Transcript 0:00 [instrumental music] Welcome to episode two of Trendlines, a podcast on global politics brought to you by World Politics Review. My name is Peter Durrie. 0:14 For this week's report, we will be joined by Edward Alden to talk about the Trans-Pacific Partnership and how it could transform international trade negotiations. 0:22 But first, I'm very happy to again welcome World Politics Review Editor-in-Chief Judah Grunstein to discuss some of this week's main developments in international politics. So Judah, 0:34 let's take a look at some of the stuff that WPR covered this week, and, uh, Emma Scott had a great piece on China's naval diplomacy, uh, with Iran and Saudi Arabia. 0:44 This was sort of a quiet story in a week when, uh, Iran's, uh, test of an ICBM was in the news and i- compared to the South China Sea territorial disputes, for instance. So, so why did we cover this? 0:59 Uh, to begin with, we've covered both of those other topics, uh, pretty thoroughly recently. Um, but more importantly, it's because naval diplomacy is really important on both sides, uh, of, of this one. 1:13 Um, the, the piece focuses mainly on China's naval diplomacy with Iran. For Iran, for Iran, uh, 1:22 the, the ICBM test, uh, got the headlines, uh, but f- the reality is that missiles, uh, for Iran are really a deterrent, uh, whereas for, for Iran to, to really project power and, and, uh, and regional influence, uh, especially vis-a-vis the United States, uh, naval capabilities are going to be very important as well. 1:49 Um, and the same holds true for China. 1:52 Uh, to, to really become a global power, uh, and especially for China, which is an energy importing power, and with a lot of its energy coming from the Persian Gulf, uh, and, and a lot of its trade, uh, being, uh, carried out, uh, by maritime transport, um, ch- it's imperative for China to have a global navy. 2:13 Uh, and having a global navy requires global bases and partners. Um, for instance, China just announced that it's developing its first permanent, uh, naval base in Djibouti, uh, in East Africa on, on the Horn of Africa. 2:31 Um, people have been waiting for that development for a while, and we actually have a feature article scheduled on the horizon, uh, looking at that in particular and all the steps that China will need to take, uh, to actually create a global navy and become a gl- a global navy. 2:48 Um, in the meantime, to be at home on the high seas, you need friends. Um, and this is what China's naval diplomacy, especially in the Persian Gulf, um, is about. 2:59 The, the problem of course is that with friends, sometimes you inherit enemies, uh, and China really doesn't like to choose sides. 3:05 It, it really likes to, uh, to, to have a lot of, uh, freedom of maneuver, and so its naval diplomacy with Iran requires balancing, uh, its already very developed ties with Saudi Arabia. 3:17 So it's a great piece on what seems like a quiet story, but will be, uh, but, but the implications of this kind of story, uh, for the future are, are, are pretty significant. 3:27 You have also written a piece yourself, Judah, this week, uh, about the recent, uh, electoral, uh, win of the Front National in, in Fran- uh, in France. Uh, so what's going on there? 3:38 So there were two elections on, on Sunday, one in Venezuela, which we talked about last week, and which, uh, confirmed that the opposition did actually win a majority in parliament. 3:49 Uh, the other was here in France, uh, regional elections, which would be the equivalent in the United States of, uh, a grouping of a handful of states, uh, on a level between the state level and the federal level. 4:01 Uh, and in those elections, which were the first round elections, the, the Front National or the National Front, um, finished with the highest overall, uh, aggregate vote total or vote percentage. 4:15 Um, and what this showed was that, uh, the party which, uh, under Marine Le Pen, um, who inherited it from her father, uh, Jean Ma- Jean-Marie Le Pen, uh, she's really succeeded in mainstreaming the party, in toning down some of her father's more explicit racist and xenophobic, uh, provocative declarations, in, um, really presenting the party as a governing party and not just a party of protest. 4:46 Um, and the results on Sunday showed what a lot of people had feared, which is that, um, people have really begun to adhere to their program, which remains, um, very extreme in terms of Europe, in terms of immigration, and, uh, and very nationalist in terms of 5:03 the sense of, uh, what it means to be French and, and France's role in, in, in the world. 