Tuesday, March 19, 2013

Presentation --"The Trans-Pacific Partnership: Japanese Strategic Diplomacy or Chinese Containment"

The Japan-America Society of Pennsylvania (JASP) is an association of individuals, corporations and organizations in the state of Pennsylvania and its surrounding regions that was established in 1986. Its purpose is to promote understanding and enlightened relations between the United States and Japan.  It is the region's premiere organization for educational, business and arts activities related to Japan and Japanese-American relations. 

I was asked to participate in the JASP's  MEPPI Japan Lecture Series: The Political Economy of Japan in the Wake of a Growing China.The event was held Thursday, March 21, 2013 at 5:30 PM at the Pittsburgh Grille in the Steel Building, 600 Grant St, Pittsburgh, PA 15219.  Later versions were presented at the University of Arizona James E. Rogers College of Law and the Pennsylvania State University School of International Affairs.

This post includes the draft text of my address lightly footnoted:   The Trans-Pacific Partnership: Japanese Strategic Diplomacy or Chinese Containment.

The PowerPoints of the presentation may be accessed HERE

The video of my presentation is available HERE.

Larry Catá Backer
W. Richard and Mary Eshelman Faculty Scholar & Professor of Law,
Professor of International Affairs
2012-13 Chair University Faculty Senate
Pennsylvania State University

ABSTRACT: The focus of this paper is on one critical new aspect of Japanese trade relationships that is likely to have significant economic and geo-political effects—the decision by Japan to join the U.S. led negotiations for a Trans Pacific Partnership (TTP), even as it pushes ahead with a Free Trade Agreement with China and Korea. I will first describe the TTP from its genesis as an effort by Brunei, Chile, New Zealand and Singapore to better integrate their economic relationships into current efforts to create a powerful free trade area of the Pacific that excludes China. I will then suggest some important strategic considerations that may follow from this important decision in the relationships between Japan, the U.S. and China, with emphasis on the way in which this affects contests for control of international rulemaking within the structures of economic globalization. For Japan TPP may represent containment within complex networks of multi lateral arrangements that protects its sizeable investment in China, at least temporarily, and permit it to leverage its power to influence global trade rules. For the U.S. TPP presents an opportunity to leverage power as well, by creating an alternative to WTO for moving trade talks forward in ways that serve U.S. governance interests in a more comprehensive way. For China, TPP represents an additional layer of containment, meant to constrain its economic power and to limit the value of its form of state capitalism. TPP represents the next wave of plurilateral comprehensive agreement that will shape the framework of global economic governance. It also suggests the growing importance of international agreements as the space within which the structures of economic regulation will be determined, to the detriment of state power. Within these structures TPP also reaffirms that Japan stands uncomfortably close to the fissure that separates U.S. from Chinese interests, and must continue to rely on the internationalization of rulemaking to protect its interests. An independent path for Japan is unlikely to be an option worth considering.

The relationship between Japan and China remains complex and antagonistically competitive.[1] History both joins and divides them.[2] The specter of the century before 1949[3] in their relations continues to affect elite and popular perceptions in ways that sometimes drives policy and culture. The Anti-Japanese riots in China last October 2012, the first significant expression of anti-Japanese popular opinion since 2005, suggest the way in which passions, both managed and unmanaged, can be inflamed.[4] Indeed, popular sentiment has become a critical factor driving those relations.[5] The Japanese have not been passive. After the October riots the Japanese press countered with the suggestion of a mass pull out of Japanese investment in China.[6]

Currently, that cooperative and sometimes antagonistic relationship is making itself felt in two important respects. The first is in territorial claims of the two states, especially with respect to the Senkaku Islands (known to the Chinese as the Diaoyu Islands). The second, and to some extent tied to the first, are the efforts to control or at least influence the structures of trade in the Pacific region, efforts pushed into high gear with the election of Prime Minister Shinzo Abe. The two are linked from the Japanese and Chinese perspectives. In an editorial published online in English on January 2013 in the People’s Daily, Chinese authorities have made it clear that they viewed Japanese economic and diplomatic policies as aimed potentially to further a strategy of encircling and containing Chinese economic ambitions and territorial claims.[7]

Shinzo Abe, himself, has suggested the contours of Japan’s policies in ways that might be understood in this way by the Chinese. At an address to the Center for Strategic and International Studies (CSIS) on 22 February 2013, Prime Minister Abe explained where he thought Japan should stand in the future by referencing three principal tasks that face it:
Firstly, when the Asia-Pacific or the Indo-Pacific region becomes more and more prosperous, Japan must remain a leading promoter of rules. By rules, I mean those for trade, investment, intellectual property, labor, environment and the like.
Secondly, Japan must continue to be a guardian of the global commons, like the maritime commons, open enough to benefit everyone.
Japan's aspirations being such, thirdly, Japan must work even more closely with the U.S., Korea, Australia and other like-minded democracies throughout the region.[8]

The focus for the Prime Minister for the most effective use of Japanese power, then, was on rules promotion, guardianship of open seas and other global common spaces, and an active partner of democratic states in the Pacific region.[9] This was mirrored recently by Foreign Affairs Minister Fumio Kishida’s speech to the 183rd Session of the Diet in which he identified the three pillars of Japanese foreign policy as “strengthening the Japan-U.S. Alliance, deepening our cooperative relations with neighboring countries, and strengthening economic diplomacy as a means to promoting the revitalization of the Japanese economy.”[10]

Today I want to focus on one critical new aspect of Japanese trade relationships that is likely to have significant economic and geo-political effects—the decision by Japan to join the U.S. led negotiations for a Trans Pacific Partnership (TPP), [11] even as Japan pushes ahead with a Free Trade Agreement with China and Korea.[12] I will first describe the TPP from its genesis as an effort by Brunei, Chile, New Zealand and Singapore to better integrate their economic relationships into current efforts to create a powerful free trade area of the Pacific that excludes China. I will then suggest some important strategic considerations that may follow from this important decision in the relationships between Japan, the U.S. and China, with emphasis on the way in which this affects contests for control of international rulemaking within the structures of economic globalization.

A. The Trans-Pacific Partnership

TPP had quite modest beginnings. It represented efforts of a few Pacific Basic states—Brunei, Chile, New Zealand and Singapore—to develop a modest framework for trade liberalization. Originally known as the Pacific Three Closer Economic Partnership (PO3-CEP) negotiations commenced in 2002 in the shadow of the Asia-Pacific Economic Cooperation forum.[13] It was signed in 2005 as a free trade type agreement among these states. The United States was not invited to TPP talks until 2008. By 2011, TPP had grown to nine—Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the United States.[14] “Many believe that other members of the Apec bloc may also join the agreement in the coming years, making it an even more important pact.”[15]

TPP has three principal objectives: increasing markets for exports; providing a basis for broad Asia-Pacific regional economic integration: and increasing the competitiveness of the participating states.[16] There are five key features that the U.S. trade representative suggested “will make TPP a landmark, 21st-century trade agreement, setting a new standard for global trade and incorporating next-generation issues that will boost the competitiveness of TPP countries in the global economy.”[17] These include first comprehensive market access by eliminating tariffs and other barriers to trade. The second strives for full regionalization that embraces the development of production and supply chains among TPP members. The third focuses on inter-agreement coherence. This requires integrating work done through APEC with a focus on regulatory coherence, enhancing competitiveness, a focus on small business (thus the reference to supply chains) and market liberalization. Fourth, TPP would help develop trade in emerging technologies, including digital and green technologies. Last, TPP is designed to be a so-called “living agreement.”[18] Like WTO but more successful, it is meant to remain a work in progress.[19] The scope of TPP is also meant to be fairly comprehensive.[20]

