Guest Post: Norm Diffusion in the Transpacific Partnership

[Ardevan Yaghoubi is a Ph.D Student at Princeton University’s Department of Politics.] 

“As we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and our businesses at a disadvantage. Why would we let that happen? We should write those rules.”  – President Obama, State of the Union Address, January 20, 2015

Proponents of the recently-concluded Trans-Pacific Partnership (TPP) typically argue that the agreement will do one of two things: increase economic growth through exports and jobs, or advance favorable geopolitical and national security objectives. The economic perspective on the agreement sees a rational-choice model of expected economic utility; the geopolitical frame emphasizes the TPP’s role in creating reputation, prestige, and soft power.

But the strictly material and abstractly ideational explanations of the TPP both miss an important feature of the agreement: that the TPP is designed to create norms that spread across the international system. It is not only intended to bring about economic benefits or directly buttress American allies in Asia to counter a rising power. In the study of international politics, this process is called norm diffusion. I argue that understanding norm diffusion helps to articulate the implicit theory behind President Obama’s metaphor of “writing the rules”. By melding insights about norm diffusion to the frame of a traditional trade agreement, the TPP is a unique and noteworthy innovation in international law and institutionalism. Whatever one’s thoughts about the merits of the TPP, the basic hypothesis undergirding its intended effects deserves greater clarity.

In this post, I explore the logic of norm diffusion in the TPP: Is norm diffusion an objective of the TPP? If so, how exactly is the process of diffusion expected to occur? And what obstacles might block the reproduction of the TPP’s rules? I will address these questions in turn.

Is the TPP Really About Norm Diffusion?

Alongside their traditional role of merely cutting tariffs and lowering trade barriers, today’s FTAs are a tool of international economic competition: the rules contained in these agreements regulate and shape industries from agriculture to manufacturing to finance. It is hardly controversial, then, that FTAs will tend to reflect the economies and economic priorities of the states who have negotiated them. States don’t have total latitude in determining the content of FTAs, since WTO rules still exert substantial influence. But there are many parts of the world economy where the WTO’s influence is limited.

What norms are these? Well, the TPP text agreed on in Atlanta contains chapters regulating norms spanning the right to organize, the illegal trade of wildlife and environmentally protected species, generic medicines, copyright infringement, 3D printing and manufacturing, financial investments, state-owned enterprises and government procurement, and of course, tariffs and non-tariff barriers to trade.

But the TPP came into being at the end of a two-decade period in which American influence in the global trade system has been waning. While the number of new agreements negotiated has increased dramatically since the millennium, the U.S. has signed just a handful of notable new FTAs: with Korea (2012), Dominican Republic-Central America or DR-CAFTA (2005), Singapore (2004), Chile (2004), and Australia (2004). Taking stock of the total number of agreements by region, the U.S. lags behind the Asia Pacific, South America, Eurasia, Europe, the Middle East, and Africa.

Seen against this economic and geopolitical backdrop, the necessity of the TPP from an American policy perspective should be evident: it represents approximately 40% of global GDP across North and South America and the Asia Pacific, and nearly one-third of global trade. Without it, the U.S. loses leverage and potential economic opportunities in a century where its percentage share of the global economic pie will continue to shrink. It also brings post-war allies, like the U.S. and Japan, closer together as a key element of the “pivot to Asia”, while integrating non-allied states like Vietnam and Malaysia.

Many geopolitical analyses of the TPP end with vague references to “soft power” or U.S. national security interests and little explanation of how the TPP will actually further those aims. What these narratives miss is that the logic of the agreement is based on a theory of norm diffusion. In its essence, norm diffusion (or sometimes called norm “cascade”) refers to “an active process of international socialization intended to induce norm breakers to become norm followers”. International relations scholars have given careful attention to the way in which norms and rules circulate and achieve legitimate compliance in international politics and international law.

But what is striking about the TPP is that its architects are themselves conscious of these socialization effects. For instance, here is a representative statement by USTR Ambassador Michael Froman writing in Foreign Affairs:

“As the need for new rules has grown, so, too, has the difficulty of reaching agreement on the details. Emerging economies such as China and India have pressed for a stronger voice in international matters, but they have been reluctant to take on responsibilities commensurate with their increasing role in the global economy…. [T]he United States will continue to press ahead, working with those countries willing to adopt stronger rules and, in doing so, hopefully giving new momentum to the WTO’s multilateral efforts…. Washington faces unprecedented constraints in crafting trade policy. The United States no longer holds as dominant a position in the global economy as it did at the end of World War II, and it must build trade coalitions willing to work toward consensus positions.”

Borrowing from Froman’s title, it might be said that the TPP is an exercise in strategic norm diffusion—a deliberate attempt to produce norms that can spread across the global trade and economic order and circumvent the deadlock at the WTO and elsewhere. (Some studies of norm diffusion highlight the role of civil society and non-state actors in the process of norm entrepreneurship. Likewise, I do not assume that states are the solitary authors of the norms contained within the agreement—civil society actors like expert groups, labor unions, and industry representatives have extensive influence on the content of negotiations. A fuller analysis could locate sub-state sources of norms included in the TPP). This design feature makes the agreement rather different from its predecessors like NAFTA, which did not have any real ambition to extend beyond North America and excluded issues like labor and environmental standards. In contrast, the TPP’s creators are self-aware of the effects of norm diffusion. But more has to be said about the ways in which the TPP may or may not successfully create a norm cascade.

