THE TTALK QUOTES
On Global Trade & Investment
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No. 61 of 2016
MONDAY, OCTOBER 24, 2016
Filed from Portland, Oregon

Click here for last Thursday's quote on China and Supply Chains. 
TPP: THE STRATEGIC RATIONALE

"Trade policy remains strategically important because no country can afford a strong military without a strong economy."

John G. Murphy
October 17, 2016
CONTEXT
John Murphy is the Senior Vice President for International Policy at the U.S. Chamber of Commerce, and he is currently - we are proud to add - the chairman of the GBD Board of Advisers.  Over the last several weeks, the Chamber has published a series of articles in support of the Trans-Pacific Partnership Agreement.  By our count, twelve such reports have been issued so far, all but one of them by John Murphy.  Today's quote is from the most recent installment, which carried the headline, The Case for TPP: The Strategic Rationale.

Understandably, the article highlights the statement by Secretary of Defense Ash Carter to the effect that TPP is as important to U.S. interests as would be an additional aircraft carrier.  We have always understood that observation to be a shorthand way of underscoring the importance of the signal Congressional approval of TPP would send - not just to the other eleven countries in the agreement but to the Asia Pacific write large.  It would underscore the notion that America does indeed see itself as a Pacific power, both economically and strategically, and is working to be part of the region's future. 

We would note that in Global Business Dialogue events alone that idea has been clearly conveyed by ambassadors and other representatives from Australia, New Zealand, Japan, Indonesia, and others.  To repeat, Mr. Murphy reiterated and underscored the point.  The weight of his argument, however, was, like today's quote, on the economic side. Here are some of the facts he adduced in making the economic case for TPP:

"The agreement would cut 18,000 taxes on U.S. exports, stimulating economic growth and job creation."

"[TPP] will unleash the digital economy, strengthen our innovative and creative industries, and end the favoritism afforded to state enterprises." 

TPP, Mr. Murphy wrote, would build on the benefits that trade already generates for the United States.  He said:

"Overall trade today supports 41 million U.S. jobs and has raised the income of the average American household by $13,000 per year."

In making the strategic case for TPP, Mr. Murphy took note of the fact that TPP is not the only major trade initiative in the region.  The other is the China-led Regional Comprehensive Economic Partnership or RCEP.  Considering the possibility that TPP could languish while RCEP moves forward, Mr. Murphy wrote:

"That would be an economic and strategic blow for the U.S. Our standard of living and our standing in the world would be diminished."

He had already said that such a result would mean that "U.S. workers, farmers, and companies would be left behind."  


COMMENT
Mr. Murphy convincingly connects the three points of the strategic triangle for America and Asia: trade and a strong economy...a strong military...and TPP.  We have nothing to add on that score. 

We would note, however, that the signal that will be sent as a result of America's action or inaction on TPP is not the only signal bouncing around the Asia Pacific these days.   Last week, the mercurial president of the Philippines,  Rodrigo Duterte, made headlines during a state visit to China when he said to his hosts:

"Your honors, in this venue, I announce my separation from the United States ... both in military, but also economics.  I will be dependent on you [China]."

He said a lot more, but that is enough for now, except to note that the Chinese appear to be paying him rather well for his bow in their direction.

Just prior to Duterte's trip to China, there was another important signal in the region.  This one from Australia.  The Wall Street Journal's editorial about that signal opened with the declaration:

"Canberra confirmed last week that the Australian Navy won't conduct freedom-of-navigation patrols in the international waters of the South China Sea..."

The editorial went on to criticize the Obama Administration for what the writers saw as a fairly tepid response to China's sweeping maritime claims.  There are, of course, other ways to analyze the naval component of the very serious rivalries in the Asia Pacific Region.   That America's indecision vis-à-vis the American-led TPP agreement is sowing doubt and uncertainty throughout the region  is, however, irrefutable.

                                                      ***

A note Winston Churchill sent in May 1940 to the then head of the British Defence Office comes to mind.  This was in the period just before the Dunkirk evacuation, and Churchill was venting his frustration over the apparent foot-dragging of a British commander in France.  In retrospect, he may have been unduly harsh, but the sentiment has a contemporary ring and relevance.  He wrote:

"Of course, if one side fights and the other side does not, the war is apt to become somewhat unequal."

No, America is not in a war now - at least not in Southeast Asia - but it is in a very serious contest, and TPP is part of it.  
SOURCES & LINKS
The Case for TPP: The Strategic Rationale is a link to this article by John Murphy of the U.S. Chamber of Commerce, which was the source for today's quote. 

The Case to TPP: The Series is a page on the website of the U.S. Chamber of Commerce with links to all of the articles in the series.  After the recurring phrase "The Case for TPP," the topics covered are:

1.    Opportunities for America,
2.    Pacific Promise,
3.    The Record of Past U.S. Trade Agreements,
4.    Benefits for Manufacturers, Farmers and Service Providers,
5.    Innovation to the World (by Patrick Kilbride),
6.    Fostering the Digital Economy,
7.    Defending Job-Creating Investment,
8.    New Rules for the 21st Century,
9.    The Promise of Good Jobs,
10.    The Small Business Imperative,
11.    Responding to the Critics, and
12.    The Strategic Rationale

Duterte's Volte-Face is an October 20 Reuters story on this development.

The Collaborator takes you to today's article in The Rushford Report, which deals with these same developments, adding some historical perspective.
  
Canberra's South China Sea Decision is a link to The Wall Street Journal editorial on Australia's recent announcement.

Churchill, A Life.  Again we are indebted to Martin Gilbert's excellent biography of Churchill for the Churchill quote above.  The link is the Amazon page for the book.

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