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The Economics of Strategic Containment

NEW DELHI – At their recent summit in Cannes, the G-20 shelved, if not buried, the World Trade Organization’s moribund Doha Development Round of multilateral trade negotiations. Crisis-weary Europe and America face a rising tide of protectionism at home, and are trying to find ways to blunt the edge of China’s non-transparent trade competitiveness.

Turning his attention from the Atlantic to the Pacific, US President Barack Obama – with his eye, once again, trained on China – has now unveiled a new regional trade initiative. Why was the US unwilling to move forward on the Doha Round, but willing to pursue a regional free-trade agreement?

The answer lies in the fact that the Trans-Pacific Partnership (TPP), launched by Obama and the governments of eight other Pacific economies – Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam – is not just about trade.

While Obama chose to stick to the economic factors driving the TPP, US Secretary of State Hillary Clinton, on the eve of the just-concluded Asia Pacific Economic Cooperation gathering in Hawaii, laid out the initiative’s wider strategic context. “The United States will continue to make the case that….[the region] must pursue not just more growth, but better growth,” which “is not merely a matter of economics,” Clinton said. “Openness, freedom, transparency, and fairness have meaning far beyond the business realm,” she continued. “Just as the United States advocates for them in an economic context, we also advocate for them in political and social contexts.”