TPP is still very much a work in progress. The 16th round of TPP were held in Singapore from March 4-13, 2013, and the 17th round of the TPP negotiations will be held from May 15-24 in Lima, Peru.[21] The U.S. entry into TPP has not gone without controversy in the United States. For example, one commentator noted that “[f]or import-sensitive US sectors, Japan’s participation in the TPP also could mean increased competition from Japanese products including in certain agriculture sectors and in the US auto and auto parts sector.”[22] Some civil society organizations suggest that the TPP project itself continues the process of power shifting from out of nation states and into a politically unaccountable international sector,[23] and in the process further undermine democratic values and national supremacy.[24]

The TPP has been criticized as a vehicle for undermining efforts to revive and push forward the WTO agenda, substantially stalled since 2008. “The main responsibility for this failure falls on the US, which believes the system of multilateral trade no longer offers the advantages it used to.”[25] The United States now appears poised to fracture the WTO model in favor of regionally specific but more comprehensive agreements that together might provide a substitute for WTO multilateralism. This shift in U.S. policy was highlighted in President Obama’s 2013 State of the Union address where the President highlighted the new policy focus on regional but comprehensive trade agreements.[26] TPP, and the related Transatlantic Trade and Investment Partnership for Europe[27] represents an alternative tack for the development of the governance framework for international trade, one in which smaller groups of individual states combine to forge common language that include harmonized general principles along with specific provisions to reflect the priorities of the member states.[28] These provide a plurilateral template for continuing to move forward the work of the WTO among powerful like minded states even as the multilateral processes of the WTO prove difficult to engage. For some, this suggests the end of the WTO as the vessel for developing the rules of global engagement in favor of smaller groups of states that together would produce a layered substitute for the WTO process. “If the TPP or TTIP come into being, they will kill the WTO. For better or for worse, the organisation will cease to be the place where trade standards are negotiated.”[29]

The TPP process also has been criticized as among the most opaque in the international arena.[30] Particularly annoying has been the deviation from the usual pattern of permitting a lively engagement by civil society. The 16th round, for instance, included a very limited space for stakeholder engagement.[31] The U.S. Trade Representative’s blog and related postings tend to be generally descriptive of events with substantially limited substantive information.[32] A group of international law professors severely criticized the negotiation process. They argued that the “functional and theoretical impact of the lack of transparency and accountability in the TPP and other trade negotiations institutionalizes the kind of process that the late Senator Daniel Patrick Moynihan criticized as policy making through “ignorant armies clash[ing] by night.”[33] They called for greater and timelier information sharing.[34] This criticism is particularly embarrassing since an object of TPP is to spread democratic based processes for engaging in regulatory programs and that might itself produce political backlash at home.[35] Representative Darrell Issa (R-CA) and Senator Ron Wyden (D-OR) recently repeated these criticisms.[36]

Despite the criticism, TPP is viewed as a socio-political tool with a value beyond its important objective of regulating economic globalization.[37] President Obama has “said the TPP could serve as a model for other trade pacts. He did not provide further details about the plan.”[38] A cornerstone of Obama administration policy is to use agreements like TPP as a component of an integrated approach to development policy.[39] Its critics understand the breadth of TPP correctly as a “super-sized” next generation trade deal that is meant to institutionalize current developments in free movement of goods, services and capital, and to some extent, labor.[40] Not merely limited to the usual stuff of trade deals, this one is meant to provide a basis for pushing forward the work of the World Trade Organization, but now in reduced multi-lateral form. To that end, it serves to regulate transnational economic activity in a way that is essentially regulatory and because of the economic power of its participants, effectively in a form that will coerce compliance among other actors. It falls within the larger U.S. and to some extent Japanese agendas of creating larger and larger multilateral webs of free trade areas, some not yet successful,[41] that can serve as a the basis of regulatory systems for integrating economic activities among member states. TPP means to set the social, political and economic tone of the conversation about the methods and values of transnational economic activity. As such it represents global regulatory power in its current form. For states it represents a means of leveraging power and participating in emerging global conversations about the structures of acceptable behavior in ways that are difficult to ignore.

On March 15, 2013 Prime Minister Abe, in what was described as an impassioned televised address, announced that Japan would join the TPP. He argued that TPP is “Japan’s last chance to remain an economic power in Asia and shape the region’s future.”[42] Despite the expected opposition from the farming sector, the Japanese Prime Minister emphasized his determination to enhance Japanese influence in the region. “Japan must remain at the center of the Asian-Pacific century,” Mr. Abe said. “If Japan alone continues to look inward, we will have no hope for growth. This is our last chance. If we don’t seize it, Japan will be left out.”[43] Acting U.S: Trade Representative Demetrios Maranatis immediately welcomed the announcement, noting that “Since early last year, the United States has been engaged with Japan in bilateral TPP consultations on issues of concern with respect to the automotive and insurance sectors and other non-tariff measures, and also conducting work regarding meeting TPP’s high standards.”[44]

Initial reaction among Japanese was cautiously positive, with an Asashi Shimbun poll indicating 71% favoring the decision.[45] But there was also anxiety about Japan’s influence to shape the course of TPP negotiations: “Tempering the positive survey results for Mr. Abe, however, the poll also showed that support for actually joining the TPP trade pact, not just the talks, is lower at 53%, compared with 23% against participation, as voters still wonder if the prime minister can secure terms that will favor Japan. More respondents said he would be unable to achieve favorable terms, at 40%, than those who said he could, at 39%.”[46]

B. Strategic Implications for Japan-China-U.S. Relations

Each of the participants in the TPP bring their own agendas. However, those of the United States and Japan are particularly strategic in the sense that they mean to use the TPP not just for economic purposes but, also to further political and regulatory objectives at the international level. The Japanese see the TPP as a counterweight to recent aggressive Chinese efforts to take the lead in determining the scope and shape of bi-lateral and multi-lateral relationships in the Pacific. Japanese goals are both economic and strategic.[47] But more important may be the way that Japanese political and economic objectives can be furthered through the TPP project. Among the most important of these, the value of which is sometimes underestimated, is the ability of Japan to use TPP as a driver of domestic reform.[48] Its strategic value lies in its use for refining the basic nature of Japan’s relationship with China and the United States butr in unequal ways. To China, the Prime Minister offers his “Mutually Beneficial Relationship Based on Common Strategic Interests."[49] But that is tempered by the effects of what Japan sees as the core of its strategic relationship with the United States, grounded in a shared effort to maintain superiority in setting the terms of the economic, social and political rules of the game that will support globalization and the relationships among states, all of which requires an economically and militarily strong Japan. Thus, the Prime Minister has emphasized that “Japan's relations with China stand out as among the most important.” [50] But he offers a deeper relationship with the United States, one grounded in coherent and mutually reinforcing development. “In order for us, Japan and the United States, to jointly provide the region and the world with more rule of law, more democracy, more security and less poverty, Japan must stay strong.”[51] Yet all of these goals are closely aligned with the broader strategic objectives of the Japanese government, only one of which directly touches on trade.