How Can TPP Norms Spread?

That the TPP is designed to incorporate international socialization will not be news to anyone who has followed negotiations. However, the process for diffusion has been left underspecified; we lack an explanation of the vehicles by which TPP norms will become widely dispersed in the global trading system. I see three central ways: (1) broadened membership in the TPP; (2) future FTAs that replicate TPP standards; (3) and internalization by private and non-state actors.

If the TPP is ratified and entered into force, it will not be a closed economic bloc with high costs to entry or a strict geographical limit on membership. Rather, its structure is closer to an ‘open platform’ that states not currently party to the negotiations can join in the future. Already, speculation about possible new members includes Korea, Indonesia, Thailand, China, and even India. The U.S. has done little to dissuade the speculation. From the U.S.’s perspective, increased membership would be an efficient means of dispersing the norms in the TPP more widely: signing up would only come at the cost of buying in. Given that ratification is still months, if not years, away, this is a long-term rather than immediate possibility.

A second mechanism for diffusion is the possibility that TPP norms will be reproduced in future FTAs. Even if TPP membership itself does not expand, the member nations may reproduce TPP standards on intellectual property, environmental standards, or state-owned enterprises by literally copying these chapters into other agreements. This would expand the scope of the TPP’s norms to any country that signed an agreement with a TPP member, for instance in a future Japan-Colombia FTA where Japan insisted on using the highest standards. It is also possible that TPP norms could be introduced in an FTA between two states who are not signatories of the TPP, akin to a “model BIT” for 21^st century trade agreements. The sheer economic magnitude of the TPP means that trade partners of close to half of world GDP would be subject to the rules included in the agreement, raising the costs of creating an alternative system of rules for trade. Third party states would find it easier to submit themselves to TPP rules than risk losing economic access.

The third avenue for norm diffusion is internalization on the part of private actors—multinational corporations and investors, as well as domestic civil society groups and internationals NGOs. As political science research has shown, these groups can be a critical element in allowing global norms to take hold and become binding: without ground-level support of firms, workers, and civil society groups, even the most rationally compelling rules will remain pie-in-the-sky. If states resist enforcing some aspects of the TPP, its norms can still be dispersed through civil society groups who hold states accountable or firms and investors that self-enforce TPP rules. This is salient particularly for the labor and environmental chapters of the agreement, which are expected to set rigorous new standards for the way business is done in states with poor human rights track records. (A caveat: at this stage, prior to the release of the text, it is somewhat difficult to discuss in great specificity which norms in particular the TPP is intended to promote. Some possibilities that come to mind are intellectual property protections, the rules on state-owned enterprises, investment protection, and the rules regarding data and the internet). So even if states have reasons not to want to replicate TPP rules in new agreements, they may still feel pressure to do so.

What Are Obstacles to Successful Norm Diffusion?

At this stage, a ratified and enforced TPP is far from certain. If the U.S. Congress or another legislature fails to ratify the deal, genuine questions will be asked of the trade agreement’s viability. Besides a total collapse of political will, what might inhibit the successful reproduction of TPP norms?

The biggest foreseeable challenge to TPP’s strategy of norm diffusion is that its dispute settlement mechanisms will be watered down or replaced altogether. If the dispute settlement system in the TPP proves too controversial for states to sign onto, or if is agreed to only in principle with the tacit promise that it won’t be used, the ability for TPP rules to be enforced will be limited. States already in the TPP would have little reason to incorporate and internalize its rules; the trade agreement would become a kind of “cheap talk” that papers over the status quo without changing behavior by governments or businesses. This outcome would run contrary to the aims of the agreement, which are to set high new standards for global trade, and helps to explain the U.S. Administration’s stance on ISDS.

Alternatively, if the TPP’s dispute settlement system is replaced wholesale by a new mechanism—such as the EU’s proposed permanent tribunal—its norms would be circumscribed. The possibility exists that the TPP could be superseded by another plurilateral FTA, like China’s RCEP which includes a number of overlapping members. In general, the concern here is one of fragmentation; if the TPP is just one among a plethora of sources for trade norms, states will find it easier to opt out and justify defection. Given rapid changes in the global economic order and its institutions, there is no guarantee that the TPP will be the only or even dominant source of norms in the future.

Norm diffusion is not a guaranteed outcome of the TPP, but it is built into the structure of the agreement. In this sense, the TPP represents a new form of international law, unlike previous trade agreements that focused primarily on the economic benefits of liberalization. It is also significantly different in kind from traditional multilateral institutions erected in the post-war liberal international order. Scholars and critics should have greater sensitivity to the socialization effects of the TPP in their assessments of the agreement.