By Sarah Cleeland Knight
Free-traders in Washington believe that 2015 may finally be the year that the United States and 11 Asia-Pacific countries finish negotiating the Trans Pacific Partnership (TPP). We won’t know the details of the agreement until the Obama administration formally presents it to Congress, perhaps as soon as March.
But we know one crucial feature of the agreement: China won’t be one of the countries taking part. From an economic perspective, this is puzzling. If the free-trade arguments behind TPP are right, adding China would be an enormous boost. Its participation would further liberalize the $500+ billion US-China trade relationship and create more wealth and jobs in both the United States and China. Chinese officials have signaled that they might be open to joining.
But from a political perspective, there are at least three good reasons why China shouldn’t be a part of the TPP, at least not yet.
The first and most obvious reason for excluding China is balance-of-power politics. The United States is wary of China’s remarkable geopolitical and economic rise and crafting a trade agreement with some of China’s neighbors – including Japan, Malaysia, and Singapore – achieves two goals: 1) it deepens US alliances in the region, alliances that may come in handy in possible, future disagreements with China; and 2) it fosters economic growth among those countries, which, if made stronger, could better balance China’s regional hegemony.
The second, less discussed, reason for not inviting China to the TPP is domestic politics. Congress, which will have to pass TPP, has become less enamored with free trade agreements since NAFTA. It has thus far refused to grant President Obama Trade Promotion Authority, which means that both houses of Congress will edit the TPP agreement line by line. U.S. officials will then have to turn around and make sure those changes are acceptable to its TPP partners. The political climate on the Hill is more positive with pro-trade Republicans now in control of the Senate, but Obama’s chief trade negotiator, Michael Froman, is still struggling to convince skeptical lawmakers that TPP is a good deal for the United States. If China were part of the deal, Froman’s job would be that much harder, as anti-China sentiment runs even higher than anti-trade sentiment in Congress.
The final reason not to include China in the TPP, and one that has gone largely unmentioned, is that the United States may be able to extract more concessions from China if it is a late entrant. One only has to look at Russia’s Herculean effort to join the World Trade Organization, which finally succeed in 2012, to understand that it is in large countries’ interest to get into trade agreements on the ground floor. Otherwise, extant members can press latecomers for concessions that original members haven’t had to make. The United States and other TPP members would undoubtedly push China hard on issues such as currency manipulation before letting it join the club.
Sarah Cleeland Knight is an assistant professor at American University’s School of International Service.