5:09 Uh, the, the, the, the two trends, uh, that this really highlights for me are, first, the, the bankruptcy of the traditional center-left and center-right parties in terms of their ability to really respond to their, their traditional constituencies and to voters' concerns, uh, in the face of a Europe that they, they, they, they don't really clearly see how it, uh, benefits them, but very obviously see a lot of the disadvantages, um, a- in terms of the Greek debt crisis and the refugee crisis. 5:45 Um, so things like open borders, which are really a great advantage to the European economy now seem like threats, and the, the National Front is really able to, to capitalize on that, um, in these elections, whereas the traditional parties have really, um- 6:02 Not managed to, to, to create a, a, a coherent message to their voters. The second trend that it really highlights for me is again, something that Hugo Chavez was something of a precursor. 6:17 Uh, this, this trend towards, uh, the, the, the sort of chara- charismatic populist leader, uh, who has a tendency toward, uh, creeping authoritarianism, something, um, that, that, um, uh, that can be thought of as illiberal democracy. 6:36 Uh, and this is something that's, that's, uh, become a problem throughout Europe in terms of, uh, s- uh, some of these far-right extreme, extremist parties. Uh, you see it in Hungary with Viktor Orban. 6:49 Uh, Vladimir Putin is a great example. 6:51 Uh, beyond Europe, uh, Erdogan in Turkey is another example, um, where you have this trend toward, uh, a, a real populist charismatic approach to politics with a, a real emphasis on nationalism. 7:06 Um, and, uh, and both of these were on, on, on, on display in the election results on Sunday. Now, the, the li- the... 7:16 If there is, uh, one note of optimism, it's that those were first round results, um, and it's looking like the second round will manage to keep the, the National Front from the regional governments in most of these cases. 7:31 There are one or two, uh, where it looks like they m- they, they have, they have a good chance of, uh, of winning. 7:37 But again, it's a wake-up call, or it should be a wake-up call to the center, the traditional parties here in France and throughout Europe and elsewhere, uh, because we see something along the same lines happening in the United States in terms of the appeal of Donald Trump, for instance, um, that, uh, the, the, the... 7:55 what we think of as liberal democracy is really not guaranteed, and it, and, and it's always under, under threat in some ways. 8:01 But the flip side of this coin is, of course, the, the very uninspired, uh, performance and rhetoric and, uh, program of the center-left and socialist parties in, in Europe and beyond. 8:14 So, um, I, s- speaking from Germany, this is the same case here, where you have a, a s- a Social, Social Democratic Party, uh, which for the last years has failed to make any kind of, uh, programmatic inroads or, or, uh, any kind of, um, innovative, uh, contribution to the political debate. 8:32 Yes, and we actually ran a feature article on that very topic, uh, of, uh, the, the, the, the state of European social democracy by Patrick Diamond in July. 8:44 Um, and he sort of diagnosed the, the, the real problems that the, the center-left in Europe has had, uh, in recent years, and offered at the end some, some prescriptions for, for, uh, reinventing the message. 8:59 Another country where liberal democracy is in no way, uh, the predetermined end state is, of course, Iraq. [laughs] And, uh, you ran a, 9:08 you ran a very nice, uh, feature article, um, about Shiite militarization in a fragmented Ira- Iraq, um, by Ramzi Mardini, uh, recently in this week. 9:19 Uh, so tell me a bit more about the troubles of Prime Minister Haider al-Abadi. Well, in, in, in a lot of ways, uh, what, what Ramzi's article, uh, 9:31 s- illustrates is that, um, Abadi is almost like a, an accidental prime minister. His main appeal was that he wasn't Nouri al-Maliki. 9:41 Um, and as a result, because he never really managed to get Maliki out of the, the, the s- the central arena, uh, of Iraqi politics and because he doesn't really have his own power base, um, he doesn't really have the, the, the necessary, um, grip on power in Baghdad, um, to really push through, uh, to begin with, the kinds of political reforms that are necessary, um, to create the environment where Iraq can begin to reintegrate, um, the, the Sunni territories in the, uh, once, uh, once ISIS is defeated. 