The Democratic Party’s civil war on trade has taken a sudden national security turn.
Defense Secretary Ashton B. Carter said President Obama’s Pacific trade deal was as important to the military as a new aircraft carrier.
Former State Department official Kurt M. Campbell warned that U.S. diplomacy in Asia would earn a failing grade if the pact, known as the Trans-Pacific Partnership (TPP), perishes in Congress.
“The Asia-Pacific is the single most dynamic part of the globe today and where much of the history of this century will be written,” Secretary of State John F. Kerry said Tuesday during a speech on the trade at a Boeing plant near Seattle. “There’s a need for American leadership.”
As Capitol Hill progressives fan fears of domestic job losses in the rancorous debate over trade, Washington’s Democratic foreign policy elite has mounted a fierce defense of the pact as crucial to the Obama administration’s national security strategy. Behind their warnings lies the uncomfortable truth that some inside the administration view the TPP, a broad 12-nation accord, as a policy aimed foremost at China.
China, America’s top economic rival, is not among the nations negotiating the TPP with the United States. But that nation’s rise, economically and militarily, over the past decade has cast a long shadow over Asia and prompted the Obama White House to pursue new alliances and partnerships.
The trade accord has emerged as the primary symbol of that effort as the administration seeks to convince allies and rivals that the United States is determined to establish primacy in a region that China also is seeking to shape.
“We are better off writing those rules for what is going to be the largest, fastest-growing market in the world,” Obama said of the trade deal during a news conference last week at Camp David. “And if we don’t, China will, and other countries will. And our businesses will be disadvantaged and our workers will ultimately suffer.”
As the president has lobbied his party, the role of China has been a central theme. Democrats, pushed by labor unions, have demanded that the administration add tough provisions to prevent countries from manipulating their currency to boost exports — a move aimed squarely at Beijing, even though economists have said China has eased off devaluing the yuan.
Although the Obama administration has objected to the provisions, saying they could kill the TPP deal, the president suggested late last week that he is discussing options with Senate Democrats.
Fanning fears over China’s rise has been an age-old tactic used by both Democratic and Republican administrations since President Richard M. Nixon helped open relations with that country in 1972. But as the anti-China rhetoric has grown louder on Capitol Hill, the debate over the TPP has presented a test of Obama’s strategy in Asia, which he has said is among the most important of his foreign policy initiatives.
The White House has argued that not sealing a TPP accord would leave a vacuum that China would rush to fill, setting its own presumably lower standards in the region.
Yet administration aides insist that the TPP is not intended to contain China’s rise but rather to create a regional economic framework that would help coax China to improve its labor and environmental standards in a bid to someday join the partnership.
But the trade pact has increasingly come to be viewed in China as a zero-sum game, playing into Beijing’s worst suspicions of the United States. Chinese President Xi Jinping has aggressively marketed an alternative economic vision called the “Asia-Pacific dream.” The rollout of a piece of that strategy, the Beijing-backed Asian Infrastructure Investment Bank, has won support from U.S. allies including Germany and Britain, despite protests from Washington.
“If TPP is worth promoting, it’s worth promoting on its own merit and is not meant to be a counterbalance to China, which is such a zero-sum mentality,” said Fred Hu, chairman and founder of Primavera Capital Group, a China-based global investment firm. “I’m so appalled. I think the TPP has a number of benefits worth promoting to sell to the American Congress and people. But they are narrowly framing it as a geopolitical response to China’s rise.”
Although the TPP began as a far smaller deal during the waning years of the George W. Bush administration, Obama and his top advisers decided to support and expand the project at the end of his first year in office. A global economic recession had crippled U.S. financial stewardship abroad, and Obama’s bid to get off to a good start with Chinese President Hu Jintao on a trip to Beijing in 2009 was portrayed by the U.S. media as appeasement of a rising power.
By 2010, the White House sought to take a tougher line with Beijing, and the administration began to view the TPP as a way to prove to other Asian countries that the United States was intent on establishing deeper economic ties to complement an American military buildup in the region, a strategy dubbed the “pivot” or “rebalance” to Asia.
“We needed a concrete win-win economic element of the rebalance. This was the best path forward,” said Thomas E. Donilon, Obama’s former national security adviser, who left the administration in 2013. As the United States pursued the TPP, as well as another large trade pact with Europe still under negotiation, the breadth of the U.S. economic engagement would have “a positive effect on reform in China,” Donilon added, comparing it to the price of China’s entry into the World Trade Organization in 2001.
Yet the latest signs in Beijing indicate that Xi’s administration is intent on sowing doubts about Washington’s commitment to the region. In a recent editorial, the state news agency Xinhua touted the “positive responses” to the Asian infrastructure bank.
“By contrast, the losing economic ‘Pivot to Asia’ strategy is advancing like a ‘lame duck,’ ” Xinhua stated in the editorial. “This is undoubtedly unsustainable, and it is also dangerous.”
The risk of framing the TPP as a hedge against China’s growth to win votes on Capitol Hill is that lawmakers, while happy to bash Beijing, are unlikely to vote for the deal based on geopolitics, said Kenneth Lieberthal, a China analyst at the Brookings Institution.
“You would have trouble finding ones voting on the basis of an abstract argument about our standing in Asia half a world away,” he said.
In some respects, Obama’s China argument has gone over better with U.S. allies in Asia than it has on Capitol Hill. Japan, despite aggressive objections from its agriculture lobby, joined the trade talks in 2013 amid rising military friction with China over a group of tiny islands in the East China Sea.
This year, South Korea, worried about being left behind, formally asked to join the TPP talks, although the Obama administration has put the request on hold to focus on passing the trade deal through Congress.
But it is in Southeast Asia, an area of modest but fast-growing economies that have at times felt neglected by the United States, where the contest between Washington and Beijing could have longer-term strategic implications. Brunei, Malaysia, Singapore and Vietnam are among the countries negotiating the TPP.
“I’m in Asia most of the year, and China is everywhere,” Tami Overby, senior vice president at the U.S. Chamber of Commerce, told a congressional panel this spring. “They’re very aggressive.”
Clyde V. Prestowitz Jr., who was an economic adviser in the Reagan administration, recently returned from a trip through Asia, including a stop in Beijing, and expressed doubts about the Obama administration’s ability to outmaneuver China in the region.
“Other Asian countries do not have trouble dealing with China,” he said. “They’re doing business like crazy with China. They find that Americans come in with something like TPP and insist on intellectual-property protections, changing the way to buy [pharmaceutical] drugs and better protection for foreign investors, and that’s often a pain in the neck to Asian countries. China is much easier to deal with than the U.S.”
That has made the administration’s high-stakes bet on TPP all the more crucial and left Obama allies fearful that defeat in Congress would be a serious setback to U.S. prestige in the region.
“Asia has basically decided that American seriousness will be judged on one issue over the course of the next few years,” Campbell, a former assistant secretary of state for East Asia, said recently. “If we did everything right in Asia . . . and did not get TPP, we can’t get a passing grade.”
Simon Denyer and Liu Liu in Beijing contributed to this report.