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Is there any future for Trans-Atlantic and Trans-Pacific partnerships?

D. Trump’s election as the 45th President of the USA foregrounded the further fate of the Trans-Atlantic trade and investment partnership (TTIP) and the Trans-Pacific partnership (TPP), which in case of implementation could have a significant impact on the world trade, as they affect the interests of all international factors. Let us step back in history.

 

I.Trans-Atlantic trade and investment partnership (TTIP)

As B. Zaritsky notes, the trend towards an increase in the number of regional and trans-continental agreements on economic cooperation that frequently go beyond the WTO, is gaining momentum. The number of such agreements officially declared at the Secretariat of GATT/WTO increased from 20 in 1990 to 398 RTS in 2015. The RTS is perceived as a threat to multilateral trade system by numerous experts, since the main principle of the WTO – the most favoured nation treatment – as a means of providing non-discrimination, is losing its significance, and developing in the opposite direction for the countries which are not parties to the RTS.[1].

These include the TransAtlantic trade and investment partnership (TTIP) project, which has been negotiated among the USA and the EU since 2013

On the one hand, it was expected that reducing barriers to interaction between partners, whose volume of mutual trade of goods and services exceeds $1 trillion, and accumulated amount of mutual direct investments is close to $4 trillion, will be detrimental to many economic actors around the world. Ones will discover new market access opportunities; others will face with the weakening of their competitive position. The TPP would help to reduce tariffs, eliminate regulatory barriers to the European-American business and make requirements for companies rather universal.[2]

On the other hand, practical implementation of the TTIP would result in a change of global economic governance architecture in a situation where the Doha round of WTO negotiations was deadlocked [3]. Numerous experts noted that the TTIP implementation would aggravate economic imbalance to the neglect of the vast majority of countries outside the agreement.[4]

The USA and the EU expected to sign the TTIP until the end of B. Obama’s presidency, however, from the very outset of the negotiations this project caused dissatisfaction in Europe for the reason of secrecy of the negotiations where mostly officials, eurocrats and largest companies’ representatives were admitted.

After May, 2 2016 when the Netherlands branch of Greenpeace published 14 out of 30 chapters of the preliminary agreement version, the number of demonstrations against the TPP sharply increased.

The public campaign «Stop TTIP» asserted, that in case of agreement undertaking, food security and environmental protection standards will decrease, unemployment will emerge; it will also depress salaries and lead to the privatization of social services by big business. Activists were also outraged by the plans to facilitate access to the EU public procurements for American companies. According to experts, the new Trans-Atlantic alliance poses a threat both to social order and lifestyle of European population, and trade and economic interests of countries remaining beyond this association. [5]

In July, 2016 during the 14th round of the negotiations on TTIP between the USA and the EU serious disagreements regarding market access in services, public procurements in the USA, and protection of investors’ rights emerged. The paragraph relating to the rights of investors which was insisted upon by the European Union, provided replacement of commercial arbitration courts with national when considering disputes. The USA opposed the European amendments and showed no willingness to compromise. [6]

France took a more rigorous position during the negotiations on TTIP. Thus, on August 30, 2016 the French Minister of Trade Matthias Fekl announced that the current round of negotiations on creation of the TTIP had to be suspended: “There is no more political support in France for these negotiations. The Americans give nothing or just crumbs. That is not how negotiations are done between allies.”[7]

Discontent with future agreement on the TTIP engendered also in Germany. Particularly, on November 5, 2016, the Minister of Economy and Energy of Germany Zigmar Gabriel during his speech at the Asia-Pacific conference on German economy in Hong Kong, suggested to prepare and sign the global free-trade treaty under the auspices of the WTO. In his opinion, distribution of bilateral trade agreements can lead to divergences in standards and rules. To address the situation, it is necessary to restart discussions in the WTO even if the process of discussing complex bilateral treaties is going on. Since there is still no global treaty, it is important that bilateral agreements consider social, climatic and consumer standards, and do not concentrate on reduction of tariffs only. [8]

The chairmanship of Austria also sceptically estimated the prospects of agreement on the TTIP. On September 10, 2016 the chancellor Christian Kern expressly stated that the signing of this agreement “is extremely improbable”. As he said, “under the guise of free trade the power is devolved to large scale concerns; that is contrary to the principles of democracy”. The vice-chancellor of Austria Reinhold Mitterlener urged to resume negotiations with a clean slate. [9]

The TTIP project met powerful opposition even in the USA. Thus, on June 29, 2016 Donald Trump the U.S. presidential candidate from the Republican Party declared that the agreement on TTIP with the European Union is the greatest danger to the USA, the country needs to restore “economic independence”, following the example of Great Britain.

