Wendy Cutler: Why Free Trade Standards in Asia Are Rising
ASPI Vice President Wendy Cutler discusses how she sees the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership as occupying different points along “a continuum of trade liberalization” rather than competing. (2 min., 45 sec.)
Officials are gathering in Manila this week for the 2015 Asia-Pacific Economic Cooperation meetings in the wake of a big change to Asia’s economic landscape: the conclusion of the Trans-Pacific Partnership (TPP). Asia Society Policy Institute Vice President Wendy Cutler, who recently served as Acting Deputy U.S. Trade Representative, sees the TPP as a major step toward integrating Asia’s economies.
“Since TPP has been concluded, a number of countries have publicly expressed varying degrees of interest [in joining], including Korea, Indonesia, and the Philippines. And I suspect, although I’m no longer part of the administration, that there are other private conversations going on [at APEC] about other countries that might be interested,” Cutler said Monday evening during a discussion at Asia Society New York.
“APEC’s very well positioned now in the TPP world because it includes not only TPP members, but it also includes nine members of APEC that are not part of TPP. And so I think APEC can play a useful role in helping to bridge some of those differences between those countries,” Cutler said.
The TPP itself, Cutler said, can also be a catalyst for further opening trade across the Asia-Pacific.
The agreement is on “a continuum of trade liberalization or coverage in terms of the products covered and issues covered,” Cutler said. “I think TPP has really moved the ball forward and is probably at the highest point of that continuum.”
Cutler rejected the notion that the TPP will compete with the Regional Comprehensive Economic Partnership (RCEP), another far-reaching Asia-Pacific free trade agreement that many observers regard as a TPP rival — especially since RCEP includes China.
“I don’t think that they’re competing, and I don’t think [a country] has to choose one over the other,” Cutler said. “One is just more trade-liberalizing than the other.”
“I think the question for RCEP now is, given TPP, should they rush to conclude this agreement? Or should they kind of take a step back and see if they can do more?”
Asia Society Policy Institute President Kevin Rudd agreed, noting that “the overall impetus in East Asia and the Asia-Pacific more broadly is towards free trade.”
“Each set of negotiations has in turn triggered another set to try to re-equalize where the region goes. And therefore over time, you’ll actually see much more free trade in goods and now, critically, services, and a better and more liberal environment for investment than we’ve ever had before,” Rudd said.
Cutler said she expects the TPP to drive economic growth across Asia. She mentioned Vietnam as one member country that is already beginning to see the benefits of joining TPP.
“We’re already hearing anecdotes from companies that, when weighing where to invest in the Asia-Pacific region, are now turning more and more to Vietnam in anticipation of the TPP,” Cutler said. “They will have a stronger IPR regime, they will have protections for services and investment, [and] they will be a platform and have all the preferential access that TPP provides.”
Japan, too, stands to see its economy grow because of “the export opportunities and the growth opportunities that TPP presents,” Cutler said.
“Japan, like others, is going to gain access to a lot of markets. Indeed, Japan has FTAs with a number of TPP partners, but frankly a lot of them are not as trade-liberalizing as TPP is.”
The Trans-Pacific Partnership still needs to be ratified by all 12 countries before it can enter into force — a political process that, Cutler said, “is extremely complex and difficult.”
In the United States, ratification involves gaining congressional approval for the agreement. Because of legislation passed earlier this year, the full TPP agreement is subject to a yes-or-no vote, with no potential for amendment.
“I’m confident that the administration will be able to secure congressional ratification,” Cutler said. “I think there are so many benefits for the United States in the deal, both economic and strategic, and I have to believe that Congress will approve this deal.”
“President Obama has made it very clear that he wants this agreement passed during his presidency,” Cutler added.