Overcoming the Tragedy of TPP



Matthew P. Goodman | Center for Strategic and International Studies

In common parlance today, the word “tragedy” is used to describe any ill fortune that befalls a person or group: a destructive earthquake, a fatal shooting, the death of a family member from disease. But to the ancient Greeks, tragedy involved an element of human error (hamartia), not just external circumstance. On this measure, the saga of the United States and the Trans-Pacific Partnership (TPP) would have given Sophocles enough material for an epic to rival Oedipus Rex.

From the start, TPP was marked by tragic irony—with China always in a supporting role. The George W. Bush administration notified Congress of its intent to negotiate a high-standard trade agreement with Asia-Pacific partners on September 22, 2008—one week into a global financial crisis that would severely undermine U.S. economic leadership and embolden Beijing. While quick to embrace TPP and successful in concluding an agreement among the parties, President Barack Obama fatally delayed pushing for trade promotion authority from Congress in 2014—choosing instead to name the chairman of the relevant Senate committee, Max Baucus, as his ambassador to China. And in one of his first, catastrophic acts as president, Donald Trump withdrew the United States from the unratified TPP—not understanding that it was one of the most powerful tools he had to compete with his nemesis, China.

And now the People’s Republic of China has applied to join TPP’s successor agreement, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Tragic irony, indeed.

Recall what the power of TPP was. It advanced U.S. interests along three lines: economic, by boosting U.S. and regional growth; strategic, by embedding the United States more deeply in Asia-Pacific affairs; and “strategic economic,” by updating and upholding U.S.-preferred rules and norms. Although Joe Biden supported TPP as vice president, his national security team argued during the presidential campaign that the economic benefits of TPP had been oversold and in any case went mainly to large multinational corporations. They also expressed determination not to be hoodwinked into supporting a trade agreement merely because of its purported “strategic” value. 

But as China’s application to CPTPP makes pointedly clear, the Biden team underestimated the rulemaking power of a U.S.-led trade agreement. Among its other useful provisions, TPP’s disciplines on state-owned enterprises (SOEs), digital governance, and labor—since upgraded in the U.S.-Mexico-Canada Agreement (USMCA)—committed a group of countries representing 40 percent of the global economy to aligning their economic policies with U.S. preferences. With the United States out and China prospectively in, CPTPP is now more likely to bend to Beijing’s preferences than to uphold U.S. ones.

Like Hillary Clinton when she renounced TPP as a presidential candidate in 2016, the Biden team no doubt fears the politics of trade. For decades trade was a toxic issue for Democrats, with their base of supporters—particularly manufacturing unions—opposed to trade because of its disruptive effects on jobs. (Certainly both parties have paid far too little attention to helping workers adjust to these and other economic disruptions.) But the tide may be turning, and the conventional wisdom on trade politics may need rethinking. Even as Donald Trump seized the protectionist ground, a growing number of Democrats have expressed support for trade—over two-thirds according to recent polls conducted by the Chicago Council on Global Affairs and Pew Research Center. A similar shift can be seen in Congress, where 193 House Democrats and 39 Democratic senators voted for USMCA, and where the pro-trade New Democrat Coalition in the House boasts nearly 100 members. All of this makes sense; Democratic voters are increasingly urban and global in their outlook, while the union movement today is dominated by government and service workers, who have less reason to oppose trade.

So there may be more political room for the United States to get back on the path to TPP than some Biden advisers believe. And there is certainly a pressing logic for the White House to reconsider its position. China’s application to join CPTPP comes just two months before the annual Asia summits in November, when new presidents typically lay out the broad outlines of their strategy in the region. A credible trade policy is an essential component of any serious U.S. strategy of engagement in the Asia-Pacific region. It is what allies and partners in the region want, for two principal reasons: it promises them greater access to the world’s largest market, and—unlike more fleeting initiatives the United States is wont to offer—demonstrates commitment to a long-term U.S. presence in the region. President Obama was quick to tack to this reality in his first year in office; while viewed initially as a trade skeptic, he used his first speech in the region in November 2009 to announce his intention to renegotiate the Korea-U.S. (KORUS) trade agreement and to launch TPP negotiations.

President Biden should consider his own version of Obama’s speech when he appears at the annual leaders’ meeting of the Asia-Pacific Economic Cooperation (APEC) forum to be hosted by New Zealand in mid-November. First, even if he is not ready to state his intention to apply for CPTPP membership, Biden should at least signal U.S. interest in eventually being part of a comprehensive, high-standard regional trade arrangement. Second, he should set out his conditions for the kind of agreement the United States could sign on to. This would presumably include the addition of USMCA-plus provisions on labor, the environment, and the digital economy, and the removal of ones seen to favor large corporate interests.

Third, Biden could announce other steps the United States is prepared to do now to get it back on the path to a comprehensive regional trade deal. He could state the U.S. intention to join Singapore and other Asia-Pacific partners in the Digital Economic Partnership Agreement (DEPA) and to build out APEC’s work on cross-border data rules. He could propose initiatives with like-minded partners in the region to build out rules in other critical areas such as SOEs and intellectual property. These could form the building blocks of a new and improved CPTPP.

Beyond trade, Biden should incorporate other valuable economic initiatives in his APEC speech, including cooperation with like-minded partners on clean energy, high-quality infrastructure (in line with the G7’s “Build Back Better World” initiative), and capacity building in less-developed economies. But again, a U.S. economic strategy in the Asia-Pacific region without a commitment to deeper integration on trade will not be credible to partners there.

In a recent opinion piece, Thomas Friedman called China’s application to join CPTPP a “tragic comedy” and a “deliciously mischievous ploy.” In fact, the Chinese bid is deadly serious, but not because of what it says about Beijing’s motivations or intentions. Rather, it shines a spotlight on the United States’ own tragic error in walking away from TPP and not replacing it with something equally powerful. In mid-November, when he is center stage at APEC, President Biden has a chance to open a new act.

Matthew P. Goodman is senior vice president for economics at the Center for Strategic and International Studies (CSIS) in Washington, DC.

To read the full commentary from the Center for Strategic and International Studies, please click here.