In late June, U.S. President Barack Obama signed the Trade Promotion Authority into law, ostensibly to give himself more leeway in negotiating international trade deals.

The bill, also referred to as a ‘fast-track’, means that Congress will only have the power to either approve or reject the trade deal as presented by the President, and not amend them. When Congress had the power to amend trade deals, trade negotiations were more difficult and required several rounds of negotiations and delays.

The ripple-effect of the TPA

The president sought this power as his administration participates in negotiations for the Trans Pacific Partnership (TPP) – a trade deal that will include 11 other countries: Canada, Mexico, Chile, Peru, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia and New Zealand.

These nations are responsible for 40% of world trade, with a collective population of around 800 million people – twice the size of the European Union’s market, which includes non-EU members Norway, Iceland, and Switzerland.

Passage of the TPA was never a given, with some members of the president’s own Democratic Party openly opposing the measure. The TPA was eventually voted in on June 23.

But the signing of the bill by President Obama on June 29 has caused more than a ripple in U.S. ally Israel.

BDS amendments cause a stir

The TPA contains two amendments which encourage negotiators to prioritize discouraging foreign trading partners from participating in the BDS – boycott, divestment, and sanctions – campaign against Israel.

BDS pressure is particularly high in Europe, as rights groups have protested the plight of Israeli-controlled territories, in particular Gaza and the West Bank, and have leaned heavily on corporations to adopt these measures.

Illinois Representative Peter Roskam, of the Republican Party, lauded the bill, calling it a “historic milestone in the fight against Israel’s enemies.”

America’s opposition to insidious efforts to demonize and isolate the Jewish state is now the law of the land,

“The bipartisan bill enacted today conditions any free trade agreement with the European Union on its rejection of BDS.”

But concerns remain that the language of the bill conflates Israel with Israeli-controlled territories.

Tiptoeing to avoid rankling Israel-controlled territories

The U.S. State Department rushed to clarify that it does not and never has supported Israel’s settlement of territories beyond the borders decided after the 1967 war.

By conflating Israel and ‘Israel-controlled territories’, a provision of the Trade Promotion Authority legislation runs counter to longstanding U.S. policy towards the occupied territories, including with regard to settlement activity,

State Department spokesman John Kirby said in a June 30 statement.

“Every U.S. administration since 1967 – Democrat and Republican alike – has opposed Israeli settlement activity beyond the 1967 lines. This administration is no different. The U.S. government has never defended or supported Israeli settlements and activity associated with them and, by extension, does not pursue policies or activities that would legitimize them.”

Navigating the pro and anti-BDS trends is tricky business, as French telecoms firm Orange learned in June.

Orange CEO, Stephane Richard said in Cairo that he was ready to pull Orange out of a partnership with an Israeli company immediately, even though the partnership was supposed to last until 2025.

Though Richard insisted the remarks were not political, an enormous backlash against his comments and the company forced him to meet with Israeli Prime Minister Benyamin Netanyahu and emphasize that Orange was not participating in the BDS campaign.

Are trade deals a useful way to address conflict in Israel and the surrounding territories? How do you feel about American inclusion of anti-BDS amendments to the TPA?

The post U.S.’ signing of the TPA forces administration to tiptoe around anti-Israel amendments appeared first on Trade Ready.

The United States, however, declined the invitation to join.

One U.S. official told a leading British newspaper:

We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.

As of writing, the following states have applied to join the IFI project:
India, Malaysia, Singapore, Iran, Saudi Arabia, Australia, Brazil, France, and Germany

So far, 57 countries have submitted an application to be part of the AIIB.

Most surprising of these, to American officials at least, is the United Kingdom. The U.S. and the UK are assumed to have a ‘special relationship’ and are expected to act in coordination on foreign policy matters.

However, the strength of these bilateral ties has been questioned, especially following the 2003 joint invasion of Iraq. London’s embrace of the China-led bank was a shock to Washington, which now looks foolish for choosing not to apply for entry.

What is the significance of the AIIB?

The Beijing-based institution will compete with the Asian Development Bank (ADB) to provide funding for much-needed infrastructure throughout Asia – such as bridges, roads, and other critical projects like hydroelectric dams. The AIIB will have start-up capital of US$50 billion.

Founding members of the development bank met in Singapore in mid-May to negotiate the operating strategies of the institution. The IFI is expected to be fully running by the end of this year.

Why is the U.S. reluctant?

The U.S.’s explicit reasoning for declining to join the bank has to do with concerns that China cannot be trusted to manage the bank using good governance and transparency.

Washington also stated that it is concerned that China will not institute appropriate environmental safeguards on projects it opts to fund.

But analysts believe the U.S. turning down membership in the China-led bank has more to do with global competition for influence.

However, the U.S. is widely perceived to have lost in reputation as a result of this decision.

Where once a U.S. refusal to join an international project would inspire its allies to similarly hold back, the opposite happened in this instance – allies and close partners ignored Washington’s lead and signed onto the project anyway.

Put more clearly:

It was also a recognition of economic reality; China has deep pockets and the institutions backed by the United States have not met the glowing demand for roads, railroads and pipelines in Asia,

The New York Times wrote in April.

The U.S. appears to be putting a major dent in its role as global economic influencer as a result of the decision to forgo membership of the AIIB.

Of developed economies, only the U.S. and Japan are holdouts. Even Taiwan, despite its long-chronicled difficulties with China, has signed up for the IFI project.

Major foreign policy watchers – such as the Council on Foreign Relations (CFR) in New York – say the U.S. is only continuing to damage its stature by urging nations to stay away from the AIIB.

Persuading “regional and other actors not to join the bank…is making the United States look weak at a time when U.S. influence in the region is otherwise quite strong,” CFR said.

Instead, the U.S. is urged to join the AIIB, in order to give it a role in the organization and to help shape it, as well as ensure that U.S. firms will have equality of access in bidding for future projects put forward by the bank.

What’s your take on this? Will the U.S influence be undermined if it does not join the AIIB?

The post Will the U.S.’s hesitation to join China’s AIIB cost them influence on the world stage? appeared first on Trade Ready.