According to D. Trump, the contract on TTIP means multimillion losses for the USA, which “China will enter through the back door”: “We need bilateral trade deals, but not the TTIP which cannot be taken, as it will lead to crash”. D. Trump emphasized: “The factories will remain closed. The borders will remain open. Trillions of our dollars and millions of our jobs flowed overseas as a result. They led us from one financial disaster to another”. As he said, it is “stupid to allow foreign countries to export their goods to us tax-free, we have become more dependent on foreign countries than ever before.” [10]

Trump’s position was sharply scarified by the representatives of administration of B. Obama. On September 22, 2016 the sales representative of the USA of ministerial rank Michael Froman who was responsible for negotiations on the TTIP declared that D. Trump’s views of trade agreements will result in stagnation in the Republican Party in the next years: “Where will the Republican and Democratic party be in 2017, 2018? Any Trump’s view on trade agreements can become a problematic heresy or lead to stagnation of the Republican Party.”[11]

However, at that moment few could have predicted that D. Trump, who confirmed his opposition to trans-continental agreements, would win the presidential election in the USA on November, 8 of this year. As a result, on November 12, 2016 “The German wave” with some grief stated: “Now, in several days after D. Trump’s election as the U.S. President, this agreement, seemingly, moves towards a rapid and undistinguished death. After fourteen rounds of negotiations held over the last two years there will be no more.” [12]

 

II. Trans-Pacific partnership (TPP)

The core of this project was the existing since 2006 agreement on the FTA between Brunei, New Zealand, Singapore and Chile. Soon negotiations on accession to the FTA (and processing of the relevant agreement) were entered by Australia, Vietnam, Canada, Malaysia, Mexico, Peru, the USA and Japan. Most importantly, Russia and China were not accepted into the negotiation process.

On October 5, 2015 the USA and 11 states of the APR tentatively agreed on creation of the Trans-Pacific Partnership – TPP, and in February, 2016 the relevant agreement was signed by Australia, Brunei, Vietnam, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA, Chile and Japan in Auckland (New Zealand). They account for 40% of the world trade, 27,5% of the world GDP, 23,9% of the world export, 26,7% of the world import and the 810-million population today. [13] It was supposed that the agreement on TPP had to be ratified by February, 2018. [14]

As experts note, the TPP is positioned as “the preferential trade agreement covering the widest range of issues including tariffs of goods and services’ trade, investments, protection of intellectual property, settlement of disputes, environmental protection, labour relations, electronic trading, competition-related issues and performance of state enterprises.

Unlike many similar agreements, the TPP does not imply introduction of standard tariffs in goods’ trade between participants, but provides individual tariff rates for each type of goods of all member states.” [15]

It is supposed that all member states will have economic benefits (the agreement levels about 18 thousand tariffs), but at the same time it is clear that the TPP became a part of the so-called “Pacific pivot” of America, proclaimed on November 10, 2011 by the U.S. Secretary of State of that time H. Clinton in the run-up to the APEC summit in Honolulu. Particularly, H. Clinton declared: “America should fix the positions – diplomatic, economic, strategic and others – in this region; this is the main objective of the USA governance for the coming decades.” [16]

May 2, 2016. The U.S. President B. Obama stated explicitly that the agreement on TPP will force all countries to follow the rules of trade established by the USA: “The construction of walls for self-isolation from the global economy only isolates us from incredible opportunities that it gives. On the contrary, America has to write the rules (of the global economy). America has to decide. Other countries have to play by the rules which are established by America and its partners, nor the other way around. The TPP is precisely what will allow us to make it. The world changes and the rules do. It is the USA, which has to write them, not the countries like China.” [17]

