TPP jeopardized by Democrats, to China’s advantage?

Democrats have chosen to pushback against Democratic President Obama’s Trans-Pacific Partnership (TPP) by failing to support his efforts to win fast-track authority.  Although it is unusual for a political party to oppose a sitting President who hails from their own ranks, especially when it comes to a proposal the Administration put on the table years ago, free trade has always represented a political conundrum for Democrats. 

Free trade can easily deleverage American workers and businesses, yet also helps spur macroscopic economic growth.  Unfortunately, previous deals like NAFTA have done harm to North American workers and businesses, e.g. increased income inequity, thus this Democratic upheaval is more in line with Democratic views than the expectation that they would support TPP.

TPP has been sold as part of the Obama Administration’s efforts to revive the US economy.  Developments like the proposed Asian Infrastructure Investment Bank (AIIB) and the implementation/expansion of the ASEAN–China Free Trade Area (ACFTA), however, raise concerns that a failure to adopt the TPP will diminish US influence in Asia.

If expanded free trade leads to increased trade and increased economic growth among ACFTA nations, the US will be at somewhat of a disadvantage when it comes to selling US goods and services in Asia.  Lower tariffs will, after all, make Asian goods even cheaper for Asians.  This means there will be fewer reasons for Asians to consume US imports and more reasons for transnational corporations to produce goods in Asia. 

The shortcomings of NAFTA suggest that the Peoples of China and smaller ACFTA countries will be harmed by free trade as has been the case for North Americans.  Unfortunately, China is more like a corporation than a country, thus it has greater interest in energizing its GDP rather than catering to the economic interests of its citizens.

The Chinese government does not rely too heavily on tax revenue while it will not tolerate political dissent.  Its efforts to “invest” in the economies of its neighbors is a good way of generating revenue, indebting foreign industries to China, and undermining the political influence of Chinese citizens by limiting their economic leverage. 

Meanwhile, TPP could easily weaken the US economy by making it even cheaper to import foreign and outsourced goods.  Because China is the center of the ACFTA trading block, TPP will make it easier for China to outsource its production and still sell to the United State via TPP partners that are also ACFTA partners.

The United States and Europe are still the largest consumer economies of the world while their economies are for more compatible, which is a prerequisite when it comes to deriving the benefits of free trade.  Free trade between the US and Europe, therefore, is far more beneficial; whereas, free trade between China and other developing Asian economies comes at a cost for their massive populations.

Furthermore, other developments in China must be taken into account.  Where the Hong Kong Umbrella Revolutions recently provided open dissent against the Chinese government, the Chinese People have grown interestingly critical of their government and this has consequences.  A willingness on behalf of Chinese workers to circumvent the All-China Federation of Trade Unions (ACFTU) to assert their economic interests through illegal strikes and independent groups is one such consequence.

TPP may offer economic benefits to the United States and help the US combat Chinese influence in Asia, but it will likely harm Americans as well as Asians.  If trying to compete against China can only be done by undermining the interests of Americans, it is best to leave China to embrace policies that disadvantage its own People in favor of increased regional influence.

Instead, the United States must support a growing underground labor movement in order to undercut Chinese influence and empower workers in the US and Asia to demand their rights, including safe working conditions and reasonable pay.