Columns 30.1.2017 07:15 am

Making China great again

Making China great again

Quitting the Trans-Pacific Partnership is unlikely to do American workers much good economically, but leaving the TPP will have a big impact on US power in the world.

Passing the TPP (Trans-Pacific Partnership) is as important to me as another aircraft carrier,” said former US defence secretary Ashton Carter two years ago, as the negotiations on the huge new free trade organisation were nearing completion.

Given that the US already has twice as many aircraft carriers as all the rest of the world put together, that comment could be taken several ways, but Carter actually did mean that the TPP was strategically important in his eyes.

As it was for ex-president Barack Obama, who saw the TPP as America’s main tool for containing China’s growing influence in Asia. China, deliberately excluded from the 12-member club, saw it that way too.

The official Xinhua news agency referred to the TPP as “the economic arm of the Obama administration’s geopolitical strategy to make sure that Washington rules supreme in the region”. US President Donald Trump has just cut off that arm.

“A great thing for the American worker, we just did,” he said after signing a document withdrawing US support for the TPP on Tuesday.

In fact, quitting the TPP is unlikely to do American workers much good economically, but it may not do them much harm either. Most analyses conclude the deal wouldn’t have had much effect either way on US wages and jobs – but leaving the TPP will certainly have a big impact on US power and influence in the world. Xinhua was right: for Obama, the TPP was always more about the strategic rivalry with China than it was about economics. It still is, but Trump’s electoral strategy has obliged him Monday 12 30 January 2017 to declare war on free trade.

The voters that Trump targeted most heavily were working-class Americans who felt betrayed and abandoned as the well-paying jobs in manufacturing disappeared. However, there was no point in telling them that automation was destroying their jobs because he could not plausibly promise to stop automation.

But if he claimed that the real problem was free trade, which allowed the Chinese and Mexicans and other sneaky foreigners to steal American jobs … well, he could certainly promise to stop that. He would build walls, cancel freetrade deals, even launch trade wars. It all sounded pretty credible.

So once he was in office, Trump was obliged to “unsign” the TPP deal, even though its main purpose, from Washington’s point of view, had been to perpetuate American economic and strategic dominance in Asia and freeze China out.

In the eyes of Trump’s supporters (and maybe even in his own), he was slaying a dragon. The biggest cost to the US is that its defection from the TPP will not automatically kill the notion of an Asian free-trade bloc: Australia is already talking about keeping the TPP going without the US, but the likelier outcome is that the Asian members start trying to link up with China, Indonesia and even India in China’s proposed Regional Comprehensive Economic Partnership.

In that case, the US could end up excluded from a free-trade bloc that includes half of the world economy.

The dominant economy in that bloc would be China’s, so the main practical effect of Trump’s action would be to give a major boost to China’s power and influence in the world.

Gwynne Dyer

Gwynne Dyer

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