As the din in the U.S. Presidential race gets noisier, issues of national interest are being put on the back burner.
One such issue is the Trans-Pacific Partnership (TPP), a free-trade agreement between 12 countries—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam—which has caused trepidations amongst the member states following comments by the two presumptive presidential candidates—Donald Trump (Republican) and Hillary Clinton (Democrat)—opposing the TPP agreement.
The TPP, which was formally signed on Feb. 4, 2016, in Auckland, New Zealand, has yet to be ratified by the U.S. Congress. President Barack Obama wants the TPP passed in Congress before his term ends.
The U.S. Undersecretary of Commerce for International Trade Stefan Selig recently told me that the TPP was important not only for the United States, but also for world trade which stand to benefit as trade barriers are dismantled and borders between the trading partners become irrelevant.
“The importance of the TPP cannot be overstated ... it is a 21st century trade agreement,” Selig said on the sidelines of an event during World Trade Week in New York. Describing the TPP as President Obama’s rebalance to Asia, Selig averred that the TPP would be passed.
“While I am not going to comment on the statements made by the various political candidates, one should realize that this is an election season ... but electoral politics is not reflected in policies,” he said, reminding that “every day we wait and don’t take action on the TPP, it costs Americans money. These delays cannot be justified.”
The TPP’s merits lie in its benchmark character: it would set high standards for various aspects of trade. All member states would have to comply with these standards on issues such as intellectual property rights, labor and human rights, ethical use of sources, and fair competition (a euphemism for eliminating currency manipulations and dumping which U.S. steel manufacturers lament is practiced by several countries, particularly China).
The formation of the TPP contours has also spurred China, which is not a TPP candidate, into pushing for its own Regional Comprehensive Economic Cooperation (RCEP), though skeptics scoff at it because of its “much lower standards,” allowing countries to reduce trade barriers at different rates—especially among less developed members—and also making limited demands for regulatory harmonization.
While China is not presently a TPP candidate, but could join it, the TPP’s regulatory emphasis makes China a less likely candidate to join.
On the other hand, the U.S. administration is also eyeing another giant, India, to eventually join the TPP. The United States supports India’s membership in the over-arching Asia Pacific Economic Cooperation (APEC) which could be a route India could follow to eventually land at the TPP table. The U.S. side is having a continuous dialogue and, as Selig said, “We are talking about issues of mutual interest.”
Selig argued that the TPP would attract foreign direct investment (FDI) into the United States, adding that FDI was a key driver of the U.S. economic recovery that helped create jobs.
“We would see a record 6.1 million Americans directly employed by U.S. subsidiaries of foreign firms, and another 6 million American jobs indirectly attributed to FDI,” he argued.
Meanwhile, some Asian member countries are also quietly working to highlight the TPP’s significance for the United States. A new initiative, christened the Malaysia-TPP Business Council of America, recently kicked off a campaign to promote the TPP which, many Malaysians fear, could be put on the back burner in the new administration.
The new initiative is headed by three chairmen, Awang Adek bin Hussin, former Malaysian ambassador to the United States; Ramlan Ibrahim, Malaysia’s permanent representative to the U.N.; and Kim Bong, a New York-based Malaysian businessman.
Haril Yahri Yaacob, economics counselor at the Malaysian Embassy in Washington, D.C., highlighted the TPP’s economic significance for Malaysia. He said TPP would enable Malaysia to retain its sharp competitive edge in global trade, besides uplifting Malaysia’s standards by complying with the overall TPP standards that will become necessary for it to observe.
Haril, who was at one point involved in the TPP negotiations, hoped that the United States would pass the TPP agreement before President Obama’s term ends. The TPP would help bolster Malaysia’s exports of electronic products, palm oil, rubber products, textiles, and more. Kim Bong said the TTP’s 12 member countries accounted for 40 percent of the global GDP.
“Ironically, TPP was initially opposed by certain sections of Malaysians but they were later convinced by Malaysian politicians, economists, industry [leaders], and others of the benefits for the Malaysian economy,” former ambassador Awang Adek said, adding that other Southeast Asian countries such as the Philippines, Thailand and Indonesia are also keen to join it.
Many studies have shown, the envoy said, that Malaysia would be the second country to benefit most, after Vietnam, from the TPP in terms of trade, investment, and business. He was confident that the TPP would be passed. He had “great respect” for U.S. lawmakers who are guided by pragmatism and national interest. U.S. companies, he stressed, also stand to benefit in terms of trade and business.
With such impressive gains to be made, it is logical for the member states to have an interest in having the TPP passed by Congress. But the clock is ticking away and U.S. credibility abroad could suffer if the TPP is put aside or even shelved under a new administration. It is time for the United States to clear this important agreement so that the agenda of free trade, business, and investment can be implemented.
The U.S. Congress needs to reflect that opposition to the TPP can be myopic and unwise, causing long-term damage to America’s credibility and its position in global trade and business.
Manik Mehta is a New York/New Jersey-based journalist who has been covering global economics, business, and social-cultural issues for more than 20 years.
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