Libre: New free trade pact

Atty Mel Libre, Sunstar| Feb 6, 2016

IT WOULD have been like another working day in Auckland if not for the 5,000-plus protesters that created a commotion outside Sky City Hotel where ministers from 12 countries, including New Zealand, signed formally the Trans-Pacific Partnership (TPP).

TPP is a free-trade agreement between 12 Asia-Pacific countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam that primarily allows the free flow of goods and services sans tariff.

The signing of the agreement in New Zealand is an acknowledgment of its role as the driving force in its creation and growth – and having convinced the United States and Japan to join. It all started in 2001 when New Zealand and Singapore entered into an agreement, the Closer Economic Partnership (NZSCEP), a precursor to the Trans-Pacific Strategic Economic Partnership Agreement that further expanded to what is now TPP. The New Zealand initiative became bigger when President Barack Obama of the United States agreed to back it up.

The second biggest economy in the world, China, has opted out of the TPP as well as a number of Southeast Asian nations, with a rival a trade agreement (the China-led Regional Comprehensive Economic Partnership or RCEP) in the works. The 10-member states of Asean have sided with China, so has India and South Korea as well as TPP signatories Australia, Japan and New Zealand.

TPP will not be enforced until the US and Japan will have ratified this through their respective legislative bodies. They have two years to do so otherwise, everything will be for naught.

The protest in Auckland jives with opposition in other countries, including the United States, where it would be an uphill climb for the agreement in Congress, with legislators sending negative signals regarding its approval. The crux lies in allowing companies to take legal action against foreign governments that harm their investments. Losing its immunity from suit, nations will fall prey to private entities, thereby allowing the latter to pressure governments and affect their citizenry.

President Barack Obama is pushing for the TPP as a way of balancing the hold of China over the economies in Asia that is expected to become dominant in the next fifty years and beyond. He confronted the issue head on, saying last year: “When more than ninety-five percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy.” The name of the game is security and control, and military strength must go hand in hand with economic supremacy.

Australian Trade Minister Andrew Robb though has a more conciliatory belief that RCEP would “eventually be merged with the Trans Pacific Partnership to form the basis of an even bigger trade treaty across the Asia Pacific.”

But what is baffling is where the Philippines stands. It placed its bet on RCEP despite its boundary conflicts with China. Shouldn’t it send signals to TPP of its intent to join? It is never too late.

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