THE BLOG

A Pacific Trade Deal Won't Stop China's Reckless Rise

06/10/2015 04:34 pm ET | Updated Jun 09, 2016

President Obama repeats a mantra on the Trans-Pacific Partnership (TPP) trade agreement: "If we don't write the rules, China will write the rules in that region...." But two recent revelations of major Chinese misbehavior -- another massive cyber hack, this time of the Office of Personnel Management database, and the build-out of South China Sea coral reefs complete with airstrips and artillery vehicles -- put the lie to Mr. Obama's claim that "if we write the rules," China (a) will have to conform to our business norms, and (b) will be constrained in its activities in the East and South China Seas.

The President's claim is dangerous nonsense because it undermines our national security -- by minimizing the challenge that China presents on all fronts and by downplaying the necessary U.S. response. Trade in the form of the TPP, Mr. Obama apparently thinks, will conquer all.

To win votes for his legacy trade deal, Mr. Obama is implicitly promising a continued American hegemony, or at least predominance, in the western Pacific through the TPP. But the truth is that U.S. power is lessening absolutely -- and relatively to a rising and increasingly aggressive China. And this trend will continue in spite of any TPP because we are simply not generating the wealth necessary to maintain our status as the world's sole superpower. The constant erosion of our manufacturing and technology base, and the accumulation of $18 trillion of national debt (with $7 trillion on President Obama's watch alone), is at the root of the problem. Neither the president nor any one else has ventured to explain how the TPP will allow us to restore our wealth-creating industries, balance our trade, and pay down our national debt in any meaningful way -- simply because it won't.

Instead of serious discussion and hard analysis, there is, starting in the White House, a pro-TPP campaign of clever slogans, "write the rules," "vast Asian markets," "consumers outside the United States," "pivot to Asia," "contain China." But Obama's much touted pivot-to-Asia is in fact not possible because the United States can't pivot. The country is mired in the new Bush-Obama-Vietnam-in-the-Middle East, and will be for years to come. And of course, the suddenly security-minded president is the same one who is cutting American military power to the bone, courtesy of a sequester he helped foster and his personal preferences. All the while global military challenges multiply.

The cyber hack and the airstrips are not random events but just the latest indications that China doesn't play by any rules other than its own -- and certainly not by any rules that the Obama administration might write. China is emphatically not a rule-writing, rule-of-law country. Unlike Mr. Obama, the Chinese Politburo and General Staff did not get steeped in Anglo-Saxon common law at Harvard, but operate in a no-holds-barred manner to advance Chinese interests and power. It might be hard for someone determined to lessen America's place in the world to grasp that China (and Russia) seek to expand influence through both hard and soft power.

Defense Secretary Ashton Carter calls China's island-building a violation of international law. The latest hacking incident is another egregious violation. After 13 years of membership, Beijing is still in violation of its WTO obligations on trade. The same is true for its extensive currency manipulation over this period -- a clear violation of its IMF obligations. In short, the rules are whatever Beijing wants and needs them to be. The TPP will not make one whit of difference. And it is naive to assume that China, even if were to join the TPP, would not cut separate deals with other TPP members in spite of rules to the contrary, such as ignoring human rights violations in Vietnam or Malaysia, thus undermining the very 'rules' that the president says will make us so secure.

The president's national security "strategy" is clearly designed for Republicans, whose votes he must have to pass first fast track trade authority and then the TPP itself. It may be somewhat surprising that the peace-oriented president is appealing to Republican hawks -- and that fact alone should make them suspicious, but it should be more surprising that the Republican hawks are apparently buying into the president's 'China security strategy' so unquestioningly. Apparently security claims made in advancing a so-called free trade agreement are given the same no-look intellectual pass as the agreement itself, so enamored are most Republicans with anything with a free trade label.

