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Reimagining the Trans-Pacific Partnership with the UK

Image credit: Oriol Salvador (Flickr: Creative Commons)

The Trans-Pacific Partnership (TPP) once presented an opportunity for continued peace and prosperity in the Asia-Pacific. The flagship policy in Obama's pivot to Asia, covering over 40% of the world's economic output, promised to control and/or contain an ever expansionist China, while elevating millions out of poverty. President Trump's decision to withdraw the US from the agreement crippled the deal, and caused Japanese Prime Minister Shinzo Abe to label the TPP without the US 'meaningless'.

Australia's attempt to revitalise the deal by rebranding it the ‘TPP 12 minus one’ has, up until recently, gained little momentum. Many states, including Australia, are looking towards Beijing's Regional Comprehensive Economic Partnership (RCEP) as a replacement. Touted as China’s regional FTA counterbalance to the TPP, the RCEP may potentially paralyse US influence in the Asia-Pacific, and equip China with the essential credentials to cement its sphere of influence in the region.

US out UK in: -1 + 1= TPP

Britain’s outlook after it withdraws from the EU is still largely unknown. Will it seek an Empire 2.0? Should it focus on establishing FTAs with the world’s largest economies, a task the EU has failed to accomplish? Or will it focus its trade policy towards states that share its soft power assets? The herculean task London faces in simply deciding what course to take, let alone actually establishing new agreements, would make even the most seasoned trade negotiator hope for UK autarky.

A major disadvantage the UK faces is that late joiners to established trade agreements usually benefit less from the agreement than early joiners. Indeed, the UK suffered from just that in 1973 when it entered the long established European Economic Community. Calls for the UK to join NAFTA are naïve and would see NAFTA states take advantage of the UK’s desperation, especially as President Trump signalled a zero-sum approach to the renegotiation of NAFTA.

However, the TPP presents the UK with an all-in-one solution to its presently directionless trade policy. TPP signature states are anxious to keep it alive, and the UK’s position as the 9th largest exporter and 5th largest importer in world merchandise trade will provide meaning to the currently ‘meaningless’ agreement. This should make negotiations for the UK relatively seamless and friendly. Additionally, the TPP already comprises Canada and Mexico (two out of the three NAFTA states) as well as other top trading partners of the UK. Also, the UK will be the only European power in the pacific agreement, which will provide both the UK and the 11 TPP states with an enhanced global reach. Finally, the UK partially fills the power vacuum left by the US through providing the TPP with the leadership from a major power.

Containment through accession

Former US Trade Representative Michael Froman famously claimed that the TPP is how ‘we (the US) shape globalization in the right way’. That is to say, the TPP establishes US approved international norms that would mould the Asia-Pacific for years to come. China recognised this as an instrument of US power engineered to control its rise, which was demonstrated by Beijing’s rejection of an invitation to join the TPP in 2012 by Hillary Clinton.

With the US' withdrawal, the Chinese threat perception of the TPP has diminished. Beijing may now assess the TPP as an opportunity to expand its power and influence. This is an accurate assessment, as there is no other major power, other than Japan, to balance China in the agreement. Chinese dominance of the deal may see a Beijing-directed spillover mutate the TPP into an agreement that’s simply an extension of China by other means.

The UK's leadership in the TPP as a major power may counter this, and still make Chinese accession into the deal palatable for Beijing. A UK led agreement would be perceived as less threatening to China's interests, and they would be far more willing to accept the strictures of TPP provisions. These strictures will provide the tools necessary to control and contain China's rise as the regional hegemon.

Opponents to this argument point to the fact that even after China's accession to the WTO, it still continues to flout international trade and investment rules and would do the same with TPP provisions. However, it’s far better for Beijing to undermine the TPP than for it to succeed, lead and control the Asia-Pacific through the RCEP.

Chris Arnel is the International Trade and Economy Fellow for Young Australians in International Affairs.

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