Pacific Ocean’s Eleven And The TPP: Imagining A World Order Without US And China

Eleven member states in the Trans-Pacific Partnership (TPP) have decided to march on ahead with the proposed trade agreement – without the United States (US).

From the Iran nuclear deal to the Paris Agreement and, of course, to the TPP, the last one year has seen the US withdraw from a world order that had come to rely on its leadership. The smaller states around the world are now looking to align themselves with a set of mutually beneficial goals to make up for the leadership deficit.

Donald Trump had been quite vocal about withdrawing from the TPP since the days of his campaign. He followed through on his promise in the first week of his presidency, putting the future of TPP in a limbo. At the time, Japanese Prime Minister Shinzo Abe had called the TPP without the US meaningless. However, almost a year later, the Pacific Ocean’s Eleven – Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Mexico, Chile, Peru, and Canada – have redrawn the trade pact, dumping and amending about 20 provisions pertaining to intellectual property that were included under pressure from Washington.

To be signed in Chile a fortnight from now, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will see the coming together of 11 countries across the Asia-Pacific region with a combined gross domestic product (GDP) that constitutes 13 per cent of the world GDP. At Davos last month, Trump had suggested that the US is open to the idea of returning to the TPP if they could get a ‘better deal’. Pursued by a few Republican senators recently to look at TPP as a means to counter the growing influence of China in the Asia-Pacific region, the US President was not quite willing to let go of the protectionist aspects that he championed during his presidential bid.

Expected to eliminate tariff and non-tariff barriers on goods and services, the CPTPP will streamline regulations for the member states, making it easy to conduct trade, establishing common product and process standards, and encouraging open markets, while accounting for the environmental and labour considerations. The idea is to regulate the monopoly of state-owned enterprises and encourage competition across an array of business domains.

The major challenges to the TPP earlier came from clauses around intellectual property rights, given that the US had been pressing for stronger copyright protection laws and for increasing the duration of patents. The clause had a direct impact on the pharmaceutical industry as the approval processes for producing generic drugs would have become excruciating and elongated. With the US out of the CPTPP, this prospect, for now, has been countered.

In the Asia-Pacific, the CPTPP is not without company – the East Asian Regional Comprehensive Economic Partnership (RCEP) is taking shape as well. Comprising the 10 members of the Association of South East Asian Nations (ASEAN) along with India, Australia, China, Japan, New Zealand, and South Korea, the RCEP countries constitute 50 per cent of the world population and almost 40 per cent of the global GDP.

However, can this non-effective agreement be seen as the ideal replacement to the TPP or a CPTPP with the prospective participation of the US or EU in the future?

Unlike what former US president Barack Obama claimed, the RCEP is not driven by Chinese leadership but, rather, by an ASEAN consensus. Wary of Chinese misadventures in Pakistan and Sri Lanka, the ASEAN nations have opted for a trade agreement that supports the idea of regional integration via trade while respecting the sovereignty of each member state. The RCEP, once it becomes effective, will do a world of good to the prevailing political fault lines among China and Japan, and China and India.

Even though the RCEP is not expected to incorporate the standards of the TPP, especially ones relating to intellectual property rights, the RCEP, if not a substitute to the TPP, could offer a lesson in global trade and collective leadership for the Oval Office and the world.

The RCEP, like any other trade pact, will have to evolve with time, and this is where the challenge lies for India. While its reservations against the TPP mainly stemmed from the high standards that had been set in terms of the intellectual property clauses, within the RCEP it might have to struggle against the state-owned enterprises of China, Vietnam, and other member states. However, TPP, as it comes into being before the RCEP, could offer some critical lessons for the latter.

The Ocean’s Eleven via the CPTPP is all set to write a new chapter in the history of Asia-Pacific trade, and without the US and China, the group could well define the next order for global leadership. For India to become a part of the CPTPP, the ideals will have to be driven by calculated aggression and not spiritual aspirations. Lacking in competitiveness across sectors, struggling due to falling exports, and combating a world order oscillating between protectionist leaders and liberal aggressors without a clear winner, India must create a space in line with desire to have greater influence on the global stage. The space, if outside CPTPP, or RCEP, or both, will go on to define the national identity of India on the world stage in the next decade.