The importance of a successfully concluded TPP cannot be underestimated. Commentators already note that “The TPP aims to be the 21st century trade agreement that sets the rules for trade and investment in the Asia-Pacific region going forward. Achieving this goal will require other major economies in the Asia-Pacific region to join the agreement with the intention of the TPP ultimately becoming a Free Trade Agreement of the Asia-Pacific (FTAAP), and Japan’s participation in the TPP will give added momentum towards this goal.”[52] Participation in TPP, then, is the instrument that might define the parameters of trade within the Pacific basin. The value of that exercise may be of enough strategic importance to Japan to make economic concessions worthwhile. In this respect, Japan’s position is very much like that of Norway,[53] and other powerful but smaller states, but effectuated in different ways. The object is to use internationalization both as a means of levering power for states like Japan and Norway, and to temper the ability of the most powerful states, like the U.S. and China, to act unilaterally. Undertaken through its sovereign wealth fund, Norway is seeking not merely to project public wealth into private global markets, but also to construct a complex rule-of-law centered framework that blends the imperatives of a state based public policy with a rules based governance system that incorporates domestic and international norms.[54] In a similar way, Japan is now seeking to use its participation in the TPP to leverage its power to help shape the architecture of transnational economic transactions.

One commentator[55] suggested what might be American strategic objectives. These include building the regional trade architecture in the Pacific basin, opening export markets, and building an alliance network around China.[56] These goals parallel Japanese objectives in joining TPP negotiations.[57] Together, these would build a set of double walls around China. The first is military and centers on the creation of a ring of security arrangements of various sorts around China. The second, through TPP is economic, aimed at creating a ring of arrangements of economic rules of the game that reflect the preferences of TPP states. More importantly, TPP would add a layer of control to the discourse of international trade regulation that would make it harder for the Chinese to participate effectively in moving the regulatory environment to better align it with its own objectives. But TPP efforts are not meant only to target powerful developing states like China. TPP and its related template similar agreements would permit the United States and its partners with a stronger position from which to pressure other states to accede to TPP as a condition, for example, of entry into bilateral agreements,[58] on the model of the standard setting role of the Financial Stability Board.[59]. But having committed to retaining a global leadership role in stetting the terms of the architecture of globalization, the United States also has increased the risk of failure. As one commentator noted: “The TPP is a game-changer, economically and diplomatically. If it fails, the recent “pivot” to Asia will be seen as military in nature and America’s value as a friend or ally would be high only in case of potential conflict. The U.S. should conclude and implement a high-quality agreement as soon as possible.”[60]

This strategic objective makes the inclusion of Japan within the TPP framework critically important, especially because with Japan the U.S. can also leverage authority in Asia to build a comprehensive trade platform.[61] But it also underlines the thinking behind U.S. efforts to bring the Republic of Korea into the TPP orbit as well.[62] Thus, leverage grounded in the control of an internationalized discourse can be as essential to the strongest states as it is for smaller states seeking to amplify power. Xiangfeng Yang has suggested that even within system of the decline of a unipolar power, one that might describe the position of the United States in the first decade of the 21st century, because in its competition with rising powers, the United States may well be able to sustain its leadership position among its allies, secure their allegiance, and extract resources from them.[63]

Commentators have also identified some of the principal consequences of TPP from the Chinese perspective. He suggests that rule making competition and access to U.S. markets as the two principal effects of TPP expansion on China.[64] He notes that China has not yet settled on a response to the potential threat posed by TTP. He identifies two schools of thought.[65] The first sees TPP as a potential threat but discounts the effects of TPP principally because they do not believe that the conflicting interests of the parties will permit much coherence or discipline. Another group sees TPP as an opportunity for Chinese expansion rather than as a means of containment.

In either case, China is particularly sensitive to any action or policy that can be understood as fostering Chinese containment. To that end, China is seeking to resist policies that might produce containment to the advantage of its trade competitors. More importantly, China is also seeking to avoid containment through its own trade strategies. These include expanding FTA type relations within the Association of Southeast Asian Nations (ASEAN) group, strengthening trade with Canada, and aggressively pursing FTA agreements with Japan and Korea.[66] Chinese military arrangements are also growing through the Shanghai Cooperation Group and similar strategies.[67] This may be a harder policy to operationalize now as China begins its transition to status as a developed state, and with it a substantially higher cost of labor and a switch in the mix of industrial production. “The shift—illustrated in weakened foreign investment in China—has pluses and minuses for an economy key to global growth. Beijing wants to shift to higher-value production and to see incomes rise. But a de-emphasis on manufacturing puts pressure on leaders to make sure jobs are created in other sectors to keep the world's No. 2 economy humming.”[68] But that may matter less as investment increasingly becomes internally generated in China.[69] China’s growing military power may also make its neighbors more cautious, yet also more likely to seek alliances with the U.S.—Vietnam is a case in point.[70]

But the issues run much deeper than economic policy for China. The fear of encirclement runs deep in Chinese strategic thinking, whether that encirclement is military or economic or touching on governance.[71] Official Chinese media sources speak to these fears:

On a strategic level, Washington wants Southeast Asia to form the center of an "Asian strategic alliance" that includes Northeast Asia, Southeast Asia and India.
On a political level, the US continues to export "democracy" and Western values to Southeast Asian countries.
On the economic level, the US has close ties with Southeast Asia in terms of trade, finance and investment and considers the latter an important overseas market, resource supplier and investment destination.
At a military and security level, the US wants to set up more military bases and positively interfere in security affairs in the Asia-Pacific region.[72]
The need to avoid American encirclement is particularly acute for the Chinese when it comes to the building of a governance web through rules of global engagement. The later point was brought home in Hu Jinatao’s Report to the 18th Chinese Communist Party Congress in November 2012. He highlighted a Chinese policy objective of projecting power beyond economics to the fields of international regulatory development; he made it clear that China intends to have a greater say in what global rules are going to be.

We will actively participate in multilateral affairs, support the United Nations, G20, the Shanghai Cooperation Organization, BRICS and other multilateral organizations in playing an active role in international affairs, and work to make the international order and system more just and equitable. We will take solid steps to promote public diplomacy as well as people-to-people and cultural exchanges, and protect China's legitimate rights and interests overseas.[73]

It is in this light that one can understand the more energetic approach of Chinese participation both in ASEAN and in seeking to procure free trade agreements within the Asia Pacific Basin. These agreements are designed to reconfigure the basic operating rules of international trade and national engagement, one that substantially protects its state owned enterprises and permits it a certain latitude with its program of sovereign investing.[74] This, of course, is something that influential poly makers in the United States oppose as a basis for ordering the framework of global trade.[75] It is also important to understand that China, like the United States, is painting with a broader brush. Just as the United States may have Latin American and African trade in mind as it works through a TPP template, China may well have the BRICs and Africa in mind as it seeks to find supporters for an alternative structure for framing trade.[76] Additionally, China may be looking to expand its influence in the construction of soft law, a critical component of the emerging structures of global law.[77] China appears ready to participate in the development of customary practices and governance standards within soft law frameworks of international organizations and private enterprises.[78] It is willing to put up substantial amounts of money to make good on its efforts to increase its influence in all organizations that help shape international discourse on rules. “’China is doing it to increase its say; it’s playing the part of investor in many international organizations in the hope of being able to formulate things, even rewrite the rules of the game,’ Mr. Ye was quoted as saying.”[79]

Indeed, Wen Jin Yuan notes the sense among Chinese academic and policy circles that “the main reason behind the Obama Administration’s support for the TPP agenda is the US’s desire to use the TPP as a tool to economically contain China’s rise.”[80] Wen notes, for example, reports published in the People’s Daily, the official organ of the Chinese Communist Party, that refer to TPP as “superficially an economic agreement but contains an obvious political purpose to constrain China’s rise.”[81] More importantly, a successfully negotiated TPP would result, according to other Chinese scholars, in trade diversion to the detriment of Chinese economic interests.[82] Yet, according to Wen’s research, United States officials insist that the ultimate goal of the United States was not containment but incorporation. The “US’s ultimate goal is to integrate China into this regional trade system, rather than keeping China out, and the TPP initiative is actually similar to the strategy led by several U.S. agencies to incorporate China into the WTO system.” [83] Yet incorporation can be understood from the Chinese side as another form of containment—rather than have China lead a new effort at refining the rules and culture of trade in the Pacific, it would be forced to participate as a junior partner in a regulatory exercise directed by the United States and its principal ally—Japan. For the Chinese the substantial effect might well be understood as containment, though that is lost on the U.S.[84]

