Will the Trans-Pacific Partnership Jump-Start a Stalled WTO? Richard Cunningham's CUSLI Distinguished Lecture

By Keith Edmund White

Editor-in-Chief, CUSLI-Nexus

Not heard much about the Trans-Pacific Partnership (TPP)?  The TPP is a U.S.-led push to liberalize trade among 11 countries that is entering its 15th round of deliberations next month.   It's also, according to Salon, "the biggest trade deal you've never heard of," like a hush-hush, super-sized NAFTA in the Pacific region.

Richard O. Cunningham

But, according to Richard O. Cunningham, the TPP is much more than a long-running series of trade talks.  The TPP may not only determine the WTO's future, but set the trend lines of the Sino-American relationship in the 21st century.  And Canada may play a critical role in whether the TPP revitalizes or cripples multilateral trade liberalization efforts.

Richard Cunningham, Senior Partner at Steptoe & Johnson LLP in Washington D.C., spoke on the Doha tragedy and sized-up America’s TPP gambit at the Sixth Annual Canada-United States Law Institute Distinguished Lecture.  Cunningham delivered his speech, Trade After Doha:  The Growing Divide Between the Emerging Nations and the Developing World, last week at the University of Western Ontario Faculty of Law in London, Ontario.

Watch Cunningham's speech at Western Law's Vimeo page, or at the bottom of this post.  Below is a summary of the Cunningham's speech, accompanied with some key quotes. 

• International Trade Talks Stalled From 3-Pronged WTO Dilemma:  (1) the ‘old guard’ of the WTO (i.e. developed nations like America and leading EU member-states) need export-led growth, but are finding further multilateral trade concessions tough to swallow; (2) emerging developed nations, like India and China, have little interest in forging a new trade consensus; and (3) developing countries—whose economies are heavily hampered by remaining textile and agricultural trade barriers—believe all trade negotiations should be viewed in the greater, and far more murky, context of development.

Key Quotes: 

“[M]any people regard [the GATT and WTO] as probably, until this juncture, as the most successful of mankind’s efforts at a truly international organization on a truly international issue—that is trade.”

“Fundamental misconception of how a trade negotiation is conducted.  Trade negotiations are about doing a deal.  Yes, there can be an emphasis on greater benefits to the developing world, but to have a deal it has to go both ways.  Otherwise, look at your Parliament in Canada, look at the Congress of the United States, can you imagine the ratification of an international deal that further lowered tariff barriers and made other concessions by the United States and Canada that gets nothing in return?  Can you imagine that being ratified?” 

• America’s Trade Gambit: The TPP Plan Could Resuscitate or Cripple Multilateral Trade Liberalization Efforts.  The Trans-Pacific Partnership (TPP) is a U.S.-led effort to conclude a 11-nation trade liberalization pact.  Why does the TPP merit our attention, even though it includes a nation most readers probably have never heard of (Brunei Darussalam) and does not include Japan, India, or China?  Because America is hoping that the diverse TPP group can reach a model trade agreement that will break the Doha logjam.  But real pitfalls exist:  (1) Pressure to include more nations in the TPP—especially Japan—risks turning the TPP into a Doha Disaster 2.0;  and (2) the desire of some U.S. officials to use the TPP as a diplomatic tool to ‘box in’ China:  a strategy that risks creating two competing trade blocs, not to mention increased tensions between the world’s two top economies.

Key Quotes:

“To the curious case of the Trans-Pacific Partnership.  It is the Obama administration trade policy.  There is no Obama administration trade policy other than the trans-pacific partnership…but it’s not clear…what [the United States] is doing with it.”

“But trade gets involved with politics and geo-politics.  And if you ask…a government official who is not a trade official…they’ll say TPP sounds great for an entirely different reason.  A geo-political reason.  They will say the big issue today is China…China [has] embarked upon bringing Asian under its wing, [and] we need to setup a counter-balance to China, and therefore we’re going to use TPP to do that."

• Canada’s Key TPP Role.  So what's Canada's TPP role?  Well, Canada—along with Mexico—recently joined the TPP talks, with Canada firmly supporting America’s TPP push.  And, according to Cunningham, “Canada is viewed as a voice of moderation, a voice to be listened to” even if not always followed by the United States.  Thus, it may be Canadian nudging that ensures the TPP remains a tool to jump-start multilateral trade talks, and not let the TPP morph into a anti-China trading bloc, or--worst yet--repeat Doha's failure.

Key Quotes:

Is it in Canada’s interest to pick up the TPP banner?  “Canada, I submit, has an even greater interest than the United States to [gain] access to the emerging markets, particularly in minerals, energy, and in agricultural.  Secondly, Canada has more flexibility than the U.S. politically to seek trade accommodations with China, India, countries like that.”

“So I will leave it to you, I leave the fate of the world’s trading system where it deserves to be, namely in the hands of Canada.  And I will leave it to you to pressure your government to pressure the U.S. and our trading partners to do the right thing and get things back moving.  Otherwise, the report I gave you today has grim implications that couldn't come at a worse time for the world economy…You don’t want Balkanization of trade in a time like this.  Maybe we can do something constructive instead.”