SINGAPORE -- The Trans-Pacific Partnership, the moribund U.S.-led multilateral regional free trade framework, should have included China as an observer, said veteran U.S. trade negotiator Charlene Barshefsky at a forum in Singapore on Saturday.
The former U.S. trade representative said President Donald Trump's decision to pull out of the pact on his first day in office was "dangerous" to the global economy. Trump withdrew to fulfill an election promise, but the move has worried U.S. trading partners that Washington is becoming protectionist.
Barshefsky said the TPP was "one of the responses" to a more nationalist Chinese economic policy under President Xi Jinping. "Instead of taking [TPP] as a systemic approach to moving China back to reform by globally acceptable means, the [Trump] administration pulled out, leaving a vacuum [and] China's more mercantilist approach largely unchanged, undisciplined," Barshefsky said. "That's extremely dangerous for the global economy."
Barshefsky, who was a part of the talks that brought China into the World Trade Organization in the late 1990s and early 2000s, spoke at a panel discussion on international trade titled, "Staying Interconnected and Interdependent," at the Singapore Summit.
"China should have been in the room as an observer the entire time," Barshefsky said. She called the decision to exclude Beijing a mistake in U.S. trade policy. She also noted that the global trade framework under the WTO is the "best way" to move trade liberalization forward, and said the U.S. should have worked to find a better formula.
In the same panel discussion, Peter Costello, Australia's former treasurer, said: "We would very much like to see TPP go ahead," noting that there is a move among the 11 countries remaining to revive the deal. Costello pointed out that one of the reasons for the surge in trade nationalism is "the perception that international organizations have failed."
Ken Kobayashi, chairman of Japanese trading house Mitsubushi Corp., called on governments to revive the TPP. "Definitely we need an international framework for free trade, before protectionism [starts] taking root," he warned. Echoing Costello, Kobayashi said: "We need to quickly conclude TPP."
He said the TPP 11 agreement must be "high quality," like the original. "Hopefully, we will conclude in principle within this year. It is quite important because TPP 11 could become a so-called benchmark regional trade agreement [for others] including RCEP," Kobayashi said, referring to the Regional Comprehensive Economic Partnership, an Asian trade pact that includes China.
Kamal Nath, India's former minister for commerce and industry, said regional trade agreements are very important because they are "building blocks to the WTO." He stressed the importance of promoting rules in trade, rather than trade liberalization itself. Such rules, which include areas such as intellectual property rights protection, should also cover trade in services, he said.