As a consequence, Wen argues, Chinese policy will continue to push its own trade agenda as a means of countering the perceived political and economic effects of TPP on its interests. First among its strategies will be an acceleration of its efforts to secure free trade agreements with its neighbors.[85] To the extent that these then hamper further TPP negotiations, all the better.[86] A possible consequence would be trade and regulatory system competition, as the U.S. and China fight for control of the discourse of trade rules, with the objective measured by the participation of the Pacific Basin’s most important economies. A March 21, 2013 report noted: “Following Japan’s recent announcement that it will join in negotiations of the US-led Trans-Pacific Strategic Economic Partnership (TPP), the US and China are picking up the pace in staking their claims on Asian economic territory. The US is encouraging South Korea to join in the TPP, which has pressured China into spurring discussions of a trilateral free trade agreement (FTA) between China, Japan, and South Korea.”[87] More importantly, China will be accelerating the creation of its own enhanced free trade area, one in which it will play the dominant role: “It is also putting work into the Regional Comprehensive Economic Partnership for East Asia (CEPEA), which would include not only China, Japan, and South Korea but also the ten countries in the Association of Southeast Asian Nations (ASEAN), along with India, Australia, and New Zealand.”[88] There is irony here: the Comprehensive Economic Partnership for East ASIA (CEPEA) is a Japanese led proposal for trade co-operation, free trade agreement, among the 16 present member countries of the East Asia Summit.[89]

Second, according to Jianmin Jin, would be the encirclement and containment of Japan and the constraining of U.S. influence in the region, especially for setting the terms of trade policy.

Jianmin Jin, a Senior Fellow at the Fujitsu Research Institute, a think tank in Japan, groups China’s current and potential FTA partners into four different categories: 1) greater China economic region (four cross-strait regions: mainland China, Hong Kong, Taiwan, Macau); 2) surrounding regions (ASEAN, Pakistan); 3) resource-rich regions (GCC, Australia); and 4) developed countries (Switzerland, etc.).[90]

Jin suggests that “as the central country tying together the China-Japan-South Korea FTA and the TPP, Japan should not choose between the two, but balance them with each other.”[91] Japan is likely to engage in this tactic, but it is clear that given Prime Minister Abe’s recent remarks about the ties with the United States, and the congruence of Japanese and U.S. military and economic interests, Japan’s balancing may be skewed toward greater reliance on TPP. It might follow that Japan would see any Chinese free trade agreement or additional multilateral trade arrangements, as a means of protecting its interests in China, at least in the short run.

Third, the short run ends when China is itself invited to join TPP. As such Chinese policy circles misunderstand one threat of TPP. Chinese analysts correctly perceive the threat of TPP in terms of its ability to change the balance of influence from China to Japan through its American alliance. But it likely mistaken to think that this change of balance will be effectuated through Japanese inclusion and Chinese exclusion form TPP. The opposite is true. The United States will seek to contain China through inclusion in the disciplinary procedures and structures of the TPP rather than by excluding it.[92] Perhaps President Obama put it best when he remarked in his 2011 meeting with the Trans-Pacific Partnership:

In a larger sense, the TPP has the potential to be a model not only for the Asia Pacific but for future trade agreements. It addresses a whole range of issues not covered by past agreements, including market regulations and how we can make them more compatible, creating opportunities for small and medium-sized businesses in the growing global marketplace. It will include high standards to protect workers’ rights and the environment.[93]

The stakes for control might be significant, especially for China. Some in the United States see the TPP as a means of managing the ability of states, principally China, to blend state and private power through state owned enterprises.[94]

Trade policy and the regulatory environment will continue to develop as complex overlapping circles of trade regimes, roughly similar but designed to assert not merely economic aims, but strategic regulatory and political objectives. Indeed, one of the side benefits of the TPP for the United States is that it might provide a back door method for reviving the abandoned Free Trade Area of the Americas by including FTAA states in Latin America within the TPP framework instead.[95] Within a global order in which the basics of transnational trade is still sometimes contested,[96] the real prize is influence over the language of control and the development of polycentric alignment of states that increasingly work with and compete against each other through harmonized and coherent rules frameworks designed to provide marginal advantage to their particular national circumstances.[97] This is something Korea and Japan well understand.[98]

C. Conclusion.

Japan remains very much in the middle between the United States and China. With the election of Prime Minister Abe, Japan has chosen a middle course, but one that pushes it further into the complex entanglements between the United States and China. Japan’s decision to participate in TPP negotiations mean to push Japan more closely to the center of current efforts to define and control the regulatory structures of trade in the Pacific basin. By extension, TPP may also control the shape of legitimate government and government policy among TPP states and those who trade with them. This represents a closer alignment of Japan with the United States. But it represents a threat to the Peoples Republic of China as well. That threat is direct—representing what to the Chinese may appear another piece of the U.S. strategy to encircle China militarily and economically and to isolate it from the center of current efforts to develop transnational regulatory structures. To that extent this represents a direct threat to emerging Chinese interests, a threat that China will respond to against the United States and Japan. Ironically the greater threat is indirect—to the extent that Japan and the United States join together under the TPP umbrella and invite China to participate as well, China will find itself constrained by the development of group norms with respect to which it will be able to participate but not dominate. For Japan this may represent containment that protects its sizeable investment in China, at least temporarily. TPP may also permit Japan to leverage its power to influence global trade rules But it also reaffirms that Japan stands uncomfortably close to the fissure that separates U.S. from Chinese interests, and must continue to rely on the internationalization of rulemaking to protect its interests. An independent path for Japan is unlikely to be an option worth considering. To al large extent, Zaki Laïdi’s recent suggestion resonates well here: “Since the end of the cold war, Europeans have believed deeply in the existence of a global commons – and the declining importance of national sovereignty. The conduct of both the US and emerging countries suggests the opposite. Power politics is back. Multilateralism is dying.”[99]


[1] For current thinking in the popular press, see, e.g., Gideon Rachman, The shadow of 1914 falls over the Pacific, The Economist, Feb. 4, 2013. Available http://www.ft.com/intl/cms/s/0/e29e200a-6ebb-11e2-9ded-00144feab49a.html#axzz2OBoyj8tY. (“US is concerned that the new Japanese cabinet is full of hardline nationalists, who are more inclined to confront China. Shinzo Abe, the new Japanese prime minister, is the grandson of a wartime cabinet minister and rejects the “apology diplomacy”, through which Japan tried to atone for the war. . . . . The Chinese military is also increasingly influential in shaping foreign policy.”)

[2] See, e .g., Richard C. Bush, The Perils of Proximity: China-Japan Security Relations (Washington, D.C., Brookings, 2010).

[3] See, e.g., Richard J. Samuels, Securing Japan: Tokyo’s Grand Strategy and the Future of East Asia (Ithaca, NY: Cornell University Press, 2011); John Dewey, China, Japan and the U.S.A.: Present Conditions in the Far East and their Bearing on the Washington Conference (New York: Republic Publishing, 1921).

[4] Rattling the Supply Chains, The Economist, Oct. 20, 2012. Available http://www.economist.com/news/business/21564891-businesses-struggle-contain-fallout-diplomatic-crisis.

