The caravan of refugees from Central America via Mexico to the U.S. has created a crisis that needs to be addressed properly and quickly. Refugees felt unsafe to travel in small groups elected to travel in caravan to the U. S. to seek asylum. Of course, Mexico is the necessary pathway for entering the U.S. According to international law, refugees should apply for asylum at the first country they arrived in, thus a huge burden falls on the Mexican government and also an opportunity for Mexicans to interfere in the immigration process. The application process is personnel and time consuming because courts are congested. Mexico and the U.S. are yet to reach an agreeable application process while the U.S. is already facing a big issue of huge amount of illegal immigrants from Mexico.

Another problem in handling the asylum application from the caravan is a troublesome clause in the US anti-trafficking law allowing under-aged (children) refugees (Mexicans and Canadians are excluded in this clause) to stay in the U.S. while waiting for asylum application. From humanitarian viewpoint, the U.S. government is urged to provide a quick solution to the thousands of refugees coming by the caravan. From national security and protection of legal immigration and true asylum considerations, the U.S. government must act prudently with due processes and expenses to deal with the applications processed through Mexico. Like many issues, the nation is divided on the caravan problem with no good fix.

Although the caravan problem is an immigration issue with humanitarian concern, the root cause of the problem is really related to poverty in Central America which affects people’s ability to survive and make a decent living. Poverty and ineffectiveness of government have a mutual causality relationship. One generally does not see people from the rich and/or well governed countries emmigrate in mass to other nations. Refugees are directly or indirectly caused by poverty and the economic condition in where they reside. Those who chose to migrate are generally the more energetic citizens daring to make a change rather than tolerating and suffering.

There has been a remarkable progress in reducing poverty over the past decades. According to the most recent estimates by World Bank, in 2015, 10% of the world’s population (about 750 million) lived on less than US$1.90 a day, an extreme poverty condition, compared to 11% in 2013.  That’s down from 44% in 1981 and nearly 36 percent in 1990. In 1990, there were 2 billion people living in extreme poverty and down to 750 million in 2015. This means that ending extreme poverty is optimistic if the number of people living on less than $1.90 a day had fallen by 68 million every two years. (* see discussion below on the effect of birth rate on poverty rate)

The global population in extreme poverty went from 80% in 1820 to 10% in 2015 by the latest estimates.This remarkable achievement was largely, though not exclusively, due to the important historical improvements of living conditions in China. By plotting the extreme poverty rates in the world, with and without China, we can see that the reduction of global poverty has been more substantial (faster rate of reduction) in China from 1980 up to 2005, comparable rate during 2005 to 2010 and then China picked up faster rate of reduction again from 2010 to 2015, certainly reflecting on China’s economic growth. Of course, the birth rate in the poverty population will have a detrimental effect on the reduction of poverty rate. China’s one child policy certainly is another factor which has helped her reducing her poverty population. If the birth rate were increased 1% in the extreme poverty population, then we would have additional 70+ million babies born into extreme poverty which would more than cancel out the 68 million reduction achieved from 2013 to 2015.

Immigration is definitely not a solution to reduction of extreme poverty rate of the world. It took the U.S. 100 years to have an immigration policy to absorb productive immigrants to the U.S. If the U.S. would open her arms to take in one million immigrants from a poor country, it would take seven and haf centuries or more to absorb the current 750 million extremely poor people. (Roy Beck has given an excellent speech using gum balls to graphically illustrate the pitiful effect of immigration on poverty population) Besides, when immigrants left their countries and entered a better world, they make the world left behind worse off. Because the immigrants tend to be the one who can affect a change if stayed behind. Most Americans are immigrants from other countries, it is fare to post a question to the Americans, has your immigration to America benefitted your homeland significantly beyond sending money back to relatives? The answer is most likely not much. Perhaps, out of feeling bad and selfish about their immigration, Americans are most generous people in making donations to help the world poor.

However, donations are not the solution to world poor either. Humanitarian effort just like accepting immigrants is a noble idea but not an effective way of helping the poor countries. Donating to poor countries, say temporary lifting poor from $1.9 a day to $102 a day say for 30 days by giving food, clothing etc. to the 2 billion poor, would require 30x100x2billion = $6 trillion dollars, 160% of the U.S. annual federal revenue. So, how often can the U.S. afford to make donations? 

The true heroes of lifting poverty line are the poor people themselves and those who went to the poor country and worked with the poor to improve their living condition and economic welfare. The poor countries and their people need external help, but it is the sincere help to develop the poor countries’ economies. As China has risen up in her economic development, she has gradually increased engagement with world affairs. One of her foreign policies is to help Africans to develop their economy. She invests in agriculture in Africa, sending farm workers to Africa to teach them how to do farming. China also invests in Africa’s resources (forest, mineral) exploration and helps them to build basic infrastructure, roads, railroad, electricity, port facility, etc. China’s action may not be pure humanitarian or unselfish but they do provide what African countries needed the most. In the end when Africans are lifted from poverty and have imporoved  economy, it would benefit Chinese commerce and her efficiently manufactured goods, a win-win position.

