Negotiators from 12 Pacific Rim countries recently reached an agreement on the Trans-Pacific Partnership (TPP), a sweeping trade pact that has been promoted by the Obama administration as a high-quality, next-generation deal that will set standards for international trade for years to come. While noting the agreement still requires ratification by each member state, Stanford scholars believe that the TPP will be approved and reshape not only trade but also security relations in the Asia-Pacific region and beyond.

 

The TPP negotiations originally began as an expansion of the Trans-Pacific Economic Partnership Agreement signed by Brunei, Chile, New Zealand and Singapore in 2005, and then took on broader significance in 2008 when the United States expressed interest. The number of members eventually grew to include the other North American Free Trade Agreement (NAFTA) economies of Canada and Mexico, as well as Australia, Peru, Vietnam, Malaysia and Japan. Even before the agreement was finalized, leaders of many other Asia-Pacific countries expressed interest in joining the next round of negotiations, including South Korea, Taiwan, the Philippines, Colombia, Thailand and most recently, Indonesia.

 

The appeal of the TPP in the region is twofold. First, the repeated failure of new trade talks at the World Trade Organization (WTO) has forced countries seeking greater trade liberalization to pursue it through other bilateral or regional multilateral negotiations. Second, in the Asia-Pacific region, the number of these agreements has rapidly multiplied, creating myriad different standards, procedures and tariff rates that raise the costs of doing business across state borders and inhibit international trade and investment.

 

The TPP offers the prospect of a common set of rules governing investment, production and exchange across all member states, with significant improvements in economic efficiency. In addition, the danger of being excluded from a new trade regime that includes a huge share of the region’s economic activity has created a sense of urgency to seek membership from those countries not in the initial round of negotiations. By far the most conspicuous absence among the TPP members is China, which is now the world’s second-largest economy and a significant trading partner of all current member states.

 

The Trans-Pacific Partnership has been a research focus at the Freeman Spogli Institute for International Studies.

 

The Walter H. Shorenstein Asia-Pacific Research Center has organized several events exploring aspects of the TPP, and the Taiwan Democracy Project in the Center on Democracy, Development, and the Rule of Law held a conference in 2013 that examined the TPP from a Taiwanese perspective. The conference produced a comprehensive report on the topic, and an audio recording of an earlier Shorenstein APARC panel event was made available online. Now that negotiations have concluded, the Taiwan Democracy Project will revisit the topic in an upcoming conference on Feb. 9.

 

With the public release of the agreement in early October, three noted experts from Stanford University, Thomas Fingar, Michael Armacost, and Donald Emmerson, offered their analysis of the TPP’s prospects for ratification and its impact on the Asia-Pacific region.

 

Now that the agreement has been published, what is significant about the TPP? What does it mean for China?

 

The TPP is a big deal for many reasons, perhaps the most important of which is that it will provide the impetus and the template for concluding the Trans-Atlantic Trade and Investment Partnership (TTIP) and myriad other regional and mini-lateral trade negotiations initiated in response to the failure of the Doha Round of WTO reform. As with all trade agreements, there will be winners and losers, pain will be local and benefits diffuse, and critics will find much to criticize. But the agreement is likely to be ratified and its provisions will affect corporate strategies, investment decisions and globalized production chains. The fact that North America (the United States, Canada and Mexico) are parties to the TPP virtually assures that the globally important NAFTA group will not accept terms in TTIP or other negotiations that are incompatible with the TPP because NAFTA governments and companies do not want to cope with multiple standards, requirements, and procedures. The same is true of other major trading states and international firms, so the TPP will quickly become the new standard for “everyone” wishing to take advantage of opportunities in a globalized world.

This means that the TPP will serve as a—the—decisive building block for beyond-WTO trade arrangements. Without success in the TPP (or TTIP, which also has the size and importance to have become the new global standard if it had been concluded before the TPP) negotiations, there was a danger that the advantages of an integrated global trading system would be degraded by adoption of multiple and partially incompatible sub-regional agreements. Now those negotiating bilateral and mini-lateral agreements are likely to strive for consistency with the requirements adopted by key trading nations and the firms based in them.

The TPP is often but erroneously described as part of a U.S. effort to contain or constrain China. It isn’t. The United States should and will seek to bring China into the TPP, not to exclude it. I anticipate that Beijing will join together with South Korea, Indonesia, and possibly other states that are not yet members.

 

Thomas Fingar is a Shorenstein APARC Distinguished in the Freeman Spogli Institute for International Studies. He served previously as assistant secretary of the State Department’s Bureau of Intelligence and Research, principal deputy assistant secretary, deputy assistant secretary for analysis, director of the Office of Analysis for East Asia and the Pacific, and chief of the China Division.

 

Does the TPP carry security benefits? What are possible consequences for the U.S.-Japan relationship?

