Behind the Trans-Pacific Partnership talks
- By Dan Steinbock
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E-mail China.org.cn, June 8, 2015
Recently, President Obama said on the U.S. public radio that China could eventually join the Trans-Pacific Partnership (TPP) agreement: "They've already started putting out feelers about the possibilities of them participating at some point." However, that statement may reflect even more the White House's concern about an impending TPP vote in the U.S. House of Representatives.
Only a day before the President's statement, Wikileaks had announced an effort to crowd-source a $100,000 reward for the remaining chapters of the TPP deal (it has released three draft chapters of the deal in the past). "The transparency clock has run out on the TPP," Wikileaks founder Julian Assange urged. "No more secrecy. No more excuses. Let's open the TPP once and for all."
What's going on behind the TPP façade?
Why the Obama administration wants the trade deal?
Not so long ago, analysts were still predicting the U.S. growth rate to exceed 3 percent in the years to come. Then came still another harsh winter and U.S. economy contracted -0.7% in the first quarter; almost a percentage point more than initially expected, according to revised data.
In addition to climate change, the short-term reasons extend from strong dollar and labor disputes at West Coast ports, to the plunge of oil prices, whereas consumer spending remains slow. Disinflation may continue until the fall. After contracting three separate quarters since the end of the recession in mid-2009, the current recovery has proved most disappointing since the 1950s.
As Washington is preparing for the post-Obama era, America's economic growth is suboptimal relative to its potential. The proposed "free trade" deals with Europe and Asia are not likely to reverse the long-term growth trend.
In the medium- and longer-term, U.S. innovation and competitiveness have historically supported productivity and growth. Today both are eroding. America's structural erosion in innovation continues, as evidenced by significant shifts in student performance, R&D, and patents.
Since 2000, the U.S. has no longer been featured in the OECD's top-10 PISA (Program for International Student Assessment) lists for mathematics, science, or reading. America's share of the higher-quality triadic patents, which reflect international innovation race, has decreased to less than 30 percent.
U.S. companies still account for more than a third of R&D investment by the top 2000 companies worldwide. However, China's share of R&D spending has grown by a factor of 15 over the past decade, while spending has decreased in Europe (-1%) and North America (-6%).
While America continues to lead in the international competitiveness rankings, the latter look into the future by staring at the rear-view mirrorand China is likely to surpass Europe in R&D spending by the late 2010s and the U.S. by the early 2020s.
Since new innovation advantages are less likely to support U.S. competitiveness and twin deficits continue to prevail at home, the White House has been pushing its free-trade agreements aggressively abroad.
But the proposed pacts are less about free trade and more about geopolitical alliances.
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