On his first day in office in 2017, President Donald Trump announced the withdrawal of the United States (US) from the Trans-Pacific Partnership (TPP). Given the central role of the United States in negotiating the 12-nation trade deal, experts wasted no time predicting the deal’s end. Four years later, the TPP is alive and well. Even as heavyweights such as China, the UK and South Korea clamor for the mega trade deal, India and the US are keeping their distance and risk being left behind.
Signed in 2016, the TPP brought together countries like the United States, Japan, Canada and Singapore under the banner of a single trade agreement. Since the original 12 founders accounted for almost 40% of global trade, the size of TPP was rightly seen as a deciding factor. The TPP, unlike its humble cousin – the Regional Comprehensive Economic Partnership (RCEP) – also represented the great economic ambitions of its architects.
While negotiating the elimination of tariffs on goods and services, the TPP also sought to harmonize everything from labor and environmental standards to intellectual property regulations among member states. Given the economic influence of the TPP members, the implications were clear: the economic rules of the Asian game would be written within the grouping while outside powers like China would be reduced to accepting these standards as a fait accompli. The partnership was also an attempt to shift the economic center of gravity in Asia from a rising China to a US-led coalition.
The grand ambitions of the trade deal were hit hard when the United States pulled out. With the Americans out, the remaining members renamed the agreement as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). The past few months have seen a wave of activity surrounding the deal. The UK announced its intention to join the CPTPP and soon after Washington’s worst fears came true as China also sought to join the trade pact.
If Beijing finds a seat at the CPTPP high table, it could use its position as Asia’s leading trading nation to ensure that the rules of the regional economy, from digital trade to environmental standards, reflect Beijing’s mandate. In doing so, China would achieve a long-standing strategic objective: to isolate and undermine the American footprint in Asia.
However, Beijing’s entry is far from certain. Stakeholders must agree to the reforms before meeting the rigorous standards of the CPTPP. However, China has moved further and further away from reforms and has doubled the dominant role of the Chinese Communist Party in the economy. Even if Beijing cleared these technocratic hurdles, its entry would require the unanimous approval of existing members. Given the recent clashes between Japan and Australia with China, Beijing’s bid is likely dead in the water. However, even if Beijing fails, it could succeed in sowing division within the pact. Malaysia, a founding member, has welcomed China’s candidacy while potential entrants like South Korea are vulnerable to Chinese pressure. If Beijing’s advances were rejected, it could still rely on weaker members to advance its ideology and interests under the deal.
For India and the United States, the risks of staying out of the CPTPP are obvious. The truth is, Beijing has gained the upper hand in the battle for economic influence in Asia. It is the largest trading partner of most countries in a region in desperate need of economic growth and investment in infrastructure. While a number of countries, particularly in Southeast Asia, may welcome Quad’s more muscular military deterrence against Chinese aggression, they have been deeply disappointed by the perceived lack of a comprehensive economic strategy. by Quad. If investment-hungry Asian countries conclude that the United States has left the CPTPP with no shore in sight or destination in mind, they will have no choice but to look to Beijing.
Moreover, New Delhi and Washington can be left on the sidelines as crucial issues such as data localization and environmental standards are debated and decided. While both can count on allies and partners to defend their interests, it is a clumsy strategy and a cold comfort to policymakers in both countries. While pressure from India to negotiate new bilateral trade deals with the UK and Australia is a welcome change, New Delhi will always lack a forum to influence the great economic debates that such a multilateral agreement offers. than the CPTPP.
However, as with the RCEP, India has recognized that the broad economic concessions required to join the CPTPP are a bridge too far. India appears to be stuck with no good outcome.
Shashank Mattoo is Associate Researcher, Strategic Studies Program, ORF
Opinions expressed are personal