The TPP risks making US-China relations worse

The Trans-Pacific Partnership (TPP), finalized  last month by 12 Pacific Rim nations, including the United States, will be the largest trade pact in modern history. It will rewrite the rules that affect how about 40 percent of the global economy does business, with the intent of increasing trade and investment. The White House released the agreement’s text to the public yesterday.

Much discussion regarding the TPP has focused on the absence from the pact of China, the largest economy in the Asia-Pacific region. President Barack Obama has portrayed the exclusion as an attempt by the U.S. and its allies to “write the rules” in the region before China does. But this kind of antagonism does nothing to push U.S.-China relations — perhaps the most important bilateral relationship in the world — toward anything productive. The increasing anti-China rhetoric that has accompanied the Obama administration’s Asian pivot will result in fewer opportunities to partner on major global initiatives and hurt both nations economically.

While the U.S. and China have cooperated on a number of important issues, including a notable recent agreement on climate change, geopolitical tensions persist. President Xi Jinping, who has led China since 2012, has pushed for a new brand of nationalism that emphasizes the projection of Chinese power in Asia. This has gotten China into territorial disputes with its neighbors, which in turn have looked to the U.S. for help. China’s periodic alignment with Syria, Iran and Russia has set it at odds with the Obama administration’s strategy in the Middle East. Finally, Washington has serious concerns about Chinese cyberattacks on U.S. businesses.

Given all this, China’s ruling Communist Party has been very nervous about the TPP from the beginning. The Obama administration is selling the TPP to Congress and to the United States’ international partners as an opportunity to get a jump on China in writing global trade rules. The TPP includes China’s neighbors and major trading partners such as Japan and Australia, and the Chinese leadership is worried about losing regional influence.

On the other hand, moderate voices in China such as Long Yongtu, who negotiated China’s entry into the World Trade Organization, have viewed the TPP as a possible way to encourage the Chinese leadership to carry out systemic reforms. For instance, the TPP contains clauses regarding the environment that could influence Chinese policies in a progressive manner. He even argued in 2014 that the TPP would have to include China “sooner or later.” But the Obama administration’s domestic considerations have eclipsed this possibility, as it uses China as a foil to persuade Democrats and Republicans to accept the accord.

The U.S. has portrayed and marketed the TPP as a way to position itself independently of China in the geopolitics of Asia. This kind of rhetoric has helped push China to pursue a similar path of independent development, irrespective of U.S. concerns. Instead of accepting U.S. containment, China has looked to expand its power and influence.

China has ongoing territorial disputes in the South China Sea with Indonesia, Brunei, Malaysia, the Philippines and Vietnam. These countries allege that China is infringing on their maritime sovereignty. China is also locking horns with Japan over islands that both countries claim as theirs.

Meanwhile, China has found other ways to throw its weight around in Asia. It has made huge investments into trade projects such as the Silk Road Economic Belt, along with closely related networks like the China-Pakistan Economic Corridor. It has established the Asia Infrastructure Investment Bank, which now has more than 50 signatories, including the United Kingdom, against U.S. wishes.

The saddest aspect of the widening U.S.-China gap is that the TPP’s specific clauses aren’t necessarily aimed at antagonizing or containing China. The country remains one of America’s biggest trading partners and is the biggest trading partner of Vietnam, Japan, New Zealand and Australia, all signatories of the TPP. It would have benefited the U.S. and China if the two countries could have come together to write the international rules on trade. That ship has likely sailed, unless China’s recent economic struggles can direct its leadership to join the TPP or at least form a strategic partnership with the bloc.

Each participating country has to ratify the TPP agreement, and the accord faces serious opposition in the U.S. from both Democrats and Republicans, for different reasons. Some Democrats have questioned whether the deal is good for U.S. labor, while senior Republicans have voiced their disagreement over rules affecting the pharmaceutical industry. The U.S. debate takes place against the backdrop of a presidential campaign, and Democratic front-runner Hillary Clinton has begun to change her tune on the TPP in a bid for the support of organized labor, despite advocating for it as Obama’s secretary of state.

It has likely become too late to change China’s fundamental orientation in the region. Beijing is now trying to push through its own multilateral trade agreement, the Regional Comprehensive Economic Partnership. This proposal is widely seen as China’s version of the TPP and involves 10 member states of the Association of Southeast Asian Nations. Like the TPP, it will affect about 40 percent of the global economy. If the U.S. and China continue to use trade as a weapon against each other’s influence, both countries will suffer, along with the rest of Asia – and the world.