Sea Lanes: TPP, Globalization and Empire – Arnie Saiki

When President Obama announced the “Pacific Pivot” last November–shortly after the APEC meeting in Honolulu– he described a shift of economic and military resources to the Pacific region and reiterated the new policy for U.S. presence in the Pacific that Secretary of State Clinton proclaimed in her bullish article “America’s Pacific Century,” published last October in Foreign Policy Magazine. “Our enduring interests in the region demand our enduring presence in the region,” Obama declared, “the United States is a Pacific power, and we are here to stay.” As Obama goes on to affirm U.S. alliance with Japan, Korea and the countries of South-East Asia it becomes apparent– if not simply by exclusion– that he is asserting a China containment strategy.

Further in his speech, Obama acknowledges that the United States will continue to “build a cooperative relationship with China.” This polite equivocation concerning China is as much a part of the U.S-China strategic and economic policy as militarization is, and this diplomatic language reaches beyond the discussions over military hegemony, and into economic persuasion of trade and currency valuation (as predicated by the dollar’s competition with the BRICS economies).  As China expresses that it hopes to participate in the Trans-Pacific Partnership (TPP); or when the U.S. Trade Representative expresses that China might one day join, I am reminded of FDR’s maxim on cooperation, “Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.” The caveat being, however, that economic cooperation between China and the U.S. are incompatible as long as China and the U.S. remain firm on their economic policies.

TPP vs BRICS

What I would put forward of Globalization and Empire, is that the TPP is a $20.5 trillion dollar (GDP) trade cooperation competing for control over the Pacific region, while the BRICS  is $14 trillion (GDP) in its present alignment. Additionally, China is resource-rich Africa’s biggest trading partner, and the UAE and Japan have already signed bilateral agreements to trade with China on their own currencies. As the TPP economies and BRICS economies are competing for resources in emerging and developing countries, it is shaping up like two teams about to engage in geopolitical football, with China and the U.S. leading as team captains.

Unlike the Cold War, however, when the U.S.S.R. and the U.S. were competing economic systems, the current economic interdependence between China and the US economies– as represented by the global-supply chain streamlining the manufacturing and transport of goods at every stage of production– have created a co-dependency that affirms how US-China trade relations are in step. Where this alignment begins to falter are in the differences over financial capital and Foreign Direct Investment (FDI) in developing and emerging economies, and it is one of the key differences to what divides TPP and BRICS.  In other words, rather than competing ideologies, we are looking at competing investment models.  Development/Aid creditor arrangements as practiced by the IMF and the World Bank dislike the state-owned Chinese model of commodity-secured credits. As western-style financial investment requirements are measured against an annual rate of return (we often hear the standard 5% three-year rate), Chinese state-owned creditors remain a step ahead in that these state-owned investments do not require a structured rate of return although this may be changing as China is relaxing their private qualified foreign institutional investor (QFII) rules.  In addition, developing countries seeking Chinese investment and aid are not bound by the same kind of legal debt demands that the IMF and World Bank require before harsh structural adjustments are imposed.

Another systemic difference between China and US economic development models is the use of the military.  The U.S. investment regime requires security and infrastructure for facilitating private investment, while China, decades away from developing a military that can compete with the U.S. builds infrastructure.  China’s state-owned investment regime has the capacity for attracting lucrative resource extractive contracts from developing countries without the imposition of a military.  Ironically, it should also be noted that, it is the U.S. state-owned military that provides for free-market private investment, and arguably, the same state-owned military that often creates destabilizing conditions in developing countries.

Although the vision of a Free Trade Area of the Asia-Pacific (FTAAP) originally included China, and the proclamation of an FTAAP was the driving force behind the TPP, the meteoric rise of China’s economic influence has also shaped how the TPP is being used to contain China’s economic future.  The militarization of South Korea’s Jeju island, the heightened tensions between the Philippines and China, as well as Vietnam and China, are directly aimed at curtailing China’s access to its normal shipping lanes for the purpose of controlling China’s access to resources and its manufacturing role in the global supply chain. Although tensions over the disputed Spratly Islands have existed for some time, the resumed tensions coincide with both Aquino’s administration seeking further economic cooperation with TPP, and Vietnam’s inclusion as a partner in TPP negotiations.