At the same time B. Obama criticized the project of the Regional comprehensive economic partnership – RCEP under the auspices of China, stating that it will not prevent unfair competition on the part of state or state-subsidized companies. According to B. Obama, the RCEP will not protect freedom of Internet and intellectual property of American manufacturers. [18]

Let’s note in this regard, that the RCEP is a project, which is negotiated upon by the ASEAN countries, Australia, China, India, New Zealand, the Republic of Korea and Japan. This classical agreement on the FTA designed to regulate such issues as trade in goods and services, competition, protection of intellectual property, settlement of disputes, economic and technical cooperation. In comparison with the TPP, the scope of the RCEP regulation is more limited, and negotiations provide more flexible approach when determining the measures for trade liberalization, depending on the level of economic development of participants. At the same time the preferential treatment for the export of goods is provided to less developed countries of ASEAN. [19]

On May 3, 2016 the official representative of the Chinese Foreign Ministry Hong Lei, commenting on B. Obama’s statements on the TPP and RCEP, declared: “The USA is very ambitious making such statements, but I am afraid, they do not consider long-term prospects”. Hong Lei added that China is open to the TPP and believes that it can complement the Regional Comprehensive Economic Partnership (RCEP) in the establishment of the free trade area in the Asian-Pacific region. [20]

It should be noted that the agreement on TPP was especially in focus of the presidential election campaign participants in the USA. On August 8, 2016 the U.S. presidential candidate from the Republican Party D. Trump declared that in case of his victory the USA will terminate the agreement on TPP.

According to D. Trump and his supporters, the action of TPP will increase unemployment and will promote decrease in salaries in the USA, will give unfair advantages to the foreign trade partners, and will also increase deficiency of the foreign trade balance of the USA. In general, according to D. Trump, the TPP is unprofitable for a number of branches of the American economy: “Just imagine how many more automobile jobs will be lost if the TPP is actually approved. It will be catastrophic. That is why I have announced we will withdraw from the deal before that can ever, ever, ever happen.” [21] Let’s note also that the ratification of TPP is opposed by the republican majority in the Congress of the USA. [22]

On October 27, 2016 the U.S. Secretary of State John Kerry declared that the updated Congress has to ratify the agreement on TPP and emphasized that the refusal of the TPP will become “a real tragedy for the American economy”. According to him, the USA shouldn’t reject the TPP as it will allow the growth, since a bulk of potential consumers of the American production lives in the countries which joined the TPP. [23]

After D. Trump’s election as the U.S. President the White House recognized that it will not be able to achieve the ratification of the agreement on TPP from the Congress and decided to suspend a debate with the Congress. In this regard, on November, 11 of this year the American edition “Wall Street Journal” noted: “A sweeping Pacific trade pact meant to bind the U.S. and Asia effectively died Friday, as Republican and Democratic leaders in Congress told the White House they won’t advance it in the election’s aftermath, and Obama administration officials acknowledged it has no way forward now. [24]

As a result some countries began to reconsider the issue of participation in the TPP. For example, the President of Peru Pedro Cuchinsqui declared that the Agreement on TPP can be replaced with the treaty of Asia-Pacific countries without the USA, but with participation of Russia and China. Afterwards, on November 17 of this year, the Prime minister of Vietnam Nguyen Cuang Fuk announced: “The United States declared, that they stop the discussion of the TPP in the parliament, and, therefore, there are no sufficient conditions for Vietnam to submit the proposal on ratification of the agreement to the parliament.” [25]

In this regard, on November 19, 2016 the Chinese President Jinping at a meeting with the president of Russia V. Putin on the sidelines of the summit of APEC in Lima (Peru) announced that China and Russia have to promote the process of creation of the free trade area in the Asia-Pacific region. [26] Earlier Xi Jinping criticized the Trans-Pacific partnership (TPP) where China was not included, stating that “closed and inclusive agreements are the wrong choice.” [27]

Let’s note also that on September 4, 2016, at an informal meeting of leaders of the countries of the BRIC on the sidelines of the G20 summit, the Russian President V. Putin announced: “Big concern is caused by a situation with the WTO which was also mentioned here, which loses prestige because of stagnation of the Doha round of negotiations, loses the status of the only universal negotiation platform on development of rules of the world trade. As a result the processes of creation of the closed associations, for example Trans-Atlantic and Trans-Pacific partnership which do not supplement, but seek to replace the WTO, are escalating. But it is not the best way to resolve problems. The best way is to agree, and find a way to a compromise.” [28]

