Asia's free trade future has become a contest between Chinese noodles
and a US steak dinner.
The chief chefs are facing off,
but some of the other cooks appear in both kitchens. In the last few days, it
has become possible to point to an explicit competition between US and Chinese
recipes for Asia's trade structure. Australia is one of those working in both
kitchens.
The US vision is expressed in the
effort to create a Trans-Pacific Partnership (TPP), a negotiation now deep into
its 14th round. The alternate Chinese way of doing things, the Regional
Comprehensive Economic Partnership (RCEP), was unveiled on 1 September in Siem
Riap, Cambodia.
Consider the membership and the
absences in the two meals.
Australia joined the effort for
Trans Pacific-Partnership in 2008 and the rest of the line-up is the US Brunei,
Chile, New Zealand, Singapore, Malaysia, Peru, and Vietnam. In June, the other
members of the North American Free Trade Agreement, Mexico and Canada, finally
joined the US in the negotiations. The big absences include China and India,
and a Japan which has expressed some interest in the TPP but not much more.
America says the door is always open, but that invitation comes with some heavy
caveats.
The new Asian trade vision is
expressed by the RCEP, the comprehensive partnership first endorsed by ASEAN
leaders at their summit in November 2011. In Siem Reap, six other countries –
Australia, China, Japan, India, South Korea and New Zealand – joined with the
ASEAN ten to work on the comprehensive partnership. This is all the countries
in the East Asia Summit except for the two newest members, the US and Russia.
Leaders will formally launch the negotiating process at the EAS in November.
Australia expresses enthusiasm
for both efforts. Canberra says its highest trade negotiation priority is the
conclusion of the TPP. The Trade Minister, Craig Emerson, thinks about half of
the TPP's chapters are close to being finalised 'but concedes some of the most
difficult negotiations will come in 2013.' Perhaps that is why Emerson, in
Cambodia, was laying the love on the new trade baby: 'This agreement would be
the perfect vehicle for advancing Australia's interests in the Asian Century.'
To return to the chef metaphor,
Beijing will decide the key ingredients and strength of the spices in the RCEP.
As Emerson notes, a central aim of the RCEP is to head off concerns about a
developing 'noodle bowl' of overlapping trade agreements in the region. In that
bowl, most of the noodles have one end in China, which is the number one trade
partner for just about everybody in East Asia. The role India and Japan will
play in the negotiations will be fascinating, but the head chef clearly stands
in Beijing.
The deal is good for ASEAN
because not all of its members are in the TPP. And RCEP has some of the
language both ASEAN and China like, such as allowing decisions to be made
through any agreed modality and enabling special and differential treatment of ASEAN
members.
This column has lamented the
diabolical possibility that Australia's focus on the TPP could lead it to the
strange position of aligning itself against China both in its traditional
alliance stance but also in a new regional trade structure. That problem has
now changed its form in a major manner. With this new parallel set of trade
negotiations, Australia can try to work both the US and the China sides of the
street.
The Asia Times thinks the RCEP
will have some advantages over what the US is trying to do with the TPP because
of 'the presumption that RCEP will not fetishize corporate rights and access
(or human rights, labor rights, or environmental quality, for that matter), and
will achieve a modus vivendi with the cozy intermingling of government and
business that has characterized the Asian economic miracle thus far.'
So the contest is between the
Asian future imagined by the lawyers and lobbyists in Washington against Asia's
mandarins and the moguls. The difficulty for the US would be to step back from
the gold-plated deal it wants to engage the big players.
The US does not even bother to
think about getting China into the TPP and Beijing returns the blank look.
South Korea, having just battled through the agony of securing a bilateral free
trade agreement with the US, is not keen on repeating the experience. Japan
would be a huge catch. The TPP represents only 6% of US trade; Japan alone is
worth that figure. Having got Mexico and Canada to join the TPP, the trick for
Washington will be to offer Japan something that Tokyo can't see on offer with
less pain from the RCEP.
As Bernard K Gordon noted in
Foreign Affairs, the US is trying to impose its expansive approach to
intellectual property, including criminal enforcement of copyright and patent
law, through a negotiating process notable for its secrecy:
If the Obama administration fails
to accommodate reservations about intellectual property rights and make the
talks more transparent, there is a growing possibility that the TPP could collapse.
The resulting failure would represent a major defeat for the Obama
administration and undermine its goal of ensuring a long-term presence for the
United States in the Asia-Pacific region.
Mickey Mouse and Apple may have
overplayed their hands.
As with diplomacy, now with
trade, Australia is being asked some interesting questions about what it wants
from the US and hopes for from China. The test for Canberra is to help cook US
steak and Chinese noodles simultaneously without getting burnt in the kitchen
or indigestion in the eating.
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