EU and US Trade Policy and its Global Implications (TPP, TTIP and China)

07-07-2014

The focus of US foreign policy has shifted to Asia in a dramatic way. With the ‘pivot’ strategy, the US intends to reaffirm its political role in the region and secure a stronger economic position, not least by concluding an ambitious Trans-Pacific Partnership (TPP) agreement. The new strategy will inevitably have an impact on China, and may be seen as a US response to China’s increasing assertiveness in world affairs. As a result of the global economic crisis, the US has also adopted a forward-looking foreign trade strategy aimed at rebalancing external deficits, create new jobs and increase industrial production in the US. In pursuing these economic aims, the US has essentially turned towards Asia, apparently at the expense of its preferential relations with the EU. With the launch of the US-EU Transatlantic Trade and Investment Partnership (TTIP) in 2013, the scenario changed dramatically, with the US negotiating two major deals at the same time. Its economic focus notwithstanding, the TTIP has strong and obvious political implications that are not without risks for the EU. In this context, China faces a serious dilemma. As joining the TPP on the conditions set by the US does not seem to be a viable solution, Beijing is left with two alternatives: to strengthen it hold over Asian economies or to conclude an ambitious deal with the EU. Both options are feasible, but neither is without consequences.

The focus of US foreign policy has shifted to Asia in a dramatic way. With the ‘pivot’ strategy, the US intends to reaffirm its political role in the region and secure a stronger economic position, not least by concluding an ambitious Trans-Pacific Partnership (TPP) agreement. The new strategy will inevitably have an impact on China, and may be seen as a US response to China’s increasing assertiveness in world affairs. As a result of the global economic crisis, the US has also adopted a forward-looking foreign trade strategy aimed at rebalancing external deficits, create new jobs and increase industrial production in the US. In pursuing these economic aims, the US has essentially turned towards Asia, apparently at the expense of its preferential relations with the EU. With the launch of the US-EU Transatlantic Trade and Investment Partnership (TTIP) in 2013, the scenario changed dramatically, with the US negotiating two major deals at the same time. Its economic focus notwithstanding, the TTIP has strong and obvious political implications that are not without risks for the EU. In this context, China faces a serious dilemma. As joining the TPP on the conditions set by the US does not seem to be a viable solution, Beijing is left with two alternatives: to strengthen it hold over Asian economies or to conclude an ambitious deal with the EU. Both options are feasible, but neither is without consequences.