10:25 Um, uh, the problem there, of course, is that 10:29 Iraq doesn't have a monopoly, a state monopoly on, on violence, i- in the sense that, uh, the forces that are fighting ISIS are largely, uh, sub-state Shiite militias, um, that again, are a necessary evil. 10:44 They're, the, the Iraqi military is not, uh, capable of defeating ISIS, but the, the, the Shiite militias, uh, as a cure, are almost as bad as the disease, um, because they create this, this fragmentation of power, uh, in Iraq that will make it very problematic, um, to, to first of all carry out a really effective military campaign in the Sunni territories, and, uh, once it's successful, uh, to, to engage in the kind of, uh, reconstruction and political healing that's necessary for Iraq to be a functioning state. 11:19 So, uh, what about a look ahead for next week? Well, next week we have another feature article that I'm really excited about by David Fidler on, uh, Obama's cybersecurity legacy. 11:30 Uh, it's all edited and, and ready to go, and it's a, a real interesting piece, um, somewhat surprising in its conclusions. And we also will be running a piece by you, Peter- Yeah... 11:41 on, uh, France's failed military strategy in Africa, which I'm, I'm excited to, to run and looking forward to, to pushing live, as we say here in the office. Yes, me too. So, uh, lots of interesting stuff coming up. 11:55 Um, thanks for joining me, Judah. It's been a pleasure. Talk to you next week. 12:01 For this week's report, I talked with Edward Alden of the Council on Foreign Relations about global trade and specifically about the recently signed Trans-Pacific Partnership. 12:10 Edward wrote a very interesting piece on the subject for WPR titled The TPP is the Last Best Opportunity for New Global Trade Rules. 12:20 And here on Trend Lines, he goes into some more detail about the challenges to global trade negotiations and how the TPP could be key to reviving them. I'm Edward Alden. 12:31 I'm a senior fellow at the Council on Foreign Relations, and I've been following global trade negotiations for about twenty-five years now. 12:37 When we talk about international or global trade agreements, we're generally talking about agreements negotiated, uh, through the World Trade Organization, which is headquartered in Geneva, that basically involve, uh, every country in the world. 12:54 So that if, say, one country is lowering, uh, tariffs on its imports, it lowers them for goods from every country in the world. 13:03 And, and these global trade negotiations go all the way back, uh, to the end of the Second World War. 13:09 The first agreement was concluded in nineteen forty-seven, and there have been a series of more than half a dozen agreements since then. 13:15 I mean, the underlying theory behind global trade is David Ricardo's theory of comparative advantage, which is that, that industries ought to locate in places where they can produce most efficiently. 13:33 That's a very simple version of it. Bilateral trade agreements are just agreements between two countries. 13:39 So Mexico enters into an agreement with South Korea in which it lowers tariffs on imports from South Korea, and South Korea lowers tariffs on imports from Mexico, and no other country is involved. 13:52 And, and if you have preferential arrangements of one sort or another that say, well, you know, if you locate in Mexico and export to South Korea, you're gonna face a much lower tariff than if you locate in the United States and export to South Korea. 14:08 That's a distortion of the market. And ideally, you want to minimize those sorts of market distortions. 14:14 So when you negotiate agreements that involve all the countries of the world or most of the countries of the world, then business locates depending on where the economic advantages exist, where market, uh, pressures, uh, would suggest that, that it's most profitable to locate rather than based on, on special and preferential governmental rules. 14:37 Countries do all the time either restrict imports or subsidize their industries or in other ways protect, uh, their own sectors. Um, generally, such practices aren't wise ones. They cost the government a lot of money. 14:54 They distort the market. Uh, they end up, uh, actually making those countries poorer rather than better off. 15:02 So again, we're talking in fairly abstract terms here, but, but all things being equal, it's better to be part of these global arrangements than it is to do all sorts of special arrangements to protect particular industries. 15:14 I mean, sometimes countries do that effectively for short periods of time, but in the long run, that has not proven to be a successful strategy for economic development. 15:24 I think all economists would argue that it's better to lower trade barriers on a, on a global basis. Bali has given a new morning to the World Trade Organization. 15:41 Each of these global trade rounds has, has been given a name of, of, of some sort. Sometimes it's the location where the negotiations started. Sometimes it's, it- it's, uh, you know, a particular individual. 