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Originally published Saturday, October 12, 2013 at 8:09 PM

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Pivot toward Asia comes with potholes

An agreement with the Trans-Pacific Partnership (or TPP) would be the largest free-trade agreement in American history. But negotiations are complex and fraught with potential problems.


Special to The Seattle Times

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If we avoid a default and return to something like what has become the normal paralysis in the other Washington, get ready for the fight over the Trans-Pacific Partnership.

The TPP, as it is popularly called, is being marketed as a free-trade agreement among 12 or more Asia-Pacific nations by the Obama administration. It is a centerpiece of the president’s second-term economic agenda.

Gary Locke, ambassador to China, spoke to me about it recently. He called it a pact ”that has very, very high standards on intellectual-property protection, labor and the environment. It’s very ambitious.”

Locke said the agreement was not an attempt to encircle or offset China. Indeed, China might be able to join someday if it can meet the quality benchmarks of TPP.

Trade-dependent Washington state is supportive of the deal. For example, the Washington Council on International Trade says TPP, along with the proposed Transatlantic Trade and Investment Partnership with the European Union, would “considerably expand” markets for goods and services, creating more jobs.

Yet to critics, the agreement is either much more — or less — than promised, and either way won’t serve the interests of most Americans.

Evaluating these claims is difficult because so little about the details of the deal is known.

TPP has its origins in the 2005 Trans-Pacific Strategic Economic Partnership among Brunei, Chile, New Zealand and Singapore. Late in the Bush administration, the United States began negotiations to become a member. The scope and intensity of talks increased under President Obama.

Now, Australia, Canada, Japan, Malaysia, Mexico, Peru and Vietnam have joined the talks. If TPP became a reality, it would be the largest free-trade agreement in American history.

It would also represent a “seismic” economic integration through mega-regional preferential trade deals, according to an assessment by the Peterson Institute for International Economics.

The hope is to complete the new TPP by the end of the year, yet negotiations are complex. For example, the United States is asking for lower barriers to goods, services and agriculture from five countries with which it doesn’t already have free-trade agreements. Much appears undecided.

An assessment by the nonpartisan Congressional Research Service said the TPP could achieve many American goals: Not just opening markets, but harmonizing trade agreements, drawing in new participants and holding them to higher standards than those of the World Trade Organization. It is “a manifestation of the administration’s ‘pivot’ to Asia.”

Some skeptics have written that the TPP is less about trade and more about reassuring allies in Asia that America will remain a counterweight to a rising China.

The Peterson Institute report warns, the effect of TPP and other mega-regional deals “will depend, above all, on how outsiders — the middle-income countries, especially China — react. If China views these agreements as economic war and containment by other means, and retaliates by concluding its own regional agreements, excluding the large traders, fragmentation and conflict could lie ahead.”

TPP was done no favors by the absence of President Obama at the Asia Pacific Economic Cooperation (APEC) summit last week in Bali, a casualty of the federal shutdown. That left Chinese President Xi Jinping as keynote speaker and America’s allies wondering what’s wrong with Washington.

And even if the difficult negotiations are completed, TPP faces substantial opposition. Any trade agreement must balance confidentiality against transparency in the negotiations. The TPP has been unusually secretive.

Opponents worry about giveaways to big corporations and nothing being done to address the trade deficit that is keeping down American job creation. Vietnam’s human-rights record has come under fire.

A bipartisan group of 60 senators signed a letter to Obama raising concerns that TPP won’t address currency manipulation, where nations can keep their currencies artificially low to offset any potential U.S. gains from lower trade barriers.

Neither of Washington state’s senators signed. But a similar letter was signed by Republicans and Democrats in the House.

So it remains to be seen whether TPP represents the future of trade or falls victim to America’s increasing ambivalence to such agreements and a status quo that is creating too many losers.

You may reach Jon Talton at jtalton@seattletimes.com



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About Jon Talton

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest
jtalton@seattletimes.com

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