The Trans-Pacific Partnership

By Fernand Le Fevre

On October 5th, after 5 years of negotiation, twelve Pacific Rim countries agreed to the terms of the controversial Trans-Pacific Partnership. For trade supporters, the conclusion of the regional trade agreement (RTA) is a promising step in the right direction after years of standstill at the multilateral level. Opponents of the deal stress the geopolitical implications, the secrecy of negotiations, and fear of a “race to the bottom.” On October 20th, the Roosevelt Institute addressed these points of contention in a debate moderated by Brendan Moore (director, Center for Economic Development) and Masih Babagoli (general body member).

The discussion kicked off with a conversation about secrecy. Critics of the TPP (and free-trade in general) often decry secrecy within the framework of a “democratic deficit” argument. This democratic deficit is further compounded by the “green room” effect, in which a small group of the stronger nations involved in negotiations form a “core.” The core then monopolizes agreement outcomes at the expense of the other “periphery” nations in closed “green room” meetings. Roosevelt members seemed to unanimously agree that secrecy actually serves trade negotiations well, following classic pro-trade logic. Since the formalization of trade institutions, secrecy of negotiations has been a fundamental tool to avoid the collapse of negotiations under domestic pressure. More specifically, members pointed out the possibility of Congressional or interest-group capture. Stalling in domestic institutions slows the crucial dynamism of negotiations (making the proverbial “bicycle” of agreements fall due to inactivity). Other members added some nuance, pointing out existing mechanisms for presidents to overcome Congressional stalemate – notably, fast-track authority.

The rest of the conversation revolved primarily around a second question: “Does the exclusion of China in the TPP make this a deal America should sign even if not perfect?” The question prompted a consideration of the TPP’s geopolitical impact, especially in the context of the Obama administration’s “pivot to Asia.” Often, the conversation took on characteristics of early trade theory, treating trade negotiations as zero-sum power grabs, relativizing American power to (potentially) impending Chinese dominance. As members brought up the competition between institutions (the US’s IMF vs. China’s new AIIB, etc.), the argument quickly took on undertones of hegemonic theory; could China potentially pose a threat to American hegemony? Points regarding the strategic membership of the TPP suggested that the latest trade agreement is as much about geopolitics as it is about trade (though not all members agreed).

Concerns regarding the environment dominated the last portion of the discussion, much as they have been a focal point of public debate on the TPP. Generally, members agreed that degradation of environmental standards was a central concern, citing the potential “race to the bottom” often brought up when discussing the impact of trade on environmental and labour regulations. Some accurately pointed out stipulations of the agreement calling for increased labour and environmental standards. But other members added an important caveat, insisting that such regulations create an unfair playing field; newly- or still- industrializing countries, according to this argument, are unjustly handicapped by higher standards. The question arises: how do we make free-trade (more) fair?

A final brief point on new dispute settlement mechanisms (DSMs) brought some members to point out the potential for trade to become an alternative channel to resolve societal problems. According to this line of thought, strict standards in DSMs could serve to “strike certain issues off the list.” Expert panels would effectively refuse to hear certain types of complaints, forcing a stricter regulatory environment. Other societal concerns included the domestic ramifications of free-trade on employment; members generally agreed that safety-net and job training spending was an appropriate response to factor adjustment.