by Mitch Kokai
Senior Political Analyst, John Locke Foundation
President Obama was stymied by Senate Democrats on May 12 on his first attempt to win authority to fast-track the Trans-Pacific Partnership, a massive trade pact that also includes Japan, Vietnam, Canada, and eight other countries. The TPP’s opponents lambaste the pact as yet another giveaway to big business to the detriment of U.S. labor. What they’re forgetting is the broader geopolitical picture. The TPP isn’t just about profits and jobs; it’s an attempt by the White House to maintain U.S. dominance of the global economic order in the face of a rising China.
The People’s Republic, the world’s second-largest economy, is conspicuously absent among America’s TPP partners. There’s a reason for that. The pact aims to redirect trade to the U.S. and solidify America’s economic position in Asia. By doing so, the Obama administration hopes to pressure China into adhering to Washington’s rules and standards for free exchange. “If we don’t write the rules for trade around the world, guess what?” Obama recently warned. “China will.”
While the TPP’s enemies may be oblivious to that new reality, China’s leadership is not. The country is ready to chart its own course in the global economy. In late April, China announced its partners in the Asian Infrastructure Investment Bank (AIIB), an institution that could rival the Washington-based World Bank. Fifty-seven countries signed up to join the AIIB as founding members—many of them America’s closest allies, including the U.K., Germany, and Australia. The U.S. decided to wait on the sidelines.
The TPP and the AIIB are symbols of an historic battle: the contest between the U.S. and China for control of the trade and finance that form the foundation of today’s global economy.