Trade, power, and opportunity

written by On February 10, 2015 in 2010-2016, Economics, Government, Obama Administration, WIIS Blog

by Dr. Michael E. Brown and Dr. Chantal de Jonge Oudraat

chantal blog pic
President Obama speaks during a meeting with leaders from the Trans-Pacific Partnership at the U.S. Embassy in Beijing on Nov. 10, 2014. (Mandel Ngan/AFP/Getty Images)

In his State of the Union address on Jan. 20, President Obama asked Congress to give him trade promotion authority for the Trans-Pacific Partnership (TPP) negotiations with 11 countries in the Asia-Pacific and the Americas as well as the Transatlantic Trade and Investment Partnership (TTIP) talks with the 28 members of the European Union. This authority would allow the president to submit trade agreements to Congress for up-or-down votes, which would improve the chances for success. It was wise for Obama to make this a prominent presidential priority.

The countries participating in the TPP and TTIP talks account for approximately half of global trade and two-thirds of the global economy. If implemented, the TPP would add an estimated $224 billion and TTIP could add another $133 billion to the global economy annually – an overall boost of more than 0.3 percent in global GDP.

These agreements would also generate substantial balance of power and strategic benefits. These non-economic benefits can’t be quantified, so they haven’t received much attention in policy discussions, but they are tremendously important.

First, Russian aggression is an unpleasant balance of power problem that is unlikely to go away any time soon. TTIP isn’t a panacea, but it would strengthen the West’s balance of power position. It would help European economies grow, provide more opportunities for European companies to turn from Russia to the United States and enhance the prospects for further trans-Atlantic economic policy coordination. The United States and its European allies need to prepare for more rounds of economic sanctions against Russia in the near term, and they have to build a stronger, more united economic front for the long haul.

Second, turning to the Pacific, the rise of China is the great balance of power challenge of our time. The TPP isn’t a Pacific panacea, but it is an important part of the equation. It would reinforce the United States’ position in the region and provide strategic reassurance to the many Asia-Pacific countries that worry about China’s rise – that is, everyone except North Korea. It would be a new, strong multilateral accord in a region that very much needs more multilateral frameworks. These would be stability-enhancing developments.

Third, TPP and TTIP pacts would strengthen Obama’s personal credibility and the United States’ international leadership position. Obama’s failure to enforce his “red line” on the use of chemical weapons by the regime of Syrian President Bashar al-Assad has done real damage to his credibility in the Middle East, Asia and around the world. Effective presidential leadership in these trade negotiations would help to restore Obama’s international credibility. A TPP agreement would also solidify the economic pillar of Obama’s “pivot” to Asia – a geostrategic priority. More generally, effective U.S. leadership on TPP and TTIP would enhance the United States’ standing in an era when many countries need strategic reassurance and want U.S. engagement.

Fourth and last, economic strength is one of the fundamentals of national and international power. This has been true for hundreds of years, and it might apply with even more force today, given the emergence of a truly global economy. In a world where national power and balance of power considerations are still important – where some states are failing and others are flailing – it is essential for the United States and its allies to strengthen their economic fundamentals and economic ties. TPP and TTIP agreements would help.

The year ahead will be a window of opportunity for concluding the TPP and TTIP negotiations. Obama is in his final years in office, which gives him the political immunity he will need to stand up to domestic opponents of trade pacts – mainly in his own Democratic party. The Republican majorities in both houses of Congress have pro-trade inclinations that, hopefully, will lead to approval of trade promotion authority. But in 2016, electoral politics will take over in the United States and the prospects for trade deals will dim.

Americans tend to be preoccupied with U.S. politics, but domestic politics in other key countries are also well-aligned for trade deals in 2015. In Japan, Shinzo Abe won re-election as prime minister in December 2014. This is the best position he is likely to have to stand up to Japan’s domestic agricultural interests and conclude a trade agreement. In Germany, Angela Merkel won reelection as chancellor in September 2013. As a popular leader of the country with Europe’s largest economy, she is well-positioned to lead the way toward a TTIP agreement. TPP and TTIP agreements would give Japan and Europe, respectively, much-needed economic boosts.

It is important for leaders on both sides of the Pacific and the Atlantic to seize this moment. The politics are as well-aligned as they can be for success in 2015, but this fortuitous confluence won’t last.

 

A version of this blog appeared on the Monkey Cage section of the Washington Post on February 6, 2015.

Michael E. Brown is dean of the Elliott School of International Affairs at the George Washington University. Chantal de Jonge Oudraat is president of Women In International Security (WIIS).

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.