By Ernie Bower
President Obama at a 2010 Trans-Pacific Partnership Summit. TPP talks have renewed animation after U.S. ratification of the KORUS FTA. Source: gobiernodechile's flickr photostream, used a creative commons license.
There is a real competition under way to define how economic integration of Asia will proceed. The two competing models are those of the U.S.-led Trans-Pacific Partnership (TPP) and the China-led ASEAN Plus Three — ASEAN plus China, Japan, and South Korea. The U.S.-led model is deep and requires massive political commitments by governments to legally bind themselves and reform current regulations and practices. The China-led model is relatively shallow and easier for governments to join. It is high-profile, with nonbinding agreements expressing general intent and some specifics around tariffs, but it includes little on other commercially important rules and regulations.
This competition should sharpen the sense of urgency for governments to move faster and more decisively. Fortunately, President Obama and the United States have begun to address the lack of leadership on trade that has resulted in the serious loss of U.S. market share in Asia. Congress recently passed the Korea, Colombia, and Panama FTAs and will announce, with the eight other negotiating partners, a significant framework agreement for the TPP, signaling that the talks are progressing well toward an agreement.
Passing the U.S.-Korea FTA convinced Asia that the United States is putting presidential political capital behind trade again. That factor was a game changer and has resulted in Japan, Canada, Mexico, and Korea indicating serious interest in joining the TPP, making progress toward the vision of a Free Trade Area of the Asia Pacific seem more compelling and achievable. (more…)