Thus, the agreement on TPP which have been prepared for many years with the efforts of 12 states and which had to become one of the most important foreign policy achievements of Barack Obama’s eight years’ presidency, turned out to be a big question now. At the same time, the APEC summit which took place in Lima (Peru) also showed the divergent views of its participants concerning the destiny of TPP. As appears from the text of the final Declaration of the APEC summit, the countries of the region increasingly sift to the idea of creation of the free trade area in APR. [29]

In general, the dramatic history of Trans-Atlantic and Trans-Pacific agreements allows to make the following important conclusion.

First, the negotiations on both agreements went on a similar trajectory and did not differ in special transparency. In both cases one of great powers tried to achieve the exclusive right to dictate the will in the world trade to its other participants. At the same time, China could appear the main loser in both cases.

Second, both agreements in case of their implementation would bring certain benefits to the participants (though not equally), but at the same time would promote the destruction of fundamental bases of the World Trade Organization (WTO).

Third, the history of both agreements demonstrates that the success of similar trans-continental agreements depends more on existence of widespread support from the population and business community, not just from the state institutes of the relevant states.

 

Links

[1] Зарицкий Б. Трансатлантическое партнерство: позиция Германии //http://www.mirec.ru/2015-04/Transatlantic-partnership-the-German-position.

[2] Germany’s economy minister: U.S.-EU free trade talks have failed //http://www.reuters.com/article/us-eu-usa-ttip-germany-idUSKCN1130FB.

[3] Афонцев С. Перспективы Трансатлантического торгово-инвестиционного партнёрства и интересы России //http://www.globalaffairs.ru/valday/Perspektivy-Transatlanticheskogo-torgovo-investitcionnogo-partnrstva-i-interesy-Rossii-18446.

[4] Соколянская А. Почему США и ЕС не могут договориться о Трансатлантическом партнерстве //http://carnegie.ru/publications/?fa=64348.

[5] Яковлев П.П. Трансатлантическое партнерство: контекст, значение, проблемные вопросы //http://www.perspektivy.info/oykumena/ekdom/transatlanticheskoje_partnerstvo_kontekst_znachenije_problemnyje_aspekty_2016-09-27.htm.

[6] Везель Б., Филатова И. Президентство Трампа поставит крест на TTIP? //http://www.dw.com/ru/%D0%BF%D1%80%D0%B5%D0%B7%D0%B8%D0%B4%D0%B5%D0%BD%D1%82%D1%81%D1%82%D0%B2%D0%BE-%D1%82%D1%80%D0%B0%D0%BC%D0%BF%D0%B0-%D0%BF%D0%BE%D1%81%D1%82%D0%B0%D0%B2%D0%B8%D1%82-%D0%BA%D1%80%D0%B5%D1%81%D1%82-%D0%BD%D0%B0-ttip/a-36370430.

[7] Франция требует приостановить переговоры о зоне свободной торговли с США //http://www.aif.ru/politics/world/franciya_trebuet_priostanovit_peregovory_o_zone_svobodnoy_torgovli_s_ssha.

[8] Коваль И. Министр экономики ФРГ выступает за глобальный договор о свободной торговле //http://www.dw.com/ru/%D0%BC%D0%B8%D0%BD%D0%B8%D1%81%D1%82%D1%80-%D1%8D%D0%BA%D0%BE%D0%BD%D0%BE%D0%BC%D0%B8%D0%BA%D0%B8-%D1%84%D1%80%D0%B3-%D0%B2%D1%8B%D1%81%D1%82%D1%83%D0%BF%D0%B0%D0%B5%D1%82-%D0%B7%D0%B0-%D0%B3%D0%BB%D0%BE%D0%B1%D0%B0%D0%BB%D1%8C%D0%BD%D1%8B%D0%B9-%D0%B4%D0%BE%D0%B3%D0%BE%D0%B2%D0%BE%D1%80-%D0%BE-%D1%81%D0%B2%D0%BE%D0%B1%D0%BE%D0%B4%D0%BD%D0%BE%D0%B9-%D1%82%D0%BE%D1%80%D0%B3%D0%BE%D0%B2%D0%BB%D0%B5/a-36275639.