[5] Nozomu Hayashi, the Beijing Bureau correspondent for the Asahi Shimbun noted:
Small anti-Japan rallies, which started near the Japanese Embassy in Beijing and elsewhere, spread to many places across the country toward the weekend. CCTV kept fanning anti-Japanese sentiments.

A retired official from China's Foreign Ministry said that anti-Japan rallies, which he said was ignited by Japan's actions, were not the same as those in the past.

"If the Chinese government stopped the Hong Kong activists, the people's criticism would have quickly turned toward the central government," the former official said. "Anti-Japan sentiments, which began after (Tokyo Governor Shintaro) Ishihara's announcement of a plan to purchase the islands, reached a different level from those in the past."”
Nozomu Hayashi, @Beijing: Why Have China’s Anti-Japan Sentiments Heightened?, Asahi Shimbun, October 25, 2012. Available http://ajw.asahi.com/article/views/column/AJ201210250004.

[6] Rattling the Supply Chains, The Economist, Oct. 20, 2012. Available http://www.economist.com/news/business/21564891-businesses-struggle-contain-fallout-diplomatic-crisis.

[7] Encircling China Just Japan’s Wishful Thinking, People’s Daily Online, Jan. 17, 2013. Available http://english.peopledaily.com.cn/90883/8095303.html. The editorial stated:
The Japanese media have described the Abe administration's diplomatic moves as new attempts to contain and encircle China.

It is fine if Japan's "strategic diplomacy" is simply aimed at improving its relations with the above countries, promoting its foreign trade and investment, creating favorable external conditions for domestic economic recovery, and enhancing its international status and clout.

Japan will be disappointed if it really hopes to work with the above countries to contain, isolate, and encircle China through "strategic diplomacy," and gain a strategic advantage over China in the dispute over the Diaoyu Islands.

[8] Shinzo Abe, Japan is Back, Speech to the Center for Strategic and International Studies (CSIS) 22 Feb. 2013, Available http://www.mofa.go.jp/announce/pm/abe/us_20130222en.html.

[9] Ibid.

[10] Fumio Kishida, Foreign Policy Speech by Minister for Foreign Affairs Fumio Kishida to the 183rd Session of the Diet, February 28, 2013, available http://www.mofa.go.jp/announce/fm/kishida/speech_130228.html.

[11] See, e.g., Joshua Meltzer, Japan Joins the Trans Pacific Partnership—Finally!, Brookings Up Front, March 18, 2013. Available http://www.brookings.edu/blogs/up-front/posts/2013/03/18-japan-joins-trans-pacific-partnership-meltzer.

[12] See, e.g., Japan Ministry of Foreign Affairs, The Fifth Trilateral Summit Meeting among The People’s Republic of China, the Republic of Korea and Japan Joint Declaration on the Enhancement of Trilateral Comprehensive Cooperative Partnership, (13 May 2012 Beijing, China). Available http://www.mofa.go.jp/region/asia-paci/jck/summit1205/joint_declaration_en.html. Preparatory meetings for the negotiation of a free trade agreement among Japan, China and the Republic of Korea were held in Tokyo on 20-21 February 2013. See announcement, http://www.mofa.go.jp/announce/announce/2013/2/0221_01.html.

[13] For APEC see http://www.apec.org/.

[14] Office of the United States Trade Representative, TPP Fact Sheet (Nov. 2011). Available http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/united-states-trans-pacific-partnership.

[15] TPP: What is it and why does it matter?, BBC News Online, March 14, 2013. Available http://www.bbc.co.uk/news/business-21782080.

[16] Office of the United States Trade Representative, The United States in the Trans-Pacific Partnership (Nov. 2011). Available http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/united-states-trans-pacific-partnership.

[17] Office of the U.S. Trade Representative, Enhancing Trade And Investment, Supporting Jobs, Economic Growth And Development: Outlines Of The Trans-Pacific Partnership Agreement, (Nov. 2011). Available http://www.ustr.gov/about-us/press-office/fact-sheets/2011/november/outlines-trans-pacific-partnership-agreement.

[18] Ibid.

[19] Ibid.

[20] Ibid. Issues covered include (1) regulation of competition (antitrust) issues, (2) cooperation and capacity building (based on a demand driven and flexible institutional mechanism), (3) cross border services (fair open and transparent markets for services), (4) customs, (5) e-commerce, (6) environmental issues (include effective provisions on trade-related issues that would help to reinforce environmental protection and are discussing an effective institutional arrangement to oversee implementation and a specific cooperation framework for addressing capacity building needs), (7) financial services regulation (investment in financial institutions and cross-border trade in financial services will improve transparency, non-discrimination, fair treatment of new financial services, and investment protections and an effective dispute settlement remedy for those protections), (8) government procurement, (9) intellectual property (reinforce and develop existing World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) rights and obligations), (10) investment (transforming bi-lateral trade agreement terms into a multi-lateral framework, substantive legal protections for investors and investments of each TPP country in the other TPP countries, including ongoing negotiations on provisions to ensure non-discrimination, a minimum standard of treatment, rules on expropriation, and prohibitions on specified performance requirements that distort trade and investment), (11) labor issues, (12) legal issues (dispute resolution), (13) market access for goods, (14) rules of origin, (15) sanitary and phytosanitary standards (animal, plant health and food safety), (16) technical barriers to trade issues, (17) telecommunications, (18) temporary entry, (19) textiles and apparel, and (20) trade remedies.

[21] Office of the U.S. Trade Representative, Trans-Pacific Partnership (TPP): 17th Round of TPP Negotiations Set for Lima, Peru -- May 15-24, 2013, March 31, 2013, available http://www.ustr.gov/tpp.

[22] Jay L. Eizenstat, Carolyn B. Gleason, and Pamela D. Walther, Japan’s Entry Into Trans-Pacific Partnership Free Trade Agreement (FTA) Raises Opportunities and Risks for US Companies, The National Law Review, March 31, 2013. Available http://www.natlawreview.com/article/japan-s-entry-trans-pacific-partnership-free-trade-agreement-fta-raises-opportunitie.

[23] “On critical issues, the massive Trans-Pacific Partnership (TPP) being negotiated in secret by the Obama administration will undermine democracy in the United States and around the world and further empower transnational corporations. It will circumvent protections for health care, wages, labor rights, consumers' rights and the environment, and decrease regulation of big finance and risky investment practices.” Margaret Flowers and Kevin Zeese, TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations, The People’s Voice.org, March 31, 2013. Available http://www.thepeoplesvoice.org/TPV3/Voices.php/2013/03/31/transpacific-partnership-will-undermine-.

[24] “The only way this treaty, which will be very unpopular with the American people once they are aware of it, can be approved is if the Obama administration avoids the democratic process by using an authority known as "Fast Track," which limits the constitutional checks and balances of Congress.” Margaret Flowers and Kevin Zeese, TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations, The People’s Voice.org, supra.

[25] Zaki Laïdi, Trade Deal Show Power Politics is Back, Financial Times (Opinion), March 31, 2013. Available http://www.ft.com/intl/cms/s/0/e2aae9f4-9254-11e2-851f-00144feabdc0.html#axzz2PGbI4Atv.

[26] Barack Obama, Transcript of Obama’s State of the Union Speech, Fox News, February 12, 2013. Available http://www.foxnews.com/politics/2013/02/12/transcript-obama-state-union-speech/.
To boost American exports, support American jobs, and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership. And tonight, I'm announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union, because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.

