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Saturday, July 30, 2016

The Grand TPP Illusion

The Grand TPP Illusion

July 15, 2016 | Clyde Prestowitz
For America’s foreign policy establishment, the Trans Pacific Partnership (TPP) is a grand “twofer.” It will improve U.S. national security by countering China’s growing economic, political, and military power in the Asia-Pacific region. At the same time, it will stimulate U.S. exports and thereby reduce the chronic U.S. trade deficit and create millions of American jobs. Unfortunately, this is a grand illusion based on fundamentally false premises about national security as well as trade and globalization.
The first problem lies in the notion that the United States can buy stronger allies. By fostering more open markets between America and certain countries and by making investment and production in those countries more secure for American and global investors and producers, the countries will become stronger allies on geo-political issues, especially with regard to China. While this sounds logical, especially to those who desperately hope for it, experience demonstrates that the world often doesn’t work that way.
Before World War I, Great Britain and Germany were each other’s biggest trading partners. Germany and France were also major trading partners. Cross investment by industry among these three countries was also substantial. But that did not prevent them from going to war. Before World War II, the United States was Japan’s largest trading partner. But that did not prevent the outbreak of war at Pearl Harbor. Today, China and the United States are among each other’s top three trading partners while U.S. industry is heavily invested in China, and China is the second largest holder of U.S. Treasury bonds. None of that has prevented rising security tension between the two countries. Indeed, as the trade has grown and China has become a richer, more powerful country, the tension has increased, contrary to the forecasts of the foreign policy elite.

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