WASHINGTON, D.C. (May 26, 2011) -- The pending Trans-Pacific Partnership, or TPP, could serve as a vital stepping stone to a broader regional trade agreement, said key Asia-Pacific trade ministers who addressed the 8th annual U.S. Asia Pacific Council Conference on May 23. But they warned that the TPP will not realize this potential if trading nations abandon all efforts to conclude the World Trade Organization’s long-stalled Doha Round of negotiations.
In contrast, U.S. trade policymakers who addressed the conference were skeptical about the viability of the Doha process but quite bullish on the TPP.
Trade Ministers Craig Emerson of Australia, Tim Groser of New Zealand and Mari Pangestu of Indonesia stressed the importance of pursuing discussions on trade liberalization in a WTO-led multilateral context. This will ensure that bilateral and sub-regional trade agreements remain grounded in high-quality standards, they said.
“Trade regionalism floats in the sea of the multilateral system,” said Groser, who previously served as New Zealand’s ambassador to the WTO and was heavily involved in the Doha talks. “If the Doha Round faces a dark future, the risks increase that the TPP also will fail.”
Successful conclusion of a high-quality TPP, however, potentially would continue a “hopeful trend,” in Groser’s view, characterized by the “collapse of regional free trade agreements into each other” and the creation of progressively larger groupings as envisioned in the proposed Free Trade Area of the Asia Pacific, which is a long-term goal of the Asia Pacific Economic Cooperation forum.
Indonesia’s Pangestu underscored the importance of developing regional trade agreements based on “WTO-plus standards” so that they may serve as “building blocks, not stumbling blocks” to a more liberal trade order. But in order to realize this, she said, developed and developing countries alike must remain committed to moving the Doha process forward so it yields a 21st-century trading regime.
If the Doha Round is not completed, she said, agricultural reforms will flounder and exacerbate food supply problems, protectionism likely will increase, and incompatible bilateral and regional trade agreements may continue to proliferate, creating a problematic “spaghetti-bowl” effect.
Australia’s Emerson said that “non-discrimination is the defining feature of the WTO system,” and that this is far preferable to some more exclusionary bilateral or regional agreements that are being explored outside the WTO process. He added, however, that the vacuum created by the stalemate at the WTO has given rise to important sub-regional architectures aimed at liberalizing trade, such as the ASEAN-Australia-New Zealand free trade agreement and the TPP process. Both initiatives have enabled like-minded nations to come together for the purpose of reducing tariffs and addressing “behind the border” regulatory barriers to trade, Emerson said. He noted that the TPP, in particular, was not envisioned as a preferential club, but as a process that other countries in the region could join provided they share an equal commitment to openness.
However, Emerson warned that the TPP would not realize its potential to generate greater trade and investment if, for political reasons, negotiators waiver in their commitment to implementing “gold standards.” He zeroed in on American agricultural supports, suggesting that the TPP “could become undone,” if Congress refuses to undertake important reforms in this sector.
Dr. C. Fred Bergsten, director of the Peterson Institute for International Economics, described the Doha Round as “dead or on life-support,” because the “deal is too small” to benefit the United States. Bergsten noted that the total gain to U.S. exports from the Doha process would be only $6 billion per year – “so small as to be negligible” – which is why Congress is losing interest in the Doha Round as a means to create more U.S. jobs.
Rep. Kevin Brady (R., Texas), chairman of the House Ways and Means Trade Subcommittee, confirmed this view. “Maybe it is time to explore new paths with respect to the Doha Round, since we’ve been on [the current] path a long time,” Brady said. He emphasized that the ultimate Doha agreement must be “balanced and ambitious,” requiring China, India and Brazil to “step up and [undertake reforms] that match their roles in the global economy.”
Both Bergsten and Brady were very optimistic about the TPP negotiations, however, and did not think these talks would be hampered by the absence of a Doha process. If the TPP can serve as the impetus for conclusion of a region-wide accord like the proposed Free Trade Area of the Asia Pacific, Bergsten said, “the European Union would realize that it can’t afford to be excluded from the Asia-Pacific region and recognize the importance of jump-starting the Doha talks” in order to realize multilateral trade reforms.
Bergsten said he would like to see the TPP membership expanded geographically, possibly to include more Southeast Asian nations, China, South Korea, and Japan – even if that would mean scaling back some of the accord’s ambition.
Brady, meanwhile, agreed with the trade ministers that the TPP process provides an valuable opportunity to craft a “next generation” trade agreement that addresses challenges in services, technology, and “beyond the border” non-tariff barriers that slow trade. He called on negotiators to produce a high-quality agreement in time for the APEC leaders meeting November 11-12 in Honolulu, Hawai‘i.
Brady also said he is optimistic that Congress would ratify pending free trade agreements with Korea, Colombia and Panama before lawmakers adjourn for their August recess.
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The United States Asia Pacific Council was founded in 2003 by the East-West Center. It is a non-partisan organization composed of prominent American experts and opinion leaders, whose aim is to promote and facilitate greater US engagement with the Asia Pacific region through human networks and institutional partnerships.