
Zealand for a meeting of the honorary advisers to the Asia-New Zealand
Foundation, Supachai told BusinessDesk in an interview that Asian economies had
more to gain by pursuing the Regional Comprehensive Economic Partnership
(RCEP), which includes China and India but not the US, than TPP, which he
described as a "US-centric" trade deal.
New
Zealand is one of three countries that initiated the TPP concept and has
committed substantial resources to its negotiation, but it only gained momentum
once the US became a member of the 12-country grouping seeking a new set of
trade rules for an Asia-Pacific trade bloc. The US and Europe are also
negotiating a TPP-style deal, known as TTIP (Trans-Atlantic Trade and
Investment Partnership).
"TTIP
and TTP together could drive the world back into the old days before the WTO
was conceived, a world trading system predominated by major trading nations,
which was something I thought we tried to adjust with the more democratic
participation of membership of the WTO," said Supachai, who was
director-general of the WTO from 2002 to 2005, immediately after former New
Zealand prime minister Mike Moore.
New
Zealand belongs to both TPP and RCEP, which was initiated in 2012, and is part
of the four year-old Association of South-East Asian Nations Free Trade Area
(AFTA), most of whose members are involved in both TTP and RCEP.
"For
me, the priority should be for Asia to move in the direction of RCEP,"
said Supachai. "If there should be a need for the US to join in or others,
it should be in the context of RCEP."
Dr Supachai
Panitchpakdi. File photo/ Mark Mitchell
As
secretary-general of the United Nations Conference on Trade and Development
(UNCTAD) between 2005 and 2013, Supachai also oversaw analysis of the North
American Free Trade Agreement, which found that Mexico had done poorly from the
deal while the developed economies in NAFTA - the US and Canada - had
benefited.
"At
UNCTAD, we pointed out that for a developing country that joins a regional
agreement with major, much more advanced economies, they are not easily going
to gain much."
That
risk existed with TPP, which would be "mainly driven by the major players
of the world trade system to set up very forward-looking, very avant
garde" rules in areas that less developed economies would struggle to
accommodate. These included intellectual property restrictions that could
thwart the availability of affordable universal healthcare and rules requiring
privatisation of state-owned enterprises with certain timeframes.
TPP
negotiations have stalled for more than a year on such sticking points.
"TPP
is US-centric," said Supachai. "It leaves the question as to what
would the rest of the membership of the TPP be able to contribute fairly to the
outcome? My general basic principle on the two so-called mega-deals (TPP and
TTIP) is that we have to be a bit cautious about the way we are practicing
regionalism these days. I'm open-minded, but regionalism should ultimately
prove to strengthen the multi-lateral processes."
Regional
trade deals have become increasingly commonly pursued as the global process
overseen by the WTO has failed over the last 13 years of the so-called
"Doha Round" negotiations to produce a new global trade agreement.
The
RCEP initiative was better suited to bolstering Asian economies' growing role
in the world economy, said Supachai.
"RCEP
is more ASEAN-centric and, for better or worse, ASEAN has a good record of
expanding trade. Intra-ASEAN trade is now 53 to 54 per cent," he said.
"This is only lower than Europe, which is 70 to 80 per cent."
New
trade agreements needed to be favourable to Asia if only because of the
region's status as a "global public good."
"We
are the ones now generating more than half of world growth and 67 per cent of
world trade and the area has been excessively accumulating financial
reserves," said Supachai. "That's why RCEP is important. TPP comes in
between."
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