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Pacific Trade Agreements, Prosperity and Democracy: for Whom does the Bell Toll? Pacific Trade Agreements, Prosperity and Democracy: for Whom does the Bell Toll?
by Dr. Emanuel Paparella
2012-11-26 07:17:30
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Lately we have seen in the pages of Ovi magazine an intriguing discussion on the decade-old military-economic alliance between the US and Australia and the latest adjustments going on as we speak. That in turn has motivated me to search for some reliable information on the topic. I’d like to share it with the Ovi readership.

There are indeed various well researched scholarly studies on the matter. The one I found most objective, useful and informative was that of Michael Richardson who is a Senior Research Fellow at the Institute of South East Asian Studies in Singapore.

As I suspected from my own rather inadequate knowledge of the subject, this strong friendship and economic-military alliance with Australia goes all the way back to World War II when American, English and Australian soldiers fought the Japanese side by side. It came as a surprise to me however to learn that more bombs were dropped on Darwin during a surprise Japanese raid than on Pearl Harbor itself. I suppose, it is the memory of those kind of events that goes a long way in strengthening  a military alliance for many decades. Presently however, this alliance is more a trade alliance than a military one, even if lately a contingent of marines and rights of port access have been negotiated. The interpretation that such military moves implies a containment of China and a revival of the Cold War against Communism, are premature and denied by the same governments who signed the agreement.

There is little doubt however that the winding down of wars in Afghanistan and Iraq has opened the door to greater U.S. attention to simmering tension over the South China Sea, a shipping lane for more than $5 trillion in annual trade that the United States wants to keep open. China looms in the background of course like the proverbial pink elephant in the living room. The present American policy pivot to Asia involves intensified diplomacy and shifting US military forces into places where, in co-operation with regional allies and friends, they can more effectively counterbalance the increasingly assertive rise of China. In my opinion Richardson has a valid interpretation here.

But it bears mentioning that this US diplomatic and military pivot to Asia is only one dimension of the strategic jostling between the US and China. The other is a competition for regional economic influence as the world's two top economies support different visions for future trade, investment and business growth. One plan is centred on Asia and backed by China to enhance its position (RCEP); the other spans the Pacific Ocean to link the Americas and Asia, and is championed by the US to increase its leverage (TPP).

In Phnom Penh President Obama recently joined leaders from 17 other, mainly Asian, nations for East Asia Summit talks. A centrepiece was a decision to launch negotiations to form the world's largest economic bloc, an arrangement to liberalise trade, investment and other barriers to business encompassing 16 nations on the Asian side of the Pacific rim. This plan for closer economic integration is known as the Regional Comprehensive Economic Partnership (RCEP). Ten Asean member states already have free trade agreements in place with the six regional economies - Australia, China, India, Japan, New Zealand and South Korea. The 16 partners mentioned will aim to conclude negotiations to consolidate these separate deals into a compatible framework by the end of 2015.

Keep in mind that this region contains about 3.5 billion people, about half of the world’s population. This ambitious plan if successful could transform the region into an integrated market. It would account for more than 27 per cent of international trade by value, with an economic output of $US 23 trillion, one-third of annual global gross domestic product.

But here is the surprising problematic: the US is not part of the RCEP. Instead, it is promoting an alternative economic arrangement to integrate markets and business practices around the Pacific rim by linking the Americas to Asia. This is known as the Trans-Pacific Partnership, it involves the US and 10 other countries. Four - Brunei, Malaysia, Singapore and Vietnam - are ASEAN members. Two - Australia and New Zealand - are Asia-Pacific nations. The remaining four - Canada, Chile, Mexico and Peru - are from the western hemisphere. The current 11 TPP members will hold the 15th round of negotiations in New Zealand next month. They aim to conclude a deal by the end of next year. Meanwhile, Obama is looking for more members. Thailand has just agreed to explore membership of the TPP. Earlier this month, the government of Japan, the world's third biggest economy, pledged to do the same if it won impending general elections.

Important to note here that the two Asian giants, China and India, are not part of the TPP talks and have opted to join the RCEP. Indonesia, south-east Asia's largest economy, has done likewise as have four other Asean states - Cambodia, Laos, Burma and the Philippines, a US ally. Another notable absentee from the TPP negotiations is South Korea, also a US ally. It has a bilateral free trade agreement with the US. The US maintains that there is room for both regional economic integration initiatives; that they are complementary not competitive. Both the RCEP and the TPP, when concluded, will be open to new members that accept their rules.

Japan, Thailand, Brunei, Australia, Malaysia, New Zealand, Singapore are hedging their bets by taking part in both sets of negotiations.  None of them want to appear to be aligning economically with either China or the US in case they choose the wrong side and undermine their future growth prospects. The US and China, which together account for a third of world output, are seen as twin sources of economic growth as Europe and Japan continue to stagnate.

Australia has said its highest trade negotiation priority is the conclusion of the TPP but knows it will be difficult, the RCEP has yet to take shape. Nevertheless the Trade Minister Craig Emerson has said that the RCEP would be ''the perfect vehicle for advancing Australia's interests in the Asian century.'' But here progress may be slowed by infighting between China and Japan as the recent territorial island disputes have shown.

One thing is for sure: the stakes in the competition between the US-led TPP and the RCEP, with China as its leading economy, are high. Only time will tell who will emerge the winner in this competition and whether or not democracy will ultimately be sacrificed to prosperity and/or security. That outcome is surely something worth watching closely. It may well determine the political destiny of the whole planet.

If history teaches anything, it is this glaring paradox: without economic prosperity and power even a military superpower (one thinks of the Roman Empire and the Soviet Union) eventually ends up declining and self-destroying. On the other hand mere prosperity without strong cultural foundations eventually leads to the same sad conclusion. China may well prove that totalitarianism parading as pseudo-democracy can lead to prosperity without real democracy and those countries that go along with that theory (even when they call themselves democratic) will end up in the same place. As Benjamin Franklin quipped once: those who privilege economic considerations above liberty deserve to lose both.

Here the EU who could have taught the importance of a strong cultural identity and democratic institutions as by far preferable to the “survival of the fittest” capitalistic system run by bankers and faceless bureaucrats, but sadly it too finds itself in the same predicament with its head in the sand. In any case I propose that such is a lesson of history that both democratic and totalitarian systems ought to take to heart and reflect upon carefully; for the bell is ringing for both.

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Murray Hunter2012-11-26 10:16:09
So glad Australia is now getting so much attention on OVI and appreciate the perspective.

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