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President Obama talks trade

How the TPP will drive domestic reform in Asia

Tracey Samuelson Oct 7, 2015
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It’s easy to think the TPP is all about trade, how much sugar or dairy one country can sell to another. But trade agreements can also be about changes countries may want to make for themselves.

In an interview with Marketplace’s Kai Ryssdal, President Obama gave a nod to the idea. The TPP, he said, “will strengthen the hand of reformers inside China.” 

China is not a member of the TPP, and it’s not clear what sort of change it could drive there.

But “these kind of trade-liberalization efforts are not just drivers of reforms; in a lot of cases they are the actual reforms themselves,” said Nick Consonery, an analyst with with Eurasia Group.

In Japan, for instance, Prime Minister Shinzo Abe has been pushing a package of reforms. For one, he’d like to tackle protections and subsidies for Japanese farmers.

“He would like to get them to really pull themselves up by their own boot straps,” said Scott Seaman, another Eurasia Group analyst, “and refocus their attention on growing the sorts of things that can be very profitable, not only in Japan, but also in external markets.”

Peter Petri, a professor at Brandeis, said trade deals can give politicians some distance from reforms that might cause pain at home.

“The Japanese call this ‘gaiatsu,'” Petri said. “It’s when you use foreign pressure to do the things that you know you have to do but are politically very difficult.”

Vietnamese officials also said they want to use TPP to push domestic reforms, including limiting support for state-owned enterprises.

“And if they say this is an unmatched opportunity for us to be able to export to the U.S. and Japan and other TPP members, and you got to bite the bullet, it gives them a reason to drive those reforms over domestic opposition,” said Derek Scissors, with the American Enterprise Institute.

But Scissors cautioned that we can’t say how much change the TPP might spur until we know more about the terms that were agreed to this week.

 

 

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