There are few who don’t imagine some sort of future regulations by which international trade is expanded. If the Trans-Pacific Partnership didn’t exist, someone would have to create it. Even though international trade policy lags far behind international communication innovations which have occurred over the past decade, deeply entrenched cultural values make it difficult to roll out a real agreement. The factors are myriad.
On the one hand, you’ve got an international culture that clearly favors trade fluidity across borders. Just check out the infographic courtesy of GrowthCrossings/The Economist. Most significant economies on the world stage and moving towards international trading freedom. There are also significant exceptions. Even as the US and Japan have made great steps at liberalizing their trade rules in recent years, China has been sprinting in the opposite direction.
China has been absent from TPP discussions, just as they were in the early days of the WTO. Were China to eventually comply with the regulations that are so culturally abhorrent to its political and social culture, this would be an enormous political victory for the US. America is still the world’s largest economy, though it is grasping at straws to keep its seat at the head of the table in place of China. China, meanwhile, has achieved incredible economic and investment growth in the past decade, and is deeply invested in counter methods to achieve further growth.
Unable to continue down the path of true isolationism, China continues to unfold its One Belt, One Road plan to increase its influence internationally, but mostly within Asia. Despite growing international sentiment that the border between East and West should be dissolved, China is working to boost economic might and influence by making the contrast more stark than ever before.
The TPP conversations will have a lot of influence on China’s ability to make good on this attempt. After seven years of negotiations, the broad strokes of the Trans-Pacific partnership are agreed upon, but the massive international policy innovation is getting mired in the weeds of tiny regional culture issues.
Take back control of your finances!
Get a FREE checklist for the money moves to make in the New Year.
Also get new articles, advice, and tips delivered right in your email inbox with our newsletter!
Because the purview of the TPP is so far-reaching, disputes between participant nation over questions as small as the sale of milk can grind progress to a halt. To quote Patrick Yow, former chief economist of the WTO:
Trade liberalization today is about harmonizing rules. It becomes an acutely political issue when regulations encompass societal values rather than just economic efficiency. Citizens and companies in sectors that lose out in trade deals can band together not just to protect domestic industries, but also domestic standards, whether it’s the pesticide in fresh flowers from Africa, the hormones in beef from the US or the lead in toys from China. “It’s protectionism you don’t see. It’s incremental, opaque, murky and dealing with regulatory issues. There are so many levels on which you can manipulate outcomes to favor or disfavor one or another interest,” Mr Low says.
With international powers asserting dominance, and tiny regions holding onto long-held value traditions, the expansion of global trade fluidity is uncertain.