[27] See United States-European Union High Level Working Group on Jobs and Growth, Final Report, Feb., 11, 2013. Available http://trade.ec.europa.eu/doclib/docs/2013/february/tradoc_150519.pdf (“the HLWG recommends to U.S. and EU Leaders that the United States and the EU launch, in accordance with their respective domestic procedures, negotiations on a comprehensive, ambitious agreement that addresses a broad range of bilateral trade and investment issues, including regulatory issues, and contributes to the development of global rules.” Ibid., 6).

[28] See the useful discussion in FAQ: Transatlantic Trade and Investment Partnership (TTIP), Marietje Schaake, March 21, 2013. Available http://www.marietjeschaake.eu/2013/03/faq-transatlantic-trade-and-investment-partnership-ttip/ (“From a global perspective a renewed transatlantic partnership would be able to set standards for future world trade- and it would be an incentive for (re)emerging economies or developing countries to step up their game, improve their competitiveness and prosperity by opening up markets and working towards meeting the new TTIP global standards.”).

[29] Zaki Laïdi, Trade Deal Show Power Politics is Back, Financial Times, supra.

[30] Sean Flynn, Law Professors Call for Trans-Pacific Partnership (TPP) Transparency, Infojustice.org, May 9, 2012. Available http://infojustice.org/archives/21137. (“Over 30 legal academics from current or potential future Trans-Pacific Partnership Agreement (TPP) negotiating countries wrote to United States Trade Representative Ron Kirk today. The letter, the text of which is posted below, criticizes the USTR decision to cancel full day stakeholder presentations for the current round of negotiations being held in Dallas, Texas. The letter calls on the administration to “reverse course” and work to expand participation and transparency by giving the general public the same rights to see US proposals in the negotiation as cleared corporate advisers now have.”)

[31] As described by the U.S. Trade Representative in his web site, “On Wednesday, March 6, negotiators from the 11 Trans-Pacific Partnership Countries paused talks to meet with more than 300 global stakeholders at an engagement event hosted by the Government of Singapore. . . . Following the 3 hour engagement event, the TPP chief negotiators convened a stakeholder briefing session at which they provided updates on the ongoing negotiations and answered questions related to the subject matter of the proposed agreement.” Office of the U.S. Trade Representative, Direct Stakeholder Engagement, available http://www.ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/direct-stakholder-engagement. The United States also keeps a web page for posting public comments—the effect of which is unclear. See http://www.regulations.gov/#!searchResults;dct=PS;rpp=25;po=0;s=Trans%252BPacific%252BPartnership.

[33] Ibid.

[34] Ibid.

[35] David S. Levine, et al. Letter to Ambassador Ron Kirk, May 9, 2012, reproduced at Flynn, supra. “There has been no publicly released text of what USTR is demanding in these negotiations, as there would be in policy making by regulation, in Congress or in multilateral forums. Reviews of leaked proposals show that the US is pushing numerous standards that are beyond those included in any past (i.e. publicly released) agreement and that could require changes in current US statutory law.”

[36] Joe Wolverton II, U.S. Lawmakers Demand Transparency in Secret Trans-Pacific Partnership Talks, The New American, Sept. 14, 2012. Available http://www.thenewamerican.com/usnews/item/12838-us-lawmakers-demand-transparency-in-secret-trans-pacific-partnership-talks.

[37] See usefully Meredith Kolsky Lewis, Trans-Pacific Partnership: New Paradigm or Wolf in Sheep's Clothing, 34 B. C. Int'l & Comp. L. Rev. 27 (2011).

[38] Obama outlines pan-Pacific trade plan at Apec summit, BBC News Online, Nov. 13, 2011. Available http://www.bbc.co.uk/news/world-asia-15704358.

[39] Office of the United States Trade Representative New U.S. Initiatives to Boost Trade and Investment Opportunities for Least Developed Countries (Dec. 2011). Available http://www.ustr.gov/about-us/press-office/fact-sheets/2011/new-us-initiatives-boost-trade-and-investment-opportunities-l.

[40] Raul Burbano, Kristen Beifus and Manuel Pérez-Rocha, Facing the Threat of the Trans-Pacific Treaty, The Tyee, 8 Mar 2013. Available http://thetyee.ca/Opinion/2013/03/08/Trans-Pacific-Treaty-Threat/.

[41] The stalled efforts to create a free trade area of the Americas provides a case in point. See, e.g., J. F. Hornbeck, A Free Trade Area of the Americas: Major Policy Issues and Status of Negotiations, Congressional Research Service Report to Congress, Order Code RS20864 (January 3, 2005). Available http://www.fas.org/sgp/crs/row/RS20864.pdf. See also, Larry Catá Backer, ALBA, Latin American Integration, and the Construction of Regional Political Power, Law at the End of the Day, Nov. 6, 2010. Available http://lcbackerblog.blogspot.com/2010/11/alba-latin-american-integration-and.html.

[42] Hiroko Tabuchi, Japan Moves to Enter Talks on Pacific Trade, The New York Times, March 15, 2013. Available http://www.nytimes.com/2013/03/16/world/asia/japan-aims-to-join-trans-pacific-partnership-talks.html?pagewanted=all&_r=0.

[43] Ibid. It appears that Japan may get agricultural concessions form the United States as part of the price for Japanese participation. Ibid.

[44] Office of the U.S. Trade Representative, Statement by Acting U.S. Trade Representative Demetrios Marantis on Japan's Announcement Regarding the Trans-Pacific Partnership, March 15, 2013, available http://www.ustr.gov/about-us/press-office/press-releases/2013/march/amb-marantis-statement-japan-tpp.

[45] Paul Jackson and Toko Sekiguchi, Support for Abe Grows in Japan, Wall Street Journal, March 18, 2013. Available http://online.wsj.com/article/SB10001424127887323415304578367751057274398.html.

[46] Ibid.

[47] Hiroko Tabuchi describes this nicely:
Japan also sees a leadership role in the partnership as a way to return to center stage after being eclipsed in the region by the rise of China, which many in Tokyo view as jeopardizing Japan’s economic interests and security. China, which is pursuing its own bilateral and multilateral trade agreements in the region, is unlikely to join the agreement soon because of the concessions on state-owned enterprises, intellectual property and labor that the pact would require. That has, in effect, made the partnership a vehicle of sorts for the United States, and now Japan, to counter China’s influence.
Hiroko Tabuchi, Japan Moves to Enter Talks on Pacific Trade, The New York Times, March 15, 2013, supra.

[48] “For instance, the TPP will lower tariff rates on goods and liberalize Japan’s services sector, which constitutes 72 percent of Japan’s GDP. The TPP will also eliminate many nontariff barriers – behind the border regulations that act as barriers to trade. These measures will lead to greater competition which should increase the productivity of the Japanese economy, improving its competitiveness, including in its export sector and boosting GDP.” Joshua Meltzer, Japan Joins the Trans Pacific Partnership—Finally!, Brookings Up Front, supra.

[49] Ministry of Foreign Affairs of Japan, Joint Statement between the Government of Japan and the Government of the People's Republic of China on Comprehensive Promotion of a "Mutually Beneficial Relationship Based on Common Strategic Interests" May 7, 2008. Available http://www.mofa.go.jp/region/asia-paci/china/joint0805.html. These are based on five pillars: enhancement of mutual trust, promotion of people to people exchanges, enhancement of mutually beneficial cooperation, contribution to the Asia Pacific region for political stability, and contribution to the resolution of global issues. Ibid.

[50] Shinzo Abe, Japan is Back, Speech to the Center for Strategic and International Studies (CSIS) 22 Feb. 2013, Available http://www.mofa.go.jp/announce/pm/abe/us_20130222en.html.

[51] Ibid.

[52] Joshua Meltzer, Japan Joins the Trans Pacific Partnership—Finally!, Brookings Up Front, March 18, 2013, supa.