Further, I would add that the UN Convention of the Law of the Sea (UNCLOS) may be used as part of a strategy to further contain China as new tensions over territorial boundaries have been asserted through the TPP countries. As Mrs. Clinton stated at a Regional Security conference in Vietnam, “The United States has a national interest in freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea,” and asserted U.S. military security in the region.

In the TPPA4 (2005) definition of territory between Brunei, Chile, New Zealand and Singapore, territory definitions include:

(a) with respect to Brunei Darussalam, the territory of Brunei Darussalam and the maritime areas adjacent to the coast of Brunei Darussalam to the extent to which Brunei Darussalam may exercise sovereign rights or jurisdiction in accordance with international law and its legislation;
(b) with respect to Chile, the land, maritime, and air space under its sovereignty, and the exclusive economic zone and the continental shelf within which it exercises sovereign rights and jurisdiction in accordance with international law and its domestic law;
(c) with respect to New Zealand, the territory of New Zealand and the exclusive economic zone, seabed and subsoil over which it exercises sovereign rights with respect to natural resources in accordance with international law, but does not include Tokelau; and
(d) with respect to Singapore, its land territory, internal waters and territorial sea as well as and any maritime area situated beyond the territorial which has been or might in future be designated under its domestic lawin accordance with international law, as an area within which Singapore may exercise sovereign rights or jurisdiction with regard to the sea, seabed, the subsoil and the natural resources.

In terms of maritime policy, Singapore could designate jurisdiction beyond its sovereign rights—operative word, being “beyond”– particularly in regard to the seabed and natural resources.  This creeping jurisdiction, I’d argue sets in motion the rights for deep seabed mining and control over disputed waters for rights of passage through waters currently in dispute with China.

South China Seas shipping lanes

Now, to be clear, I’m not suggesting that Singapore is claiming all disputed waters, but when you consider that more than half the world’s fleet tonnage passes through the South China Sea, much of it has to pass between Singapore, Malaysia, Indonesia, Vietnam and the Philippines. In terms of tanker traffic that is 3x greater than Suez and 5x greater than Panama, and this includes shipping which is dominated by liquid natural gas, crude oil, raw materials and commodity resources. The issue over these territorial waters is very serious and the transport of goods and commodities is often neglected in discussions about trade, particularly, as the claim on these waters also includes the airspace above them and the natural resources below the water.

By convention, merchant ships have what is known as the right of “innocent passage” in territorial waters. When a hostile ship enters the territorial waters of a nation, the government reserves the right to fire on them without warning; likewise for enemy aircraft and submersibles. In other words should this regional economic cooperation conveniently find itself in dispute with China, rules within the “Innocent Passage in the Territorial Sea” (UNCLOS, Section 3), could justify the potential use of military choke points along Chinese passage routes to Africa or the Middle East.

I might also add that the Senate has postponed the US ratifying UNCLOS until after the November elections, and this will be a very telling vote, in that among several environmental, legal, international taxation and mining issues, etc,  this also impacts military law, in that it provides a legal framework for the U.S. to take on regional military action.

Another choke point in this containment strategy is Jeju island.  When does  an island that contains three – UN world heritage sites, that is also known as Peace Island, become a military base that many believe will be used to harbor the US military?  The Plan was first announced in 2007, a year after North Korea began to receive funding from China and Russia to build an industrial district and port.  It was already declared a free economic trade zone known as the Tumen River Area Development Project, but it never attracted sufficient international attention to take off until just recently.

The Rajin-Sonbong port is expected to be a very fast, state-of–the-art port, and unlike Vladivostok which is north of the Rajin-Sonbong port , there is no problem with freezing ice blocks.  This is important as well, because China and Russia have signed a currency agreement in 2010, including a huge trade agreement that will send Russian resources to China. If the port is able to function as planned, many believe, that it will speed up the manufacturing end of the global supply chain in China, further threatening US manufacturing interests who are developing manufacturing infrastructure in Vietnam and Malaysia where labor is cheaper and environmental regulations more relaxed.

Having a military outpost in Jeju allows the ROK/US partnership to choke the passage of raw materials to China’s manufacturing corridor, just as territorial disputes over the Spratly islands and the South China Seas, can warrant the US military to control direct passage to Africa and the Middle-East where China is playing a dominant role.

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