The ‘elephant in the room’ for the AEC, part 3
Over the past two issues we have been looking at what is arguably the greatest threat to the future success of the AEC in trade terms, the Trans-Pacific Partnership (TPP).
The TPP currently has 12 member states, including four AEC members: Singapore, Brunei, Malaysia and Vietnam.
The Thai prime minister, Prayuth Chan-ocha, was quoted at a speech in the United States saying Thailand would probably join the TPP at some point, although no timeline has yet to be announced for this.
As noted in the last issue, ‘There is a strong possibility that trade and investment could potentially be diverted from the current six non-TPP Asean members to countries that are members of both the TPP and AEC. This is simply because of the benefits the TPP offers to its members, such as lower trade barriers and better protection for foreign investors.’
The TPP has had plenty of negativity surrounding its launch, from a wide variety of people and organisations. The Nobel Prize-winning economist Joseph Stiglitz suggested the TPP would result in further inequality with the regulations harmonization in the TPP leading to a ‘race to the bottom.’ Stiglitz claimed the TPP would only enrich corporations and, “will not necessarily help those in the middle, let alone those at the bottom.”
Echoing these concerns was UN human rights expert Alfred de Zayas who argued the TPP merely served to strengthen the bargaining power of investors as well as transnational corporations’ monopoly over public expenses. At the same time the TPP’s provisions would lead to reduced labour standards, food security, health and environmental protection.
Medecins Sans Frontieres (MSF), along with 50 other groups, sent a letter to the US Congress expressing concern about the TPP. They argued the agreement’s strict patent protection would increase the price of medicine and healthcare. MSF wrote that, “The stakes for public health are too high.’
Complicating matters even more is that all members of the AEC are presently negotiating with six trading partners regarding what is called the Regional
Comprehensive Economic Partnership (RCEP), which is basically China’s response to the TPP.
The RCEP is potentially huge considering it embraces 3.4 billion people (or about 49 percent of the world’s population), and a collective GDP of $21.7 trillion, which is the equivalent of 29 percent of global GDP, admittedly less than that commanded by the TPP.
There is some general feeling the RCEP could be a much more economically ‘friendly’ trade agreement than the TPP.