[53] See, Larry Catá Backer, Sovereign Investing and Markets-Based Transnational Legislative Power: The Norwegian Sovereign Wealth Fund in Global Markets (November 18, 2012). Consortium for Peace & Ethics, No. 2012-11/11. Available at SSRN: http://ssrn.com/abstract=2177778

[54] Ibid.

[55] Chen-Dong Tso, “Trans Pacific Partnership and China-Japan-Korea FTA: Implication for Taiwan,” Stimson Center paper presented Dec. 12, 2012. Available http://www.stimson.org/images/uploads/Trans_Pacific_Partnership_and_China_Japan_Korea_FTA.pdf. Tso is the Executive director, Centre for China Studies and Associate Professor in the Department of political Science, National Taiwan University.

[56] Ibid., 1-2. Others have noted the importance of the economic considerations: “Japan’s participation in the TPP is also of economic significance for the U.S. Without Japan’s participation in the TPP the market access opportunities for the U.S. are limited because the U.S. has FTAs with six of the 10 TPP parties.” Joshua Meltzer, Japan Joins the Trans Pacific Partnership—Finally!, Brookings Up Front, March 18, 2013, supra.

[57] See discussion above and note especially the policy drivers identified in Shinzo Abe, Japan is Back, Speech to the Center for Strategic and International Studies (CSIS) 22 Feb. 2013, Available http://www.mofa.go.jp/announce/pm/abe/us_20130222en.html.

[58] Electronic Frontier Foundation, Trans Pacific Partnership Agreement, What’s Wrong With TPP, available https://www.eff.org/issues/tpp.

[59] See, Larry Catá Backer, Private Actors and Public Governance Beyond the State: The Multinational Corporation, the Financial Stability Board and the Global Governance Order, 18(2) Indiana Journal Of Global Legal Studies 751 (2011).

[60] Derek Scissors, What a Good Trans-Pacific Partnership Looks Like, Heritage Foundation Backgrounder No. 2772, March 8, 2013. Available http://www.heritage.org/research/reports/2013/03/what-a-good-trans-pacific-partnership-looks-like.

[61] See Mireya Solis, Japan’s Big Bet on the Trans Pacific Partnership, The TPP Nations Should Reciprocate, Brookings, March 25, 2013, available ----.

[62] But later accession comes with a price—no participation in the construction of TPP rules. “"There's no formal deadline," Acting U.S. Trade Representative Demetrios Marantis said at a press conference for foreign journalists in Washington. "The idea is that if economies aren't ready right now, that they'll be able to join once it's done and essentially accede to the TPP."” Lee Chi-dong, No deadline for S. Korea to decide on TPP talks: USTR chief, Yonhap News Agency, March 21, 2013. Available http://english.yonhapnews.co.kr/national/2013/03/21/26/0301000000AEN20130321000200315F.HTML.

[63] Xiangfeng Yang, What Can China's Past Tell Us about America's Future? APSA 2011 Annual Meeting Paper. Available at SSRN: http://ssrn.com/abstract=1901965 (“elongated unipolarity is both possible and feasible, but it is predicated upon a robust inter-state hierarchical authority structure with the hegemon at the top.” Id. 28).

[64] Chen-Dong Tso, “Trans Pacific Partnership and China-Japan-Korea FTA: Implication for Taiwan,” supra, at 3-4.

[65] Chen-Dong Tso, “Trans Pacific Partnership and China-Japan-Korea FTA: Implication for Taiwan,” supra, 4-5 and sources cited. Xiangyang Li (李向陽), “Trans-Pacific Partnership Agreement: A Major Challenge to China’s Rise (跨太平洋伙 伴关系协定:中国崛起过程中的重大挑战),” International Economic Review (國際經濟評論), Iss. 2, 2012; Yunling Zhang (張蘊嶺), “Impact of US-led Trans-Pacific Partnership Agreement on China” (美國主導泛太平 洋夥伴協議對中國的影響), Review of Economic Research (經濟研究參考) , Iss. 1, 2012. Tso argues that TTP is in China’s long term interests and that indeed XChina should seek to join TTP. See ibid., 10.

[66] Ibid., 5-6. ASEAN, the Association of Southeast Asian Nations, includes many of the TTP participants. See, http://www.asean.org/.

[68] China Begins to Lose Edge as World's Factory Floor, The Wall Street Journal, Jan. 16, 2013. Available http://online.wsj.com/article/SB10001424127887323783704578245241751969774.html.

[69] Ibid. (“With the lion's share of investment in China now coming from domestic sources, the impact of falling foreign investment on growth will be limited. But an erosion of manufacturing's importance underlines the challenge for China's leaders in finding new sources of growth in domestic consumption and higher-level industry.”).

[70] See, e.g.,

[71] Larry Catá Backer, Encircling China or Embedding It?, Law at the End of the Day, Nov. 8, 2010, available http://lcbackerblog.blogspot.com/2010/11/encircling-china.html (“For a considerable period of time, Chinese officials have been focusing on the possibility that the United States intends to surround it to prevent it from more forcefully asserting its own interests in the region. Echoing similar concerns of the Russians, the Chinese suggest that American policy has been to engage China economically while creating an effective military encirclement that would enhance the American position in the event of conflict.”).

[72] Li Bing, Time to Counter US Ploys, Xinhuanet.com, July 29, 2010. Available http://news.xinhuanet.com/english2010/indepth/2010-07/29/c_13420374.htm

[73] Hu Jintao, Report to the 18th Chinese Communist Party National Congress November 17, 2012, Section XI. Available http://news.xinhuanet.com/english/special/18cpcnc/2012-11/17/c_131981259_12.htm.

[74] Larry Catá Backer, Michael Komesaroff on Chinese Investments in Afghanistan and the Changing Face of Global Mining, Law at the End of the Day, March 17, 2013. Available http://lcbackerblog.blogspot.com/2013/03/michael-komesaroff-on-chinese.html.

[75] Robert Zoellick recently argued:
The increased importance of SOEs in the world economy – in financial services, telecommunications, steel, chemicals and energy, and other natural resources – requires new rules so that private businesses can compete fairly with state capitalism. The rules need not push privatisation or rollbacks of state enterprises, but they should require transparency, commercial behaviour, declarations of subsidies, nondiscrimination and open procurement.
Robert Zoellick, Questions for the World’s Next Trade Chief, Financial Times (Opinion), April 1, 2013, available http://www.ft.com/intl/cms/s/0/5f9f5ece-923a-11e2-851f-00144feabdc0.html#axzz2PGbI4Atv.

[76] See, Chinese president participates in BRICS Leaders-Africa Dialogue Forum, Qiushi, March 27, 2013. Available http://english.qstheory.cn/news/201303/t20130328_219352.htm (“Chinese President Xi Jinping and leaders of the other major emerging economies met a group of African leaders in Durban, South Africa, Wednesday to discuss cooperation between the BRICS nations and Africa. . . . .Xi said the world cannot enjoy stability and prosperity without the peace and development of Africa and international affairs cannot be properly dealt with without Africa's participation, adding that the global governance system would lose vitality without Africa's saying. BRICS and African countries are like-minded friends with extensive common interests, he said, noting that the rising of Africa brings opportunities to BRICS countries, likewise, the development of BRICS countries brings opportunities to the continent.”).

[77] See, e.g., Larry Catá Backer, Governance Without Government: An Overview, in Beyond Territoriality: Transnational Legal Authority In An Age Of Globalization 87-123 (Günther Handl, Joachim Zekoll, Peer Zumbansen, editors, Leiden, Netherlands & Boston, MA: Martinus Nijhoff, 2012).

