The TPP and Chile’s Foreign Policy Options

In early August, the blog War on the Rocks (WoR) published a favourable opinion regarding the controversial Trans-Pacific Partnership (TPP). This is a supposedly free trade agreement initiated by the United States, involving 11 other countries, among them Vietnam and Singapore in Asia, and Peru and Chile in South America.

Despite the free trade label, the WoR-piece suggests that TPP also pertains to geo-strategy. To bolster that claim, it features a video of a press conference Singapore’s President, Lee Hsien Loong, gave as part of his recent White House visit. He claims that for US allies in Asia, the TPP represents a test of reliability, because if the agreement fails, they would’ve reason to doubt Washington’s promise to provide a nuclear umbrella. Countries like Singapore and Japan trust the US will defend them, with nuclear weapons if necessary, should any actor, read China, threaten them.

More important than what Mr. Loong said is what he didn’t. I think, in his words swung a subtle threat that countries like Singapore or Japan might turn toward China for pragmatic, national security reasons. This way he pressured Washington quite audaciously to get done with the TPP. Yet, the agreement is not without controversy, and likely causes damage especially to its Latin American parties.

If ratified, the TPP brings courts where corporations can sue governments, if laws made in the public interest would impede on supposed corporate profits. Even so, and despite the government’s efforts to present TPP as economic matter, it goes far beyond the fines we will have to pay to corporations and the stuff we will be able to buy.

Carlos Furche, ex-director of Chile’s General Directorate of International Economic Relations (DIRECON), published an extensive analysis of TPP in 2013, in which, to his credit, he dedicates a section to the role TPP plays in the US strategy towards Asia. Furche doesn’t go too deep into the matter, but he rightly questions whether Chile should become a part — I say, puppet — of the United States to entrench its position in the system and contain China.

Thus, Furche points out that implementing the TPP will restrict manoeuvring ability, and that’s a prevalent point. Chile, although committed to a liberal foreign policy, a euphemism for US hegemony in the guise of ‘spreading democracy,’ has no scruples to conduct business with autocracies like Russia and China — money rules. That’s hypocritical, sure, but foreign policy mostly is. And as long as people remain complacent about the fact that their shopping spree here supports exploitation and repression there, this approach is basically sustainable. My concern, however, is that economistic, not amoral, thinking in the foreign ministry will paralyse decision-making ability.

For example, Chile has clearly signalled its interest in deepening military relations with China. But would China keep such cooperation when Chile settles firmly in the US sphere? Likewise Russia. This country, albeit not really a superpower, manipulates world events decisively. For example, Europe’s security and border policies develop to large extent in response to Russian actions and interests in Ukraine and Syria. This shows that Moscow is aware of the levers it needs to pull in order to punch above its weight, and it will keep doing that in Latin America and eventually Antarctica.

Chileans often tell me that they think their country doesn’t carry any significance in the international system. And yes, the country is unable to impress itself on the system as much as the US or Russia, but it remains important whose trade rules, and therefore points of view, Chile accepts and why. Mr. Muñoz, the country’s foreign minister, brushes over such details, and emphasises instead that the negotiators hammered out quite a deal, especially on the question of generic medications. When pointing that out, and as an experienced diplomat, Mr. Muñoz clearly saw the elephant in the room, but intentionally didn’t mention it: What did Chile have to give? Why did it get something other parties, Peru for instance, didn’t? Obviously, the US cared about Chile’s participation, and that’s not a question of money.

Specific geo-economic and -strategic implications that should be more discussed publicly, but are drowned in the swamp of trivialities and advertisement-as-news business model of the Chilean media, relate to the Antarctic and access to Chinese and Russian markets. The latter point is crucial for an export-oriented economy like Chile’s, and I think, it’s a clear failure of Mr. Muñoz to perceive the TPP favourable in this regard. Sure, critics may argue that the affluent US market remains a key target for Chilean exports. But Chile already has an extensive free trade agreement in place to ensure the unrestricted flow of goods. On the other hand, Russia and China have an interest to keep a committed TPP member, and therefore US ally, weak. They aren’t reliant on Chilean produce and don’t need the country as much as vice versa. Thus any of these countries may make stricter demands in future trade negotiations, making Chile pay a price higher than if had it not agreed to the TPP. Deepening trade with China and Russia is in Chile’s interest, because the US market alone doesn’t hold the same potential as all three markets combined.

On the strategic front, Antarctica will emerge. Liberal thinking and belief in international law in the foreign ministry, push strategic planning for the cold continent to the backburner. But, as I wrote last week, geopolitical dynamics can’t be wished away. Whether Chile can count on Chinese and Russian backing regarding Antarctica may determine whether it can have a place there at all. I’m referring to territory which both Chile and Argentina claim. The United States as ally of both countries won’t take sides, because getting involved too much would leave the impression it privileged one ally over another. That may easily backfire. In such a scenario, I believe, Washington would issue not more than some declarations of neutrality, packaged in diplomatic language. China and Russia would happily watch from the sidelines, too for when two allies of an adversary pick on each other, their position vis-a-vis that adversary strengthens, and eventually they even might be able to pull one actor over to their side by promising support. But even if not, such an issue will likely arrive at The Hague or some other international institution. The current row with Bolivia and the past ruling in favour of Peru, however, should have created enough caution in La Moneda to not go down that road again.

The TPP is far more than a trade deal. Indeed, economic matters, as Messrs. Loong and Furche pointed out, aren’t even that important. Yet, TPP restricts Chile’s rule of law, sovereignty, and strategic options quite severely. True, a this country is perhaps always caught in unequal power relationships, no matter who it turns to. But shrewd policy-makers transform weakness into strength, and one way to do this would be to traverse Chile’s international relations outside the corset of the TPP. Currently, they are en route to damage out of belief — not purpose — the country’s (future) foreign policy.