15:52 So the, the, the trade round in the nineteen sixties was called the Kennedy Round. Uh, the trade round in the nineteen seventies was called the Tokyo Round. That's where the negotiations started. 16:01 The trade round in the eighties and early nineties was the Uruguay Round, which is where the negotiations, uh, were launched in Punta del Este in, uh, in Uruguay. 16:09 Um, the latest effort is referred to as the Doha Round, again, because negotiations were launched in, uh, in Doha, in Qatar in, in two thousand and one. 16:21 And the idea was that this would be, again, another big, ambitious global round of trade liberalization. And, uh, the Doha Round now has gone on for fourteen years, 16:36 and there's only one substantive accomplishment, which is an agreement on trade facilitation, essentially customs rules, uh, ports of entry rules, um, that was reached in Bali a couple of years ago. 16:50 It still hasn't been ratified by enough members to come into force, but, but the Doha Round has never come together as a successful agreement the way all these previous rounds did. Um, and its future is unclear. 17:03 Uh, it's still out there. People still talk about the Doha Round, but there are no real negotiations happening under the, the Doha Round. 17:13 Uh, nobody's quite willing to bury it and declare it dead, uh, but, but nothing substantive is happening right now in, in those global negotiations. So these rounds are basically... 17:23 These are, are big, complicated negotiations that involve all the countries that are members of the, the WTO and, and all of the issues that, that are on the table. 17:36 And the, the idea behind the rounds was that, that in any trade negotiation, some countries will benefit in some sectors, and other countries will benefit in other sectors. 17:45 And so if you have this complicated negotiation, you can get an agreement that all countries think will benefit them in some way or another. 17:53 So that was the theory behind the trade rounds, and it worked well, as I said, for, for most of half a century. 17:58 [outro jingle]This week, after five years of effort with eleven other nations, we reached agreement on a new trade deal that promotes American values and protects American workers. 18:14 There's a reason this Trans-Pacific Partnership took five years to negotiate. I wanted to get the best possible deal for American workers, and that is what we've done. 18:25 The, the Trans-Pacific Partnership is a trade agreement involving the United States, Japan, and ten other Pacific Rim nations. 18:37 And so it's, it would be, if, if successfully ratified, the largest regional trade arrangement of its kind. I mean, the only comparable one was the creation of the European community, uh, many years ago. 18:50 So the, the countries that are part of the TPP account for about forty percent of global economic output. 18:57 So what it would do is the traditional trade things of lowering tariffs on industrial products and quotas on agricultural products and all that stuff, but would also create a whole set of rules on everything from government subsidies to state-owned enterprises to intellectual property to customs facilitation to exports by small business. 19:19 It's a, you know, multi-hundred-page agreement that would write rules for trade in the Asia-Pacific region. Um, one of the very interesting features of the TPP, uh, is that it's designed as an open trade agreement. 19:37 Um, the idea is that other countries in the future will sign on and become, uh, part of the Trans-Pacific Partnership. So South Korea, for instance, has already said it wants to be added as soon as possible. 19:52 Uh, Indonesia and the Philippines have similarly indicated an interest in, in joining. Um, and, and there is talk that at some point China might well be interested in joining. 20:04 So potentially, I think the most consequential of these regional trade agreements ever negotiated. 20:11 Over time, the idea in these regional agreements is, in fact, that all tariffs will be eliminated, and that's true in the case of almost all industrial goods. 20:22 Um, some of it takes a very long time, like autos, for instance. The United States is taking almost thirty years to phase out its tariffs on, on autos. 20:31 Um, but eventually you will see in the TPP zero tariffs on all industrial goods. I mean, in some ways, this is a very old idea. So, um, the, the United States and, and, and, uh, 20:48 almost two dozen other Asia-Pacific countries way back in the nineteen eighties formed something called APEC, the Asia-Pacific Economic Cooperation, uh, Agreement. 