China and US vie for Asian trade pacts
February 14, 2013, 10:44 am

Barack Obama, the US President delivering his state of the union speech. [Getty Images]

During his address, Obama said “Now, even as we protect our people, we should remember that today’s world presents not just dangers, not just threats. It presents opportunities.

“To boost American exports, support American jobs, and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership.”

Obama has already taken several steps toward what others have said is US protectionism.

US authorities had earlier warned that Huawei and ZTE, two leading Chinese technology firms which were trying to find inroads for the American market, posed potential threats to its national security.

The US has also slapped sanctions on a number of leading Chinese firms for allegedly supplying Iran and Venezuela with banned materiel, a charge the Beijing government has reputed and says ultimately hurts US-Sino trade relationships.

At the 23rd China-US Joint Commission on Commerce and Trade (JCCT) in Washington last December, Beijing’s representative said Obama was applying protectionist measures to keep Chinese companies at bay.

Well aware that its major industries are locked out of the US, China has been pushing the Regional Comprehensive Economic Partnership (RCEP) which includes all of the ASEAN nations, and six others, as an alternative to the TPP.

The opposing approaches will directly impact Obama’s so-called pivot to Asia, Washington’s re-allocation of strategy to the Asian Pacific where China is considered an unstoppable economic locomotive. At stake is the fact that Asian countries are forecast to grow by 7.7 per cent by 2017, lucrative markets for both Washington and Beijing.

Exacerbating the rivalry are recent territorial disputes between China and some of its neighbours have raised concerns in Washington, which is now increasingly turning its strategic policies toward the US Pacific Command and Asia.

The new foreign policy was the focus of US President Barack Obama’s visit to Thailand, Myanmar and Cambodia in late November 2012.

But most countries approached by the US to join TPP appear more devoted to RCEP.

A major point of scepticism, some analysts say, is that the TPP appears to have a political agenda which the US has not yet made clear. Some countries are troubled that the TPP, according to Obama, could be used to rebalance Asia against China’s rising influence.

Writing for Radio Free Asia, analyst Parameswaran Ponnudurai says: “Critics of the TPP however argue that its high standards are a disincentive for developing countries who see the RCEP as an attractive alternative because it protects sensitive industries from exposure to enhanced competition and makes fewer demands for economic policy changes.”

Another difficulty is that Japan has not yet agreed to join the TPP. At the 16th round of talks in Singapore next month, the US will push the other 10 members to try and conclude a deal by October, which would then go into implementation by 2015.

However, TPP critics say any far-reaching trade agreements cannot afford to exclude China, citing the volume of trade between Beijing and Washington.

The uneven relationship has many guessing the future of Asian trade pacts.

Analyst Ann Lee believes that while trade between these two nations is enormous, their relationship is fraught with escalating tension amid accusations of “protectionism”, “currency wars,” and other hostile activities.

An editorial in the Chinese news portal Global Times urges both countries to work together.

“The prosperity of the world including China and the US, beckons stronger ties between the world’s two largest economies,” the February 13 editorial says.

“Therefore, building on past efforts and further advancing that relationship would be a wise choice for Obama as he presses ahead with his second-term agenda.”

With input from Agencies