[9] Добров Д. Трансатлантический стопор: возможна ли торговая война между ЕС и США //https://ria.ru/analytics/20160909/1476518465.html.

[10] Трамп назвал стремление Обамы к «экономическому НАТО» большой ошибкой //http://vz.ru/news/2016/6/29/818614.html.

[11] Взгляды Трампа на торговые соглашения в США назвали «проблемной ересью» //http://www.vz.ru/news/2016/9/22/834179.html.

[12] Везель Б., Филатова И. Президентство Трампа поставит крест на TTIP? //http://www.dw.com/ru/%D0%BF%D1%80%D0%B5%D0%B7%D0%B8%D0%B4%D0%B5%D0%BD%D1%82%D1%81%D1%82%D0%B2%D0%BE-%D1%82%D1%80%D0%B0%D0%BC%D0%BF%D0%B0-%D0%BF%D0%BE%D1%81%D1%82%D0%B0%D0%B2%D0%B8%D1%82-%D0%BA%D1%80%D0%B5%D1%81%D1%82-%D0%BD%D0%B0-ttip/a-36370430.

[13] Транстихоокеанское партнерство: что это такое и кому оно выгодно //http://inosmi.ru/infographic/20161005/237973093.html.

[14] Шелест Д. Транстихоокеанское партнёрство как предостережение //https://regnum.ru/news/economy/2193301.html.

[15] Веремеев Н. Торгово-экономическая конкуренция на Тихом океане //http://intertrends.ru/system/Doc/ArticlePdf/1584/9jGCFnJhjZ.pdf.

[16] Клинтон: 21-й век будет для Америки «тихоокеанским столетием» //http://www.golos-ameriki.ru/a/apec-clinton-2011-11-11-133676138/248344.html.

[17] President Obama: The TPP would let America, not China, lead the way on global trade //https://www.washingtonpost.com/opinions/president-obama-the-tpp-would-let-america-not-china-lead-the-way-on-global-trade/2016/05/02/680540e4-0fd0-11e6-93ae-50921721165d_story.html?hpid=hp_no-name_opinion-card-c%3Ahomepage%2Fstory&utm_term=.c0c69876d7d2.

[18] Там же.

[19] Веремеев Н. Торгово-экономическая конкуренция на Тихом океане //http://intertrends.ru/system/Doc/ArticlePdf/1584/9jGCFnJhjZ.pdf.

[20] Китай ответил на слова Обамы о том, кто должен «писать правила торговли» //https://ria.ru/economy/20160503/1425412284.html.

[21] Трамп заявил, что не допустит участия США в Транстихоокеанском партнерстве //https://ria.ru/world/20160808/1473878766.html.

[22] Трамп анонсировал выход США из Транстихоокеанского партнерства после своей победы на выборах //http://www.rosbalt.ru/world/2016/08/09/1539186.html.

[23] Керри назвал возможный провал ТТП трагедией для американской экономики //http://www.vz.ru/news/2016/10/27/840405.html.

[24] Obama Administration Gives Up on Pacific Trade Deal Congressional GOP leaders indicated they wouldn’t consider Trans-Pacific Partnership in lame-duck session //http://www.wsj.com/articles/obama-administration-gives-up-on-pacific-trade-deal-1478895824.

[25] СМИ: Вьетнам отказался ратифицировать ТТП из-за изменений политики США //http://tass.ru/mezhdunarodnaya-panorama/3790808.

[26] Си Цзиньпин: РФ и КНР должны содействовать созданию зоны свободной торговли в АТР //http://tass.ru/ekonomika/3798355.

[27] Председатель КНР призвал к созданию зоны свободной торговли в АТР //http://tass.ru/ekonomika/3797898.

[28] Неформальная встреча лидеров стран БРИКС //http://kremlin.ru/events/president/transcripts/52819.

[29] 2016 Leaders’ Declaration Lima, Peru 20 Nov 2016 //http://www.apec.org/Meeting-Papers/Leaders-Declarations/2016/2016_aelm.aspx.