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The Death of TTP and the Path to Putin

The economic costs of ditching the Trans-Pacific Partnership (TTP) agreement are substantial, but there are geopolitical costs as well. TTP was designed to cement an Asian alliance to contain a rising and yet still communist China. Trade agreements often have political as well as economic purposes. The General Agreement on Tariffs and Trade was initially a Cold War instrument. Its core members were originally those of the anti-communist alliance. Growing their economies faster helped the West have more resources to contain the Soviet bloc. But it also brought officials and citizens of these nations into more common enterprises, promoting their overriding common purpose.

An international trade legal regime is one of the most effective soft power methods of containing adversaries. For instance, in the case of TTP we not only strengthened our alliances but provided incentives to China to open up its economy, if it wanted to become a member. A more open economy provides a long-run counterweight to the Communist Party and foreign adventurism. When we give up such tools, we are left with less palatable alternatives—using more military force or pursuing a balance of power diplomacy. Both require sacrifices.

President Trump’s Secretary of State designate has already suggested that the administration may be inclined to a more robust military approach to China. At his hearing, Rex Tillerson suggested that the United States should prevent China from gaining access to the artificial islands that it is creating to control the South China Sea. But that kind of response risks military confrontation. And even if it does not come to a shooting war, it requires the United States to possess the forces to deter China. That costs money, and while the Trump administration has vowed to build up our military, it faces enormous budgetary problems in sustaining that effort. The United States already has one its highest debt-to-GNP ratios in modern times.

Balance-of-power diplomacy requires dealing even with unsavory regimes if such dealings offer the prospect of containing a greater adversary. That was the logic of President Nixon’s opening to China, when he was willing to shake hands with Mao Zedong, a mass murderer, to help with what was viewed as a greater threat—the Soviet Union. Once the Trump administration abandons trade agreements and other mechanisms of soft power, there is a similar sad logic to creating an opening with Russia. Of course, that opening might well mean sacrificing some of our other interests, like continuing to oppose Russia’s annexation of Crimea. Balance-of-power politics regularly requires such deals.

Now many have criticized the liberal international order of trade, because of the domestic dislocations it creates. I believe  such criticisms fail to take account of its economic benefits, even to the less well-off, and that those dislocations, which are not unique to trade in our technological era, are best handled by other policies. In any event, the geopolitical alternatives to this order themselves exact heavy costs.

Reader Discussion

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on January 30, 2017 at 10:21:04 am

China hasn't opened up its economy. We've become dependent on it. We have less strategic leverage over the Chinese thanks to the trade policy you support. Your ideas have proven to be a failure.

The only alternative to "domestic dislocations" for the past eight years with a Republican Congress has been heroin and welfare. No thank you.

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boxty
on January 30, 2017 at 17:27:26 pm

1) "An international trade legal regime is one of the most effective soft power methods of containing adversaries. For instance, in the case of TTP we not only strengthened our alliances but provided incentives to China to open up its economy, if it wanted to become a member."

Not so! - at least in the case of TPP. In effect what we have provided the Chinese, by including all of the Left's missionary enthusiasm for "climate change" deterrents, is a stick with which to beat us. Listen to recent comments from the Chinese Premier who now insists upon TPP partners attaining their climate change goals. Do you really think that the Chinese will themselves achieve these goals OR that they will even try. Perhaps, their method of providing a *safer* environment for their people, our ostensive trading partners, is to provide better face masks to protect against the polluted air in Beijing, Shanghai, etc.

Do you really think that in all of the manufacturing centers, devoted to producing consumer goods for the West, at ridiculously low labor rates, that the workers in the vast (and I mean VAST) factory complexes will be afforded the comforts, benefits and wages that we would consider sufficient to a decent lifestyle? Better check out the conditions in those arenas. Foxcon has always treated their laborers poorly and as a consequence possessed a rather significant advantage over domestic manufacturing. FULL DISCLOSURE: i had to compete with these folks - ultimately we were unable to counter their advantage.

Do you really think, as Boxty above mentions, that the Communist Party of China is really going to open up its economy. Better check out some of the date coming out of their financial houses. The Central Committee has been ordering financial organs to prop up their manufacturing sector for well over a decade.

And you think that they are suddenly going to go all "free market" on us.

Yep - that's the ticket, says Premier Li. why didn't we think of this before? Thank you, TPP. I'll jump right on it!

2) It appears that McGinnis would like to connect a statement evidencing a "foolish" desire to prevent the Chinese from accessing artificial islands, incidentally actions which are generally considered to be contrary to international Law, with TPP. A rather tenuous connection I would think, although the consequences of enforcing such a ban would be as dire as McGinnis asserts. It has no place in an essay otherwise centered on free trade, as much as the essayist would like us to believe that he is presenting a grand geostrategic vision.

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gabe

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