Debunking the Myth TPP’s Demise is China’s Gain

Economic analysts say trade pact would have done little to restrain Beijing

An economist argued Tuesday that America’s withdrawal from the Trans-Pacific Partnership trade deal actually makes it easier to ship jobs overseas and gives a boost to China.

Ann Lee, a New York University adjunct professor and author of “What the U.S. Can Learn from China,” told CNN that the 12-nation trade pact negotiated by former President Barack Obama would have raised labor and environmental standards that would have made it less inviting for corporations to move manufacturing operations to any of the low-cost member nations.

“Obama’s pivot to Asia was his version of a containment strategy … It was a joke for a number of reasons.”

“TPP was not so much a trade deal as a deal that was going to harmonize regulations and sort of set different standards, like around intellectual property,” she said. “And, so this would actually make it easier for some countries to move their operations offshore, to hire cheaper workers, to bypass regulations of other countries in order to make their manufactured goods cheaper.”

Alan Tonelson, an economic policy analyst who blogs about trade issues at RealityChek, ridiculed that argument.

“That would be true if there was any reason to think any of these high TPP standards were in any way enforceable,” he told LifeZette.

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Tonelson said Japan and other Asian trading partners have a notorious reputation for thwarting foreign companies with “non-tariff barriers.” U.S. policymakers never have devised an effective way to monitor those barriers, much less take them down, he said.

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Kevin Kearns, president of the U.S. Business and Industry Council, agreed that the United States would have had little ability to make sure other members adhered to the rules.

“It’s basically a phony argument,” he said. “It would take millions of U.S. labor officers to comb the world … and find every last manufacturing plant and make sure the workers were treated to whatever standards.”

Lee said U.S. withdrawal also threatens to cede influence to China, which has been trying to form the Regional Comprehensive Economic Partnership.

“So, China is actually trying to push their own version of TPP in the Asia-Pacific Region … And they’ve been negotiating this for many years, too,” she said. “And it looks like they’re going to be closer to getting that done now that TPP’s dead in the water.”

China, Lee said, has been shedding low-value manufacturing jobs to places like Africa in favor of higher-paying technology jobs. One destination for outsourced Chinese jobs has been Vietnam, which would have been a TPP member and potentially could have given China back-door access to the trading bloc, according to trade experts.

Lee said China’s exports, once half of its gross domestic product, have fallen to about 20 percent. And the U.S. market accounts for only 18 percent of that, she said.

So China could stop trade with the United States and lose only about 4 percentage points of its economy.

“I don’t think China’s going to be so worried about that,” he said.

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Tonelson said that was another “silly” argument. He said China, like other Asian countries, has an export-based economy. As exports have declined, he said, so has overall economic growth.

“The real question is how much of China’s growth does trade represent?” he said.

Kearns said the geopolitical argument for the Trans-Pacific Partnership never was persuasive. He noted that even the rosiest forecasts projected tiny increases in economic growth. It is “arrogance and ignorance” to believe that such modest increases in growth could stop China’s ambitions, he said.

“Obama’s pivot to Asia was his version of a containment strategy … It was a joke for a number of reasons,” he said.

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