The death of the US pivot to Asia?



If implemented, the Trans-Pacific Partnership (TPP), which would liberalize trade in 40% of the global economy, would represent Barack Obama's greatest foreign policy legacy. He could claim that, despite having been distracted by urgent challenges in the Middle East and Eastern Europe, the United States articulated a coherent strategy to deal with what will be, by far, the most important foreign policy challenge in the coming decades: the rise of China. The TPP would connect the United States to the economic center of the 21st century, one of the fastest-growing regions of the world, and cement its relationship with Japan, its key ally. It would be the only real manifestation of Obama's pivot to Asia, which so far consisted of mere rhetoric. 

China, which is excluded from the countries negotiating the TPP, has responded by promoting the Regional Comprehensive Economic Partnership (RCEP), which excludes the United States, and which would promote rapprochement between Beijing and Tokyo. The tussle for regional influence between the United States and China has thus also taken hold of the debate about trade agreements. Just like the TTP, the RCEP, whose negotiations were launched at the ASEAN Summit in Phnom Penh in November 2012, would connect a large chunk of the global economy, placing China and Japan at the center, as well as harmonize trade-related rules, investment and competition regimes. The RCEP includes a vast array of rules about investment, economic and technical cooperation, intellectual property, competition, dispute settlement and government regulation, also focusing on easing the way for supply chains. Still, in its entirety, RCEP is more modest and far less ambitious than the TPP.  Notably, India, set to play a key economic role in Asia in the coming decades, is also part of the grouping. That may potentially slow down negotiations, considering Delhi's stance during trade negotiations during past decades.

Now that the US electorate is gripped by populist anti-globalization feelings, both Hillary Clinton and Donald Trump were forced to pledge that they'd scrap the deal in its current form. Clinton may not personally be opposed to the TPP, yet the specter of a tea-party style takeover of the Democratic Party and her struggle to build trust with voters will make it hard for her to copy Bill Clinton's famous turnaround on trade after being elected. The implementation of the TPP seems ever more unlikely.  


While Obama's pivot to Asia was above all a broad vision, the TPP always was its center piece. Without it, the idea will be reduced to little more than a vague concept. When Obama launched the idea of the pivot, the US shifted 2,500 Marines to a base in northern Australia, but otherwise Obama has taken very few concrete steps. The Obama administration understood early on that the TPP was about far more than trade. Rather, it was meant as a tool to contain China in its neighborhood and retain the US role as an agenda-setter in Asia. Obama's strategy can be understood in the context of a growing number of Chinese-led initiatives that, in their entirety, create a "parallel order" to complement and possibly some day rival existing US-led structures. In the end, the prevailing deal — either the TPP or RCEP — will allow either Washington or Beijing to act as a regional agenda-setter, shaping the architecture of economic cooperation in the Southeast and East Asian regions, and helping secure economic interests.

As a consequence, US trade representative Froman famously argued that rejecting the TPP would be like "handing China the keys of the castle" on globalization. Portraying the TPP as a way of countering China  carried a risk, of course: failure to implement the treaty would produce another Chinese diplomatic victory, just like after US failure to convince its allies to stay away from China's Asian Infrastructure Investment Bank (AIIB). China's rhetoric has been more measured. Indeed, Beijing always officially welcomed the TPP, saying that it was open to all the free trade arrangements that are beneficial to the world’s trade liberalization and regional economic integration, as long as they were open and transparent.

There seems to be a tiny window of opportunity for the United States. The FT's Edward Luce argues that 

The only realistic scenario is that Mr Obama could somehow bludgeon the lame duck Congress to rush it on to the statute books after a landslide victory by Mrs Clinton.

Naturally, the death of the TPP would not mean Asian countries will automatically embrace the China-led RCEP proposal instead. Success is far from guaranteed. India has made a further increase in its offers in goods conditional to other member countries agreeing to a higher level of commitment in trade in services. Yet others are reluctant to accept India's proposal of a liberalized visa regime for movement of professionals in the region. The next meeting on August 5 in Laos will determine the rhythm of negotiations in the coming months and years. RCEP members also remain divided over whether to have an investor-state dispute settlement (ISDS) mechanism.

And yet, even if RCEP negotiations do not succeed for now, the failure to implement the TPP would be a tremendous setback for US geopolitical goals in Asia. Even if Hillary Clinton won the election and vowed to maintain US security commitments, Washington's influence in the region would stand reduced. China's neighbors would increasingly look to Beijing for leadership on economic matters, marking another step towards a more Asia-centric world order.

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