US Domestic Politics and America's Withdrawal from the Trans-Pacific Partnership: Implications for Southeast Asia.

• Author: Narine, Shaun

US President Donald Trump's decision to withdraw the United States from the Trans-Pacific Partnership (TPP) agreement within days of taking office in January 2017 has made many Asia-Pacific leaders and observers question the depth of US commitment to the region. The administration of President Barack Obama had promoted the TPP as an important means to entrench America's economic presence in the Asia Pacific, counteract Chinese influence, reassure allies of US commitment and ensure that America defined emerging principles of international trade. By contrast, Trump presented a vision of US "leadership" directed towards maximizing American power at the expense of other states, including allies. (1) He portrayed America as a victim of globalization that other states have exploited in trade and security agreements. (2) During the 2016 election campaign, Trump stated his intention to withdraw from the TPP and also threatened to re-evaluate and renegotiate all of America's trade agreements with other states to get a "better deal" for the country. (3)

Many Asian leaders hope that Trump will, over time, moderate his positions and assume policy stances designed to bolster US-Asian trade and the security status quo. More than a year into his presidency, Trump continues to advocate many of his earlier, antagonistic positions on global trade. The administration has acted on some of Trump's positions while showing restraint on others. (4) The Trump administration has sent contradictory signals on its approach to China and its territorial claims in the South China Sea. (5) If Trump does not modify his stated policies, America's Asian allies hope that a future US administration will join the emerging Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the arrangement signed by the remaining members of the TPP.

This article argues that it is highly unlikely that the TPP or any similar multilateral free trade agreement (FTA) is possible between the United States and the Asia-Pacific region for the foreseeable future. In America, the debate around the TPP (and other FTAs) is a symptom of the larger domestic forces that are shaping modern US foreign policy. Trump's election reflects attitudes and ideas, deeply entrenched within the American ideological landscape, that have shaped the social and political development of the country over the past 50 years. The global role of America must be resolved within the United States between antagonistic visions of what the country should be and how it should interact with the world.

This article addresses key questions relating to the Trump administration's decision to abandon the TPP. First, is America's withdrawal from the TPP as politically consequential as TPP advocates claim? Second, why did the United States leave the agreement? Third, what are the prospects of America returning to the TPP--or its successor the CPTPP--in the future? Finally, what factors must Southeast Asian states consider as they decide how to respond to the changing regional environment?

This article argues that the TPP was an important symbol of the US commitment to its Asian allies and that America's withdrawal is a definite blow to the country's regional leadership. The United States left the agreement because many Americans, across the political spectrum, believe that FTAs have contributed significantly to domestic economic and political inequality. The inequality for which many Americans blame FTAs is real, but this inequity is largely the product of technological change and greatly exacerbated by domestic political, economic and social forces and decisions. Effectively addressing these deficiencies requires America to confront fundamental cultural, racial and ideological divisions within its society. The conflict around these issues presages major social, political and economic upheaval within the United States. While this is happening, America will be an unreliable regional ally and its aversion to FTAs will continue.

The US decision to abandon the TPP necessitates new responses and strategies from Southeast Asian countries in how to manage regional relations. Those countries have to contend with an America that is dismissive of regional institutions and that intends to use its economic power to disadvantage its trade partners. The increase in China's influence that is likely to follow from these moves has the potential to divide the Association of Southeast Asian Nations (ASEAN) even further. The result of the American decline may be a region that is even more divided and uncertain as regional powers jockey for influence.

America's Changing Approach to the TPP

On 23 January 2017, as one of his first acts as president, Donald Trump carried through on his election promise to pull the United States out of the TPP. In doing so, he fed regional fears that America's commitment to the prosperity and security of the Asia-Pacific region was wavering. America's Asian allies have been concerned about the US position in the region since the start of the twenty-first century. Under President George W. Bush, America was preoccupied with the "war on terror" and interested in Southeast Asia only as the so-called "second front" in that campaign. (6) During this period, US global power and prestige declined precipitously as America proved unable to achieve its political goals through military force, even as it undermined international stability. (7) Concurrently, China grew in regional political and economic influence. The Obama administration's attempt to "rebalance" US foreign policy towards Asia was partly an effort to reassure Asian allies and partners that the United States remained committed to its role as the dominant regional power in the Asia Pacific. (8) Obama understood that if America was to fulfil its long-term global hegemonic ambitions, it needed to be entrenched in the Asia Pacific. Ultimately, the Obama administration failed to fully implement the "rebalance" because it was distracted by various global crises and never gave Asia the full attention that it needed. (9) Obama himself, however, remained dedicated to the policy to the end of his administration.

In 2002, Chile, New Zealand and Singapore began negotiating the Trans-Pacific Strategic Economic Partnership (TPSEP) (Brunei joined late in the process), and signed a partial agreement in 2005. The original negotiations could not resolve disagreements on financial services and investment, so the member states signed the agreement with the intention of returning to discussions within two years. (10) In 2008, the outgoing Bush administration announced its intention to join the TPSEP, greatly expanding the scope and appeal of the agreement to other states. Over the next several years, more states joined: Australia, Peru and Vietnam in 2008, Malaysia in 2010, Mexico and Canada in 2012, and Japan in 2013. The members signed the re-named Trans-Pacific Partnership (TPP) agreement in 2016.

The Bush administration entered the TPP negotiations because it judged that the agreement could provide a firm economic anchor for the United States in the Asia-Pacific region. The Obama administration made the same assessment and claimed the TPP as the necessary economic pillar in its multi-pronged rebalancing strategy. The military dimension of rebalancing was not enough; America needed to show that it was willing to counteract China's growing regional economic clout. US Secretary of Defense Ashton Carter famously declared that "passing TPP is as important to me as another aircraft carrier". (11)

Some critics argue that the Obama administration exaggerated the TPP's economic benefits and its importance to national security. (12) Even without the TPP, America is strongly engaged with the Asia Pacific. The United States runs large trade deficits with most regional states, has pre-existing FTAs with six of the TPP signatories and is part of the Asia-Pacific Economic Cooperation (APEC), which aspires to be a free trade area by 2020. Between 2010 and 2015, US foreign direct investment (FDI) into ASEAN averaged US$12.7 billion per year, or 11.1 per cent of the ASEAN total, making America the fourth largest foreign investor in ASEAN. US FDI stock in ASEAN reached more than US$226 billion by the end of 2014 and accounted for 31 per cent of all US FDI in Asia, about 4.6 per cent of US global FDI. About 72 per cent of US FDI in ASEAN is in the service sector. (13) The US 7th Fleet patrols the area and the US military has about 50,000 troops stationed in the region and another 65,000 in Hawaii. (14) If these factors do not convince Asian states of America's commitment to the region, they argue, the TPP would not change this.

This assessment underestimates the economic efficiencies of a multilateral FTA over a bilateral FTA. (15) It overlooks the fact that a country can be a major economic actor in a region without also being a major political or security actor, as illustrated by Japan. Most importantly, this argument underestimates the importance of the TPP as a political symbol. Whatever the objective reality, regional states perceived the United States as losing position throughout the early 2000s in the face of a barrage of Chinese activities and economic/political outreach. (16) The TPP was meant to reassure regional allies that America was responding to China's economic dynamism with measures of its own. At present, regional states cannot be sure that the United States will risk confrontation and complicate its relations with China over issues such as the South China Sea dispute. (17) A formal US economic arrangement in the Asia Pacific addressed those fears by demonstrating that Washington was linking its economic self-interest to regional stability, security and engagement. The TPP's loss reinforced regional fears that the United States is an unreliable ally. (18) The reality of the Trump administration, which has upended more than 70...