This article is part of our special report Free Trade for Growth.
SPECIAL REPORT / A fledgling trade agreement between the United States, Latin America and Asia threatens to derail Europe’s attempts to create free trade agreements with Japan and the US and casts doubt on the EU’s lack of strategy towards Asia, trade experts say.
The fears emerged at a Brussels seminar on the Trans-Pacific Partnership (TPP) (see background) organised by the European Centre for International Political Economy (ECIPE), a think tank.
The TPP aims to create an ambitious trade network, encompassing goods and services, but including areas not usually covered by trade agreements, such as common rules for intellectual property rights and standards, as well as environmental protections and labour rights.
TPP, like a Spielberg trailer
Since negotiations underlying such agreements are conducted behind closed doors, few solid details about the TPP are known.
“The TPP is being trailed like a new Spielberg film. Everyone is hoping that their favourite actors will be in it, we hear that it will be full of special effects, but what is unclear is whether it is going to be a blockbuster or a flop,” Lutz Guellner, an EU official, told the seminar on 28 September.
Deborah Elms, head of the Singapore-based Temasek Foundation Centre for Trade and Negotiations, said Canada and Japan could signal a desire to join the TPP negotiations next year.
The “big elephant in the room is who will be the new members and what would happen if Japan joined,” Guellner said.
Race on for influence in Japan
The EU is currently trying to negotiate a trade agreement with Japan, but “there may be a race on” for influence in Japan – with its interest in the TPP, said Hosuk Lee-Makiyama, director of ECIPE.
The TPP also raises doubts about the EU project – currently under way – to negotiate an ambitious free trade deal with the US itself.
“How can the US be equally ambitious both on the TPP and Atlantic [European] side of negotiations,” is one of the questions under consideration by policymakers, Guellner told the seminar.
The EU will also have to be careful to avoid any perceived slight against China in its reaction to the TPP. Many within Chinese government circles suspect that the TPP represents an attempt by the US to contain Chinese power in the region, by encircling the nascent superpower with a large trade bloc.
TPP seen as counterweight to China
“The TPP is a US reaction to China’s rise. It is not, however, an attempt to contain China, but rather to meet the concern that the US itself feels in being shuttered out of the Asean groups. So it can be seen as a counterweight,” Elms told the seminar. Asean is the 10-member Association of Southeast Asian Nations.
There are doubts about whether the agreement is a deal about trade or about trade and security, Guellner said, adding: “There is a real question what will be the impact on China and China’s interests.”
He said the Commission is eager to know more details about the TPP, “from the point of view of our own negotiations with Asean and other partners”.
“I don't think that Europe has any strategy about the TPP, and even if there were no TPP – with the rapid integration of the regional trade architecture in the Asia-Pacific region – Europe risks being left behind,” Lee-Makiyama told EURACTIV afterwards.
The countries involved in the TPP are already integrating quickly on a cross-border “company-to-company” basis, “much as Europe expanded its cross-border trade between member states during the 1960s”, Lee-Makiyama said.
“The regional trade architecture is closing very quickly and unless Europe gets its foot in the door, it will be much more expensive for it to obtain market share in 10 years time,” he said, warning that the tide of events – with or without the TPP – poses “an existential threat” to Europe.