 

The TPP is a trade agreement, not a security pact. Security is generally a predicate for growth and trade. It does not thrive amidst turmoil, let alone conflict. But with greater economic interdependence, the incentives for avoiding conflict increase. And fortuitously Asia remains an unusually peaceful region despite some growing tensions between China and its neighbors.

The TPP agreement is certainly an integral feature of the Obama administration’s effort to “rebalance” toward the Asia-Pacific region. It embeds the United States in a new institution whose membership, I believe, is destined to grow. America’s engagement in the region is a source of reassurance to our friends and allies there. The United States has been bolstering its alliance with Japan, and this agreement will add a broader framework to the U.S. alliance, which was established through the Treaty of Mutual Cooperation and Security, and which contains a specific clause encouraging expanded economic collaboration.

I regret that selling the agreement publicly has included some explicitly anti-Chinese features such as the claim that if the United States and others don’t write the rules of trade, China will. The TPP is and should be open to new members who are prepared to live up to its requirements and that includes China.

 

Michael H. Armacost is a Shorenstein APARC Distinguished Fellow in the Freeman Spogli Institute for International Studies. He held a 24-year career in the public service, including having served as U.S. ambassador to Japan and the Philippines.

 

How does the TPP fit into the context of Southeast Asia and its possible alternative arrangements for economic cooperation in the Asia-Pacific region?

 

In strictly economic terms, there is no exact alternative to the distinctively comprehensive and intrusive TPP. In loosely economic but mainly geopolitical terms, however, a competitor does exist: the Regional Comprehensive Economic Partnership (RCEP). The United States is in the TPP. China is not. In the RCEP, the reverse is true. The United States has propelled the TPP. China and the Association of Southeast Asian Nations (ASEAN) are driving the formation of RCEP by all ten ASEAN states plus Australia, China, India, Japan, New Zealand and South Korea.

Compared with the TPP, RCEP is far less robust. RCEP is mainly about straightening the overlapping and sometimes inconsistent free trade agreements that already complicate Asian regionalism—the tangled contents of Asia’s “noodle bowl” of overlapping FTAs. (Trade agreements in the Asia-Pacific have burgeoned from around 60 ten years ago to some 300 today.) Under pressure from the more detailed and thoroughgoing TPP, RCEP’s would-be progenitors have been trying to expand their agenda to include more intrusive proposals. Partly for that reason, observers are pessimistic that RCEP’s negotiators will be able to proclaim its successful completion before the end of 2015.

ASEAN is divided. Myanmar, Cambodia, Indonesia, Laos, the Philippines, and Thailand are inside RCEP but outside the TPP. The other four ASEAN members—Brunei, Malaysia, Singapore, and Vietnam—enjoy the advantage of sitting at both negotiating tables. If only one of the two projected partnerships fails, these four states would still have the other arrangement to fall back on, and so much the better for them if both schemes succeed. It is partly for this reason that varying degrees of interest in joining the TPP have been expressed by five of the six non-TPP states in Southeast Asia. The exception is Myanmar, but once the structure and character of its new government have been clarified, its leaders too may wish to consider the TPP. Even China’s initially hostile view of the TPP has softened.

Given the market-favoring and regulation stipulations of the TPP, new entrants may be unwilling to accept its detailed, full-spectrum rules. But the Doha Round is dead, and the proposal to replace it with a scaled-down “Global Recovery Round” has gone nowhere. For the time being, the best one can hope for in the Asia-Pacific region is a successful TPP that China could eventually join, or a successful RCEP that could someday welcome the United States, or the birth of both arrangements followed by effective steps to render them complementary rather than competitive.

Donald K. Emmerson is director of the Southeast Asia Program at the Walter H. Shorenstein Asia-Pacific Research Center in the Freeman Spogli Institute for International Studies, where he is also affiliated with the Center for Democracy, Development, and the Rule of Law and the Abbasi Program in Islamic Studies.

 

Interested in joining the conversation? The Taiwan Democracy Project will revisit this topic on Feb. 9. The one-day symposium will bring together scholars and practitioners to reconsider Taiwan's prospects for entry into the Trans-Pacific Partnership. RSVP here today.

 

Listen to the audio from the event "The Trans-Pacific Partnership (TPP) -- A New Order for the Asia-Pacific?" with Stanford scholars Donald Emmerson, Thomas Fingar, Daniel Sneider and Kathleen Stephens.

 

 

Stanford students belong to the first generation that could witness the end of extreme global poverty — in what would be one of humankind's greatest achievements — the head of the World Bank said during a recent talk on campus.

But their generation, he said, is also likely to experience the first global pandemic since the 1918 influenza that killed more than 50 million people.

Jim Yong Kim, president of the World Bank, said innovations in health, education and finance are behind the World Bank's twin goals of ending extreme poverty and boosting shared prosperity for the bottom 40 percent of the global population.