20:58 And, and the idea was that at some point that would actually become a proper trade agreement. And so that would be the vehicle to achieve trade liberalization in the Asia-Pacific. 21:07 For a variety of reasons, that never happened. TPP had a slightly different origin. It was originally started as a very small trade agreement. I think it was New Zealand, Singapore, Brunei, and Chile. 21:19 So it was a very sort of odd, idiosyncratic little agreement that would have linked, uh, um, you know, a Western Hemisphere country, Chile, with, with several, um, Asian countries. 21:32 Um, what happened was that the United States, um, in the late part of the Bush administration, so this was two thousand and seven, two thousand and eight, um, uh, said to these countries, you know, "We would like to join and become part of the TPP and make this a bigger undertaking." 21:50 So once the United States joined, it became a much more substantial project. 21:55 And a, and a number of the countries that the United States already had free trade agreements with, uh, Australia, Canada, Mexico, said they wanted to become part of the, the TPP as well. 22:06 And then the big breakthrough was the decision by Japan several years ago that it wanted to enter into the TPP negotiations. 22:14 So it, you know, it started as a kind of idea back in the nineteen eighties, became a small reality in the mid-two thousands with these initial countries, and then, and then over the negotiations the last, uh, decade really has become a, a, a, a very large trade agreement. 22:32 China is the, uh, I say the world's, uh, largest exporter of manufactured goods. The UK is the world's second-largest exporter of services. 22:41 We have a, a central objective to work together to resist protectionism in all its forms, to reduce barriers to trade and investment, to develop new markets, to expand world trade, to see greater progress, uh, on the Doha Round. 23:00 If the TPP is concluded successfully, I think there will be a lot of incentive to try to expand this into something that looks like a new global agreement, whether, uh, going back to Geneva and restarting the negotiations in what's called the Doha Round, or else expanding the TPP to include other countries and then maybe the US and the EU conclude the TTIP successfully, possibly that expands as well. 23:26 I also think it's quite possible that several of the countries that have been the most opposed to moving forward on a new global round are, are-- will find themselves on the outside of these new trade arrangements. 23:42 So if you've got the TPP, if you've got the TTIP between the United States and Europe, well, what are the big economies that then are outside? Uh, China, India, Brazil. 23:53 Well, these are all the countries that have been the biggest obstacles to moving forward on the Doha Round. 24:02 So I, I think that, that the TPP and certainly TPP plus TTIP change the, changes the incentives for these countries. 24:11 And so they have to decide, well, do we wanna remain outside these trade arrangements and just live with that economic disadvantage? Or do we wanna find a way to, to, to get back inside? 24:22 And, and I, I think for, for some of these countries, their calculation will be, well, it's better off to go back to Geneva and try to restart, uh, the Doha Round and produce a global agreement there rather than having, say, to try to join the TPP on, on American terms. 24:40 So I just-- I think it creates a, a very interesting dynamic that hasn't existed for a long time. 24:46 Uh, really, you know, twenty years you have to go back to the end of the Uruguay Round negotiations that created the WTO, the last time there's been this kind of interesting dynamic in, uh, in global trade arrangements. 24:59 So you, you, you, you, you could see this moving forward into a whole new architecture of global trade rules. Clearly, if the TPP fails, I think that project fails as well. And so, 25:13 uh, countries, I think, will be forced back into doing one-off bilateral trade agreements because that's the only way they'll be able to continue moving forward. 25:21 So I think it would be bad news for global trade rules if the TPP fails. There are also, I think, diplomatic consequences for the United States. Uh, this is, this is the, the biggest US initiative towards Asia. 25:35 It's extremely important for US allies in Asia. It's seen, uh, in Asia as a signal of the US willingness to remain deeply engaged economically in the region, to serve as a kind of counterweight to China. 25:51 And so I think there would be, there would be very negative diplomatic consequences in Asia if the TPP fails as well. [upbeat music] Mr. 26:01 President, the United States is in the final stages of negotiating the Trans-Pacific Partnership, a massive free trade agreement. And I come to the floor today to ask a fundamental question. 