[78] China, Ministry of Commerce, Press Release, MOFCOM: Further Enhancing CSR Awareness of Chinese Companies Operating Abroad, Sino-Swedish Corporate Social Responsibility Cooperation, March 19, 2013, available http://csr2.mofcom.gov.cn/article/cooperation/201303/20130300059556.shtml (“we will give further play to the role of trade associations. In recent years, MOFCOM has been committed to establishing China-funded enterprises associations or chambers of commerce in the key investment countries, and standardizing the companies’ behavior in the local investment” Id.).

[79] Didi Kirsten Tatlow, BRIC, BRICS or BRICSI? The Growing Challenge, IHT Rendezvous, March 31, 2013. Available http://rendezvous.blogs.nytimes.com/2013/03/28/first-bric-then-brics-now-bricsi-the-world-financial-orders-challenge/ (quoting in part Xia Yeliang, an economics professor at Peking University) (“As the leaders of the BRICS nations met in South Africa this week and announced they would establish a development bank to help fund five-year infrastructure investment sums, plans for a financial “safety net,” or reserve, and a string of councils to add business and intellectual heft to the group, some are wondering if Indonesia should be in.” Id.)

[80] Wen Jin Yuan. The Trans-Pacific Partnership and China’s Corresponding Strategies, CSIS Freeman Briefing June 20, 2012, pp. 2-4. Available http://csis.org/publication/trans-pacific-partnership-and-chinas-corresponding-strategies.

[81] Ibid., citing Ding Gang, Ji Peijuan, “Mei Licu Fan Taipingyang Huoban Guanxi,” (The US Attaches Great Importance to the Pan-Pacific Partnership), Renmin Ribao (People’s Daily), July 27, 2011, p.3, http://news.xinhuanet.com/world/2011-07/27/c_121725596.htm.

[82] Wen Jin Yuan. The Trans-Pacific Partnership and China’s Corresponding Strategies, supra, p. 5.

[83] Wen Jin Yuan. supra, p. 4.

[84] Larry Catá Backer, Encircling China or Embedding It?, Law at the End of the Day, Nov. 8, 2010, available http://lcbackerblog.blogspot.com/2010/11/encircling-china.html.

[85] Wen Jin Yuan. supra, p. 6.

[86] However, it should be noted that internal Chinese politics may make these agreements easier to speak about tan to negotiate. FTA require cooperation among a number of ministries within China, some of which is not known for sharing the same views. See ibid., 8-9.

[87] Park Hyun and Seong Yeon-cheol, US hoping South Korea will join trans-pacific partnership, The Hankyoreh, March 21, 2013. Available http://english.hani.co.kr/arti/english_edition/e_international/579052.html.
At a Korea Society lecture in New York on Mar. 19 (EST), Assistant US Trade Representative for Korea, Japan and APEC Affairs Wendy Cutler said, “We believe that Korea could be a natural member of the TransPacific Partnership negotiations. We look forward to continuing our working relationship with Korea and keeping them updated on. . . . In response, China is pulling out all the stops in pursuit of the China-Japan-South Korea FTA.

[88] Ibid. For a Japanese perspective on CEPEA, see Risaburo Nezu, Why CEPEA Makes Sense to Asia

[89] The CEPEA proposal was advanced by Japan in conjunction with the establishment of the Economic Research Institute for ASEAN and East Asia (ERIA). The two mechanisms are designed to be mutually supporting liberalization and co-operation. See Mohit Anand, Towards Comprehensive Economic Partnership in East Asia, Institute of Peace and Conflict Studies, #2702, 12 October 2008. Available http://www.ipcs.org/article_details.php?articleNo=2702 (“Japan's emphasis on such a framework rests on its attempt to ensure that prosperity accruing from effective economic integration of East Asia will connect Japan's economy with Asia's growth.” Ibid).

[90] Wen Jin Yuan. supra, p. 7, citing Jianmin Jin, “China’s Concerns Regarding TPP No More than Empty Worries?” Fujitsu Research Institute, January 11, 2012, Fujitsu Research Institute, April 09 (Friday) 2010, available http://jp.fujitsu.com/group/fri/en/column/economic-topics/2010/2010-04-09.html.

http://jp.fujitsu.com/group/fri/en/column/message/2012/2012-01-11.html. Jin suggests that “”China takes into account the strategic economic, political, and diplomatic significance of FTAs and aims to 1) realize scale merit of economic development, 2) obtain resources necessary for its own economic growth, 3) erase the “China Threat” doctrine, 4) suppress separate independence movements like “Taiwan Independence”, and 5) improve the international environment, especially the surrounding environment.”

[91] Jianmin Jin, “China’s Concerns Regarding TPP No More than Empty Worries?” Fujitsu Research Institute, January 11, 2012, supra.

[92] “"Whether it's China, whether it's the Philippines, whether it's Thailand ... it's incumbent upon those economies to be able to convince the other TPP partners that they are capable of meeting the high standards that we're negotiating," Marantis told reporters from foreign media outlets at a briefing on the US trade agenda for 2013.” Joseph Boris, US says trade talks are ajar for China, China Daily, March 21, 2013. Available http://usa.chinadaily.com.cn/epaper/2013-03/21/content_16329114.htm.

[93] Barack H. Obama, Remarks by the President in Meeting With Trans-Pacific Partnership, Honolulu Hawaii, 12 Nov. 2011. Available http://www.ustr.gov/about-us/press-office/speeches/transcripts/2010/november/remarks-president-barack-obama-meeting-tran.

[94] Derek Scissors, What a Good Trans-Pacific Partnership Looks Like, Heritage Foundation Backgrounder No. 2772, March 8, 2013. Available http://www.heritage.org/research/reports/2013/03/what-a-good-trans-pacific-partnership-looks-like (“the very existence of SOEs should be understood as an effort by governments to limit market competition and increase state control in a particular sector. That is: an effort precisely to retain sector participants which do not operate on a commercial basis. . . . Where TPP member states insist on retaining SOEs, their market share should be capped at as low a level as possible, to forestall absurd claims that state firms completely dominate markets due to competitive superiority. . . . . Because SOEs represent circumscribed competition at home, their investments overseas can properly be considered by host countries as different from investment by companies that earn commercial profits at home.”).

[95] “The TPP is seen in Latin America as a second attempt by the United States to push a Free Trade Area of the Americas (FTAA) in the region with help from countries whose governments are subservient to de the U.S. led neoliberal ideology and "free trade" economics.” Raul Burbano, Kristen Beifus and Manuel Pérez-Rocha, Facing the Threat of the Trans-Pacific Treaty, The Tyee, supra.

[96] See, e.g., Larry Catá Backer and Augusto Molina, Cuba and the Construction of Alternative Global Trade Systems: ALBA and Free Trade in the Americas, University of Pennsylvania Journal of International Economic Law, Vol. 31, No. 3, 2010. Available at SSRN: http://ssrn.com/abstract=1407705.

[97] See generally, Larry Catá Backer, The Structural Characteristics of Global Law for the 21st Century: Fracture, Fluidity, Permeability, and Polycentricity, 17(2) Tilburg Law Review 177-199 (2012).

[98] “South Korea will monitor Trans-Pacific Partnership negotiations while it pursues competing free trade pacts with Asian partners, but Seoul hopes the various regional trade agreements will one day merge, Trade Minister Taeho Bark said on May 16.” South Korea prioritizes Asia trade pacts over Pacific partnership, Asahi Shimbun, May 17, 2012. Available http://ajw.asahi.com/article/behind_news/politics/AJ201205170023.

[99] Zaki Laïdi, Trade Deal Show Power Politics is Back, Financial Times, supra.

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