Transatlantic Trade and Investment Partnership: A View from Asia

1. Dr. Altay AtlıBogaziçi UniversityAsian Studies Center Transatlantic Trade and Investment Partnership: A View from Asia TASAM 4th Turkey-Europe ForumIstanbul, November 21-22, 2013

2. Global trade • WTO negotiations stalled. • Recent wave of regional trade integration efforts. • Transatlantic Trade and Investment Partnership (TTIP). • Trans-Pacific Partnership (TPP). • Regional Comprehensive Economic Partnership (RCEP). • Bilateral free trade agreements.

3. TTIP

4. TTIP + TPP

5. TTIP • Reciprocal market opening between the US and the EU, and enhanced cooperation in market regulation will have a considerable impact.  Growth, welfare and employment for both the US and the EU. • TTIP as a renewed, economic NATO. • Attempt to rewrite global trade rules in line with the economic principles and political values of the US and the EU.  Liberal rule-based capitalism and democracy as opposed to the growing influence of state-led capitalism. • Renewed impetus after the global financial crisis. • Bilateral linkages with Asia.

6. TTIP The geopolitical dimension of TTIP. “But this is also, let us not kid ourselves, a geopolitical challenge to the Chinese Communist party… American know this. Europeans know it. The Japanese know it.” (Timothy Garton Ash, The Guardian,10 July 2013). Source: US National Intelligence Council.

7. TPP • Significant market access potential, particularly for Asian countries. • Bilateral agreements connecting TPP with TTIP. • China is not included. • Access to the growing Chinese market? • Sourcing components and intermediary goods from China? • Regional production networks?

8. TPP • Pragmatic approach by Asian countries. • TPP. • Bilateral trade agreements with the EU. • EU has reached agreements with South Korea and Singapore, and is conducting negotiations with Japan, India, Vietnam, Malaysia, and Indonesia. • RCEP. • ASEAN 10 + 3 (China, Japan, South Korea) + 3 (Australia, New Zealand, India). • Negotiations started in November 2011. Expected to be completed in 2015.

9. China’s reaction against TTIP + TPP • TTIP + TPP is likely to reduce China’s competitive power in both the US and European markets. • TTIP + TPP is likely to reduce China’s influence in Asia, albeit to a limited extent. • Geopolitical consequences at a time when both the US and the EU have their own “pivot” to Asia.

10. China’s reaction against TTIP + TPP • “The strategy is clearly targeted at China” (Wang Yong, Beijing University). • “TTIP will become the base of new international trade and investment rules, thereby affecting the entire global regulatory process. Together with the TPP, the impact on China will be a significant increase in the cost of participation in globalized markets.” (Wang Yiwei, Renmin University). • “Once the TTIP is completed, the world trade landscape must be redrawn and the multilateral free trading system might be replaced by a cold war on the trade front, featuring two divided camps of mutual hostilities and trade wars. One camp is led by the US, supported by the EU, and the other is led by China, supported by some developing countries.” (Zhang Xiaotong, Wuhan University)

12. What does it mean for global economic governance? • Regional integration serves global economic governance only if they lead to multilateral liberalization of trade by establishing rules and norms; by connecting rather than separating regions. • China is a major actor in the global economy.  The key question about the future of the global economy is how successfully the major economies of the world will act WITH (and not AGAINST) China.  Cooperation instead of protectionism. • At its current shape, TTIP + TPP does not promise this. • China’s response will be important in determining the impact of TTIP + TPP on global economy. With its increasing market demand, continuing growth prospect and ongoing economic restructuring, China has bargaining power in the negotiations toward a rewriting of global trade rules.

13. Alternatives for China • Alternative A: Stay away from this US initiative and set up its own version and/or invest in RCEP. • China will face remodeled western rivals. • Greater focus on BRICS. • Economic polarization at a global level. • Alternative B: Wait and see the progress with TTIP+TPP, and actively participate in the global free trade negotiations. • Accelerate domestic market reforms to meet the higher standards of international trade rules. • Improve relations with other emerging economies in order to have a stronger position in the process of rewriting international trade rules. • Better option for global economic governance.

14. Dr. Altay AtlıBogaziçi UniversityAsian Studies Center Transatlantic Trade and Investment Partnership: A View from Asia TASAM 4th Turkey-Europe ForumIstanbul, November 21-22, 2013