TPP Completed, on to TTIP?
The new TPP and TTIP agreements are the greatest deepening OECD has ever seen. True, they deepen it in two halves, one Atlantic, one Pacific; this is because some of the socio-cultural issues are different, and it enables the inclusion of several non-OECD allies from the diverse Pacific region, laying grounds for a further OECD widening when some of these countries become socioeconomically ripe. The two agreements could nevertheless be fruitfully linked later on.
The Alliance System is being supplemented by major new trade agreements: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).
The Trans-Pacific Partnership (TPP) negotiation has been completed. The ratification battle begins now, and will soon end -- hopefully in success, since the American public strongly supports trade, but there are no guarantees since powerful special interest groups oppose it.
Western negotiators want the Transatlantic Trade and Investment Partnership (TTIP) to be completed next, and ratified by the end of 2016.
Renewing the vitality of the Atlantic-Pacific world
It is being widely reported that TPP has 40 per cent of the world's economy. This is a lot to have in a single common trading space.
Even more important is the fact that the core Atlantic area, which would belong to the TTIP agreement, has even more – a bit over 40 per cent of the world economy. Most important of all is the fact that, combined, the TPP plus TTIP spaces have 60 per cent of the world economy.
Almost all of this 60 per cent in the TPP-TTIP space lies within a further organized and allied subspace, defined by the classic OECD countries. It is deeply cohesive socioeconomically and politically. The 60% total is unaffected by the few OECD countries not included as yet in TPP and TTIP, and the few non-OECD countries inside TPP, as these balance out.
These numbers mean a lot. They tell us that the West still dominates the world economy by a large margin. It is several times larger economically than the next largest cohesive country or group of countries in the world. And it is not declining, when measured over long enough spans of time, because it keeps growing, horizontally in membership as well as vertically in its domestic economies.
This also means that "hegemonic stability" is real, as long as it is recognized in its actual form: as something held, not by America alone, but by the joint entity constituted since 1947 by the cumulative organization of the West, and by its gradual enlargement. It corrects the assumption that a hegemonic transition is inevitable, and with it, global crisis and conflict. That is good news for world peace and stability. Reinforcing the concrete organization of this joint space is the single most important thing that can be done for global stability; along with making it more visible, so that people will not continue making misleading projections of decline -- and acting in destabilizing ways on them. This is something the trade agreements are well-suited to do.
The larger political contexts of the deals -- the gains they bring in reforms and stability -- are actually more important than the economic details. Nevertheless the details have to add up to a positive balance, in order to make the agreements viable for their larger purposes. And they do add up well.
a. Economic winners and losers.
A trade-off of winners and losers always occurs when trade patterns expand and shift. With trade expansion, the winners are greater than the losers. This is particularly true when the trade expansion occurs within a fairly cohesive socioeconomic space; and the TPP space is indeed fairly cohesive socioeconomically, TTIP even more so. But the greater quantity of wins does not mean they will be heard about more loudly than the losses. There is a distorting effect: from the psyche, from the propensity of intense interests to complain, from the media interest in negative and conflictual news, and from ideological interests in opposing the agreement.
b. Regulatory issues
The TPP and TTIP agreements are innovative in the regulatory sphere: they work to unite the regulatory regimes of their countries and regions.
- Both the Left goal of effectiveness of regulation and the Right goal of reducing the onerous burden of regulation are positively served -- upgraded -- by harmonizing regulations. It reduces the patchwork maze that separate regional and national regulations create. Regulation is made more efficient; this makes it easier to have a trade-off in which there is both effective regulation and efficiency of production. This also yields an inherent upgrading of environmental benefit, because reducing inefficiency and waste in production.
- The trade-offs don't just balance out; the very making of trade-offs is itself, as a general rule, a positive-sum activity, a good thing to do. It expands the space for mutually agreed, mutually beneficial exchanges -- the scope of the "deep peace" of mutual freedom, mutual trust, and mutual cooperation.
These deals go far toward creating a sense of a common economic space -- a space that is somehow ours jointly, a common turf for mutual interaction, where the terms of interaction are pretty much the same throughout the space. This is of great importance for business planning and expansion. If the two agreements both come into force, the Western Alliance will have evolved further, into a more comprehensive economic and security community than in the past. It may be said to have risen to a level in-between the Unity level it had hitherto achieved by the combination of NATO plus OECD, and the Union level achieved inside its European subspace by the combination of the EU plus NATO.
Ratification of TPP, followed by completion and ratification of TTIP, are the most important of the hopeful tasks facing the alliance system today.
Ira Straus is U.S. Coordinator of the international Committee on Eastern Europe and Russia in NATO (CEERN), an independent public organization. CEERN was formed at the beginning of 1992 by long-standing Western Atlanticists and new Eastern European and Russian Atlanticists; it was the first organization to provide analysis of how NATO expansion could proceed, at a time when the issue was not yet being seriously considered on either the official or the public level; it did so with a view to avoiding the problems that have subsequently arisen. Opinions expressed here are solely the responsibility of the author.
This article is an excerpt from the full paper, Good News for the Alliance: TPP Completed; on to TTIP? that expands on the systemic and economic, as well as the non-economic advantages of the proposted trade agreement, potential ratification issues for both agreements, the historically strong support for trade agreements from the American Public and the importance of the Atlantic-Pacific space.
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