However, the president's claim that TPP will provide a bulwark against China's rise is a 'fact free zone.' This is the president whom Republicans think is an utter failure in foreign policy: witness the Russian 'reset,' the encouragement of the Arab spring, the abandonment of an Egyptian ally, the tilt toward Palestine, the state of US-Israel relations, the red line on Syria, the lead-from-behind on the now failed state of Libya, the release of five Taliban for Sgt. Bergdahl, the premature withdrawal from Iraq and the collapse of the Iraqi army, the vast swath of territory controlled by the JV ISIS, the Russian seizure of the Crimea and eastern Ukraine, the collapse of Yemen, the alienation of Saudi Arabia and the Gulf states, the dubious nuclear negotiations with Iran. The list goes on, but the president, for Republicans, has suddenly become a foreign policy genius in containing China.
 
Beijing, for its part, is unconcerned about Mr. Obama's policies or opinions. Just look at their establishment of an "ADIZ" (Air Defense ID Zone) in the East China Sea that now threatens U.S. and Japanese aircraft. Or the near collision of one of their ships with a US destroyer. Or their buzzing of a U.S. P-8 reconnaissance aircraft. Or their decision to MIRV their ICBMs. China is also rapidly expanding its offensive capabilities in anti-ship, anti-carrier, anti-satellite weapons, as well as hyperkinetic kill vehicles, computer/IT warfare, and stealth aircraft. This is not a country to worry whether America signs a trade deal that includes such lightweights as New Zealand, Singapore, Malaysia, and Brunei.

Overall, the TPP will involve 37% of the world's GDP. The U.S. and its current Free Trade Agreement (FTA) partners already represent 80% of that amount. Japan constitutes 18%. The remaining four countries being brought into the TPP offer a combined GDP of 2%. China isn't concerned about losing market share to the United States in these junior partners, nor do they and others provide any possible counterweight to Beijing's growing military might. The argument is made that TPP will 'solidify' our military relations with these countries, in particular Japan and perhaps Malaysia. One wonders how many more American jobs and factories we have to outsource to these countries in order to be allowed to defend them.

The U.S. sent roughly $342 billion to China last year via our massive trade deficit. Considering that China's defense budget is reliably estimated at around $150 billion, America is literally arming China through this trade imbalance. Ironically, because we continue to fuel China's rise, the Pentagon is now obligated to spend a greater share of its budget in order to meet the threat we are helping to create. By contrast, the TPP is projected to grow US GDP by only .04 percent and add a measly $70 billion to our economy by 2025.

Sadly, the TPP will not alter China's military trajectory one bit. In truth, if President Obama were serious about curbing China's military power and expansionism, he would end our toleration of Beijing's currency manipulation, massive subsidies for state-owned industries, forced technology transfer from American companies operating in China, and other trade cheating -- which have cost the U.S. trillions of dollars and millions of jobs. Direct action on these paramount issues by the Obama administration doesn't require a TPP. We have what China wants: a rich and large market that we control. That is leverage enough and we must use it while it still exists.

China must look at the Obama TPP national security claims and laugh. So it is a wonder that Republicans do not. The Obama 'policy' is nothing less than a gilded invitation for China to continue its expansion. If Republicans gave even the most cursory look at our prospective TPP partners' varied reactions to the reef build-outs, they would see these putative allies are not necessarily eager to side with the United States against China. And the U.S. struggle to mount a credible response to China's reefs campaign -- perhaps overflights or maybe a sail-by to show that we do not regard them as Chinese territory -- indicates the difficulty of containing a rogue state, especially one that is their chief trading partner. In short, the TPP countries do not view the agreement as an all-encompassing response to their security or economic needs. Unfortunately, many in Congress and the policy/pundit class do. But the world is much more complicated that that.

So it's quite remarkable that the national security-advocating Republican Party has not challenged the President on his fanciful China TPP claims. Apparently, they are so wedded to free trade theory that they think it is a cure-all for national security ills as well. To believe that Beijing will suddenly feel chastened or constrained by a signed TPP is naive and dangerous. And, despite President Obama's rhetoric, it's hard to envision China suddenly choosing to play by rules which have never mattered to them before.

Kevin L. Kearns is President of the U.S. Business & Industry Council (USBIC), a national business organization advocating for domestic U.S. manufacturers since 1933.