Singapore Prime Minister Lee Hsien Loong met with President Obama and Vice President Biden, among others, during his Washington trip in June. Image: The White House.

Trade Pact Crucial to America’s Rebalance to Asia


During his June 2014 visit to the US, Singapore Prime Minister Lee Hsien Loong stressed the strategic importance of the Trans-Pacific Partnership (TPP) to the US. He said the multilateral trade agreement provided the crucial economic component of the US re-balance to Asia and failure by the US to conclude and ratify it would “call into question the whole story of your commitment and your engagement…it would be very, very, damaging”.

Why is the TPP of such strategic importance for the US?

Ever since the arrival of Commodore Mathew Perry’s warships in Tokyo harbor in 1853, and then Washington’s Open Door policy on China enunciated in 1899, both commercial and strategic interests together have driven US policy on Asia. Today, as global economic power tilts towards the East, Asia’s importance to the US is greater than ever.

Yet there is a troubling trend. Whereas during much of the post-World War Two period, and until recently, the US was the Number One or Number Two trading partner of most East and Southeast Asian countries, today this place has been assumed by China. China is seeking to bring these countries, including some of America’s allies, into its economic—and geopolitical-- orbit. The US is at a disadvantage in this game because it is not a member of any of the Asian regional arrangements that are seeking to advance free trade, such as the ASEAN Plus Three or the broader Regional Comprehensive Economic Partnership.

There is a clear danger that US commercial and strategic interests will suffer in this increasingly integrated region under rising Chinese influence, with deleterious longer-term implications for US jobs and prosperity and for America’s position as the world’s pre-eminent power. The stakes are high. Countries on China’s periphery in Northeast, Southeast and South Asia, could have a combined GDP of over $20 trillion by 2030. Add to this China’s GDP being projected to reach over $20 trillion by 2030 (Price-Waterhouse Cooper, January 2013) and you have the makings of a very powerful economic region approaching $50 trillion in GDP in just over a decade and a half from now.

A successful conclusion and ratification of the TPP will bind America to some of the key East Asian economies while leaving open the possibility of others, including China, joining later. In the process it will create a trans-Pacific free trade area which ensures full US access and participation in Asia’s trade and commerce and also anchor America strategically in the region.

Countries like Japan, Vietnam and Malaysia are convinced of their need to join the TPP even in the face of significant domestic hurdles. Malaysia’s Prime Minister Najib Razak for example has said that “people [of Malaysia] should bear in mind the cost of not being part of the TPP.” The interesting question here is, do the American people, presently tired of foreign entanglements, know the costs to the US if the TPP does not come into being?

Wise leadership is needed in Washington DC, in the US Administration and in Congress, to override short-term political considerations to get the TPP finalized for America’s longer-term advantage.

Daljit Singh is a Senior Research Fellow at the Institute of Southeast Asian Studies (ISEAS), Singapore, and the Editor of the institute’s annual publication, Southeast Asian Affairs.