Speaking at the inaugural conference of the Stanford Global Development and Poverty Initiative on Oct. 29, Kim lauded faculty and students for their multidisciplinary approach in tackling poverty and improving public health. He is an infectious disease physician who oversaw World Health Organization initiatives on HIV/AIDS.

"Seeking transformative solutions to challenges of development and poverty that are necessarily cross-disciplinary is exactly what a great university should be doing," Kim said in his speech at Stanford.

The World Bank announced last month that the number of people living on less than $1.90 a day is expected to drop to 9.6 percent of the global population by the end of the year. That is down from 36 percent in 1990.

The bank has pledged to cut that rate to 3 percent by 2030.

"We expect the extreme poverty rate to drop below 10 percent for the first time in human history," he said. "This is the best news in the world today. And this is the first generation in human history that has been able to see that potential outcome." 

Promoting prosperity

One of the co-founders of Partners in Health, Kim was the keynote speaker at the daylong conference, "Shared Prosperity and Health," which drew together Stanford faculty and researchers, plus government and NGO officials from around the world.

Stanford's global development and poverty effort is a university-wide initiative of the Stanford Institute for Innovation in Developing Economies, known as Stanford Seed, and the Freeman Spogli Institute for International Studies. The conference was held at Stanford's Graduate School of Business, which was a partner in the event.

Kim's talk was optimistic about the newly adopted U.N. Sustainable Development Goals, with an ambitious agenda to end poverty and hunger, ensure healthy lives, empower women and girls and attain quality education for all children by 2030.

 

While those goals seem lofty, Kim pointed to the accomplishment of bringing down extreme poverty to 10 percent, a figure many had once said was impossible.

Ninety-one percent of children in developing countries now attend primary school, up from 83 percent in 2000, he said. And the number of people on antiretroviral drugs for treatment of HIV in sub-Saharan Africa has increased eightfold in the last decade.

"But we're humbled by the challenges ahead," Kim said. "Rising global temperatures will have devastating impacts on poor countries and poor people – and, as we saw with Ebola, major pandemics are likely to disproportionately affect the poor."

Pandemic threats

Kim said that most virologists and infectious disease experts are certain a pandemic will sweep the world in the next 30 years. He said that would lead to more than 30 million deaths and anywhere from 5 to 10 percent of lost GDP.

He blasted the global community for taking eight months to respond to the Ebola crisis in West Africa, noting that Guinea, Sierra Leone and Liberia had among the fastest growing economies in Africa before the outbreak killed more than 11,000 people – most of whom were poor.

In an effort to speed up financial aid the next time such an outbreak occurs, the World Bank is developing the Pandemic Emergency Facility, which would disburse funding immediately to national governments and responding agencies.

Rajiv Shah, the administrator for the U.S. Agency for International Development from 2010-2015, spoke earlier at the conference about his work leading the U.S. efforts to contain Ebola.

"Three small countries with total population of maybe 30 million people had such weak health systems with so little domestic investment – in one country $6 per capita health investment per year – that when Ebola became a crisis there was no first-line of defense," he said.

By October 2014, the U.S. was pouring hundreds of millions of dollars into containment efforts, including the establishment of a 2,500-personnel military deployment to hit Ebola on the ground. Shah said President Obama "stayed extraordinarily true to the science" of containment at the source.

Stunted children 

Moving beyond containment of epidemics, Kim said the most important investment developing countries could make in their people starts when a woman becomes pregnant. Using a combination of health, nutrition and education will have lifelong benefits for each child, as well as for the country in which each prospers.

The World Bank estimates that 26 percent of all children under age 5 in developing countries are stunted, which means they are malnourished and under-stimulated, risking a loss of cognitive abilities that lasts a lifetime. The number climbs to 36 percent in sub-Saharan Africa, giving those children limited prospects in life."This is a disgrace, a global scandal and, in my view, akin to a medical emergency," Kim said. "Children who are stunted by age 5 will not have an equal opportunity in life. If your brain won't let you learn and adapt in a fast-changing world, you won't prosper and, neither will society. All of us lose."

From 2001 to 2013, the World Bank invested $3.3 billion in early childhood development programs in poor countries. Kim said innovative policymaking and financial tools allowed the bank to help Peru cut its rate of child stunting in half to 14 percent in just eight years.

"Progress is possible – and it can happen quickly. But we must do even more,"he said.

Kim said the world set a target in 2012 to reduce stunting in children by 40 percent. But that would still leave 100 million children malnourished and undereducated. The bank and world leaders should pledge to end stunting for all children by 2030, he said.

"With partners like the Global Development and Poverty Initiative and the entire Stanford community, I'm full of hope that we can indeed be the first generation in human history to end extreme poverty and create a more just and prosperous world for everyone on the planet."

Read more here about another innovation to improve health in the developing world.