CPTPP signing Trumped by US tariff move
March 12, 2018: The Comprehensive Progressive Agreement on Trans-Pacific Partnership – even without the US – is still about maximising corporate rights and minimising government regulation in the public interest. Despite the suspension of 22 clauses, foreign corporations will still have the right to bypass national courts and sue governments if they can claim that a change in law or policy harms their investment. And there are still 30 other chapters that mostly restrict future democratic regulation.
Trump’s tariffs on steel and aluminium shattered the neo-liberal consensus that reducing all tariffs to zero is always the best policy, as Paddy Manning notes in The Monthly.
But both the CPTPP and the tariffs may be more symbolic than substantive for Australia.
Among CPTPP members, Australia already has free trade agreements with New Zealand, Singapore, Brunei, Vietnam, Malaysia, Japan, Chile, and Peru. There is no great economic bonanza for Australia in reduced tariffs with Canada and Mexico. Without the US, the claimed economic benefits for Australia are even less than from the original TPP. But the Turnbull government is claiming the CPTPP as “the best rules” for future global trade and is desperate to have the Australian parliament finally endorse it. The Senate refused to do that for the original TPP in February 2017, and there is even less reason to do so now.
Currency movements may have a larger impact on prices than Trump’s steel and aluminium tariffs. Trump has promised to exempt Australia, as well as Canada and Mexico while they are re-negotiating the North American Free Trade Agreement. So the main impact will fall on South Korea, Japan, and the European Union. China – Trump’s rhetorical target - is a much smaller exporter into the US market. Nevertheless, this impact could mean more global oversupply and even lower prices, with cheaper products in danger of flooding markets like Australia, and further destabilising the global trading system.
One response has been to contrast the CPTPP as “open, fair trade” against Trump’s “unilateral domination” trade policy, and China’s unilateral Belt and Road authoritarianism.
But the CPTPP is anything but “fair”. In reality, the shrinking of the TPP demonstrates the power of popular democratic opposition to the neoliberal agenda, which meant both sides of US politics had to oppose it. AFTINET is calling for a Senate inquiry to assess the real costs of the CPTPP, and for the majority in the Senate to vote against it if it is not in the public interest.