Will the TPP rupture Asia Pacific
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The Trans-Pacific Partnership (TPP) deal was sealed on 5 October 2015. Moscow’s stance on the TPP has not been defined yet. The Russian International Affairs Council has asked Natalya Stapran, Associate Professor at the Department of Oriental Studies, Moscow State Institute of International Relations (MGIMO) of the Ministry of Foreign Affairs of Russia; Alexander Gabuyev, head of the “Russia in the Asia–Pacific Region” program of the Carnegie Moscow Center, Sergey Luzyanin, Professor at the Department of Oriental Studies, MGIMO of the Ministry of Foreign Affairs of Russia and Won Dong Cho, Chair-Professor at Chung-Ang University (The Republic of Korea), to comment on the agreement and share their insights on whether it poses a threat to Russia’s interests.
The Trans-Pacific Partnership (TPP) deal was sealed on 5 October 2015. Moscow’s stance on the TPP has not been defined yet.
The Russian International Affairs Council has asked Natalya Stapran, Associate Professor at the Department of Oriental Studies, Moscow State Institute of International Relations (MGIMO) of the Ministry of Foreign Affairs of Russia; Alexander Gabuyev, head of the “Russia in the Asia–Pacific Region” program of the Carnegie Moscow Center, Sergey Luzyanin, Professor at the Department of Oriental Studies, MGIMO of the Ministry of Foreign Affairs of Russia and Won Dong Cho, Chair-Professor at Chung-Ang University (The Republic of Korea), to comment on the agreement and share their insights on whether it poses a threat to Russia’s interests.
What implications does the signing of the agreement on the Trans-Pacific Partnership will have for Russia?
Natalya Stapran: The complete text of the agreement is not available yet, and we are only aware of its structure. It comprises 30 chapters encompassing a broad range of areas for cooperation — it is a serious claim to the role of the agenda-setter both at the regional and global levels. Russia will benefit from accessing the market of 12 countries while having economic ties only with Vietnam. However, there are several negative scenarios: what is being established now is a new bloc of countries sharing the same vision, abiding by its own rules, and defining its own quality standards, which will enable them to put those who fail to meet these standards in terms of both labor resources and environment beyond the framework for economic engagement.
In this respect the agreement has broad provisions and regulates a lot more areas than commodity trade and investment. As any new rule, the TPP agreement will be a new obstacle to Russia, albeit tiny.
Alexander Gabuyev: Although the text of the agreement has been approved, it will have to be ratified. It will likely be ratified by the Congress, because the Obama administration has been competent and smart enough to pave the way for the deal.
With such projects as the TPP you cannot embrace the aftermath. Some companies may be unwilling to play by the new rules. For example, it will turn out too costly for them to meet the TPP’s labor standards and they will find it more lucrative to place manufacturing facilities in countries, where the costs of labor and compliance with labor regulations are lower.
However, if Russia is planning to diversify its economy and become a supplier of software and food, we will have to consider either joining the TPP or at least harmonizing our regulations.
When it comes to our country, Russia’s engagement in the Asia-Pacific is all about raw materials and the military industrial sector, and the agreement practically covers the areas not associated with the military industrial complex. If Russia plans to continue playing the role of a resource-based economy and arms trader in the Asia-Pacific, the agreement will pose no threat to us. However, if Russia is planning to diversify its economy and become a supplier of software and food, we will have to consider either joining the TPP or at least harmonizing our regulations. One burden that we need to deal with is the Eurasian Economic Union (EEU), where, say, Belarus has very weak connections with the Asia-Pacific and has a totally different economy and interests. Because Russia’s regulations are pegged to the EEU, Belarus with its power of veto can ruin some of the initiatives that could benefit the Russian economy. It is apparent that Russia should stop being arrogant and put an end to the rhetoric “we do not have to be interested at the state or corporate levels, we can afford to know nothing about it, not to travel anywhere, and not to use any formats being well aware that they will fail.” But the TPP is a reality that we need to study as thoroughly as we studied the WTO and other regimes of the global economy.
Sergey Luzyanin: It is obvious that they are through with time-consuming preparations of negotiations and the de jure and de facto approvals of this enormous project entitled the Trans-Pacific Partnership. Everyone knows that the United States is the initiator of the project. Experts and politicians are aware that the TPP is an American integration project within the Asia-Pacific. Another point that is less obvious is how Russia and its partners should respond. Naturally, we live in a differentiated world from the perspective of economic institutions: the WTO is eroding; the Asia-Pacific Economic Cooperation (APEC) is being deformed. I believe the Trans-Pacific Partnership will become a direct threat for the APEC that is losing its function of the principal bloc in the Asia-Pacific, which coordinates integration and convergence, decreases in tariffs and rates, and improvements in trade and economic relations. Importantly, politically the APEC brings together all major powers, including Russia and China.
Experts and politicians are aware that the TPP is an American integration project within the Asia-Pacific.
Unfortunately, Russia and China are not APP members, which will encourage them to increase their presence in the APEC. We will be watching the APEC and the APP compete. The Russia–China link will mold, offer preferences, and promise loans to medium and weak countries, and the U.S. will be doing the same. We will thus have a sort of regional geoeconomic “bipolarity.”
The TPP project will not add stability and further complicate the already intricate plexus of integration ties: we can add a long list to ASEAN+1, ASEAN+3, and East Asian Community. And now, American ideologists and politicians would like to see this cluster crowned with the kingly pyramid of the Trans-Pacific Partnership. However, it will more likely add to the regional disorder. Overall, the creation of the Trans-Pacific Partnership is more of a challenge to Russia and China than an opportunity.
Won Dong Cho: Korea has found itself in a very unique situation, connected with the creation of Trans-Pacific Partnership. TPP has a team of member countries. Among these twelve countries seven, which is more than a half, have a bilateral Free Trade Agreements with Korea. For example, we have an FTA with the United States, Canada, Australia, Mexico and Vietnam. Moreover, we have bilateral FTA with China, who is not a member of this bloc. Some people ask why Korea has to participate in TPP, when it already has so many bilateral FTA´s with its member countries. Korea might be seriously damaged when the TPP is actually to emerge since the bloc FTA is more beneficial to the member-countries.
If Korea is in that risky position, what about Russia and China who don’t have FTA relations with the TPP countries? So if there is a regional FTA to emerge it should have more coverage when it comes to the region as a whole. Korea and Russia should be united in making a voice that TPP should not be protectionist. In order to make this happen we need bilateral efforts of our countries.
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