26:12 Who will benefit from the TPP? American workers, consumers, small businesses, taxpayers, or the biggest multinational corporations in the world? 26:23 Uh, the United States, I, I, I think will be by far the most difficult ratification fight. Um, the United States is very, very divided internally over the costs and benefits of these free trade arrangements. 26:39 The President Obama's own Democratic Party is now almost entirely opposed to continuing these sorts of trade agreements. 26:50 So there are only maybe two dozen Democratic members of, of the Congress out of, um, you know, some hundred and eighty members that the president can rely on to support the Trans-Pacific Partnership. 27:07 So he's going to be almost entirely dependent on support from the opposition party, from the Republican Party, in order to move this agreement through the Congress. 27:17 So the Republican Party, at least in its modern history, has been a free trade party. But there are, you know, there are a, a series of issues that could cause particular members of Congress to oppose the issue. 27:32 Australia has insisted in this agreement that tobacco be carved out, that tobacco companies no longer be allowed to use the investor-state arbitration provisions, and the United States has agreed to that. 27:45 But there are, uh, a handful of members of the Congress from tobacco-producing states who are Republicans who are very angry about that provision and have indicated that they might vote against the agreement on, on those grounds. 28:01 Um, there are provisions in the agreement having to do with effectively patent protection for these new classes of what they call biologic drugs, which are drugs that are essentially derived from the human genome in various ways. 28:17 Uh, Humira is the sort of best known of these new biologic drugs. Um, the United States, US companies that manufacture these wanted much longer periods of protection than they got in the agreement. 28:29 And so there are some members of Congress who've suggested they might oppose the agreement on that, uh, ground. 28:35 There's talk about maybe the US going back to its TPP partners and seeing if it can renegotiate some of these provisions. I think that's very difficult in a, in a big, complicated trade agreement like this. 28:47 So, so and then, then on top of that, all of this is happening in the midst of a presidential election year in the United States, in which leading candidates of both the Republican and Democratic parties have come out in opposition to the TPP. 29:02 So this agreement faces an extremely difficult battle in the United States. I do think the TPP will be ratified successfully. 29:13 I think the, the diplomatic and foreign policy stakes for the United States are very high here. 29:19 You've got important allies, Japan in particular, that have, have taken some real domestic political risks to negotiate this agreement. And I think for the United States to turn its back on the TPP at this point, 29:36 after all the work that has gone into it, uh, I think would send a tremendously bad signal to the region. And, and, and therefore, I think at the end of the day, 29:46 Congress will understand that and will agree to move forward. I, I don't, I don't know what the timing will be. I, I think it could well take a year or more before Congress acts on this. 30:00 But at the end of the day, I do think the TPP will be ratified successfully, and it will move forward. And, and I think if the TPP is successful, that will put a lot of pressure on the US-EU negotiations. 30:10 The Europeans aren't going to want to be left on the side. So I think if TPP concludes successfully, then, then the TTIP, uh, probably will as well. Thank you, Edward, for sharing these insights. 30:22 And thank you, dear listener, for your interest. Trendlines is now available on iTunes. 30:28 So if you are looking for an easy way to subscribe, please use iTunes on your computer or your podcast app of choice on your smartphone and search for Trendlines. 30:36 You can also use the RSS feed to subscribe, which is available on worldpoliticsreview.com, just like the show notes with links to articles covering all the issues we talked about today. 30:48 This show was produced and presented by me, Peter Durie. You can use Twitter to follow me and World Politics Review. 30:54 The additional audio in the report was sourced from the WTO, The White House, Associated Press, and Senator Elizabeth Warren. Thank you for listening, and please join us next week for the next episode of Trendlines. 31:07 [upbeat music]
