David Pilling of the FT has written a great column about US’s response to China’s AIIB, which many countries–including U.S. allies–against U.S. pressure jumped on. So I will summarise the mainpoints.
US’s countermove is the Trans-Pacific Partnership. It will be a major trade initiative since the WTO’s 2001 Doha round. It will bind US and Japan into a bloc covering 40% of global output. It is the commercial equivalent of US military engagement of the region–“trade pivot”.
Obviously, China is not invited to take part, which as Pilling points out, is a big piece of cake to miss out, but is precisely the point. The excuse is that China’s economy is still not market enough. Just maybe it is aimed to urge further economic reforms, but China may not be interested, already engaged in Regional Comprehensive Economic Partnership.
Will the TPP be successful?
It has already upset people in both participating countries and America itself for its intrusive policies:
goes beyond tariff reduction to deal with “behind the border” issues
thought to impede trade and investment. These include tendering
processes, financial regulations, data protection rules and intellectual
Bremmer, president of the Eurasia Group consultancy, says the vote on
trade promotion authority will be “razor thin”, though he believes
ultimately Mr Obama will prevail.
Even if TPP is finally concluded, the chances are it will be too
watered down to satisfy trade purists and too intrusive to please
Washington’s Pacific partners. For Beijing, fresh from its triumph over
the infrastructure bank, the whole spectacle must be quite amusing”