The U.S. seems to be walking off her pedestal of humanity and high morality in helping the world poor and moving towards a self-centered international policy. (One recalls an online story: when President Carter asked Chinese Leader Deng Xiao Ping to allow Chinese dissident citizens to emmigrate to the U.S. Deng responded, how many can you take in, one million, five million or more?) Deng apparently understood the root of dissent was mostly because of poverty and the government’s ultimate responsibility is to improve citizens’ economic welfare. China has certainly been pursuing that strategy successfully.
Because of imbalance of trade and increasing competition in technology development with China, the U.S. turned protective in her dealings with China and the world. However, the U.S. must keep an open and fair mind about China’s engagements with the world, from Asia, Africa, Europe to South America. We can not ignore her success and right approach in pursuing win-win projects with developing countries by offering investments and loans to help them to develop their economy. China, still a developing country herself with a large population, perhaps, has a better understanding of what the developing countries really need. It would be a win-win for the U.S and China and the world, if the two great nations could join hand in dealing with world affairs especially the issue of lifting world poverty line.

On December 1, 2018, US President Trump and Chinese Leader Xi Jin Ping held a 150-minute dinner meeting at Buenos Aires, Argentina where the 13th G20 took place. The meeting was highly anticipated and hyped in the media to world attention. At the end, the two sides reached an understanding by announcing a 90-day truce stopping the escalating trade war. Both sides will not increase any tariff rate nor add new items onto the current tariff list. Within the 90 days,both sides will negotiate and tro to reach an agreement. The caveat is, if a satisfactory agreement could not be reached, they would be back to the trade war. This transnational conclusion is certainly better than no conclusion. The question is: will they reach a final agreement? Let’s make a fair analysis on each side’s demands and see whether a satisfactory agreement can be reached in 90 days.

This trade war was initiated by the U.S. China was on the defensive firmly stating that she would rigorously defend her rights. The most important matter to China is her right to maintain her economic development and to continue pursuing the China Manufacture 2025 plan which is designed to elevate her manufacturing and product technologies. The U.S. had made more accusations and demands in asking China to cease or correct her trade practices in addition to objecting to the China’s 2025 manufacturer plan. Apparently, the U.S. had realized that it is unfair to forbid anyone to have its own development plan unless the plan contained measures violating international law and damaging to the U.S. economy. Thus the U.S. did not mention ‘China manufacturer 2025’ but focused on the specific practices that were deemed damaging to the U.S., such as deploying predatory tactics in its tech drive, including stealing trade secrets and forcing American firms to hand over technology in exchange for access to the Chinese market.

According to the White House announcement, Trump agreed to hold off raising tariffs on Jan. 1, 2019 on $200 billion in Chinese goods and China agreed to buy a very substantial amount of agricultural goods, energy, industrial and other products from the United States to reduce the huge trade deficit with China. The media (Times) noted that the White House appeared to be reversing course on its previous threats to tie trade matters to security concerns (like China’s construction activities in the South China Sea). Out of humanitarian reasons, China agreed to label fentanyl, the deadly synthetic opium causing the death of tens of thousands of American drug users annually, as a controlled substance (making seller of fantenyl to the U.S. subject to maximum punishment). 

The G20 downgraded their outlook for global economic growth next year to 3.5 percent from a previous 3.7 percent citing the trade conflict as well as political uncertainty as the causes. The U.S. stock market has been jittering downward worrying about the outcome of the US-China trade war. Will this 90-day truce bring us an agreement that will stop the trade war for good? Based on the events including rhetoric, actions and counter-actions happened in the past eight months and the above truce statement, one may be cautiously optimistic about the future. First of all, the rise of China and her economic power was not by steeling from anyone, it has its logical reasons. China’s focusing on manufacturing and the U.S. transforming her economy from agriculture and manufacturing industries to finance and service industries are all their voluntary choices. The success of China’s goal of lifting her significant number of citizens from poverty line to middle income is commendable and can be credited to her government’s right economic policies and her people’s work ethics.

China started with low level labor intensive manufacturing which most advanced or developed nations were willingly to transfer for profit and/or to get cheap goods in return. Then China, like all market places on earth in the past history, offered her market place for technology products, from low, medium and high tech with the condition that China would benefit with technology infusion while the foreign firms could rip tremendous profits. The Chinese government might have a concerted plan coercing foreign companies to participate, but in reality no one was forced under a gunboat (thinking of the British forcing opium trade to China under her gunboat power). The foreign corporations voluntarily signed their cooperation ventures. Did they make money, sure they did. Did the Chinese learn from the transferred technology, yes they did with more innovation on her own. Hindsight to cry foul seems to be just sour grape attitude. As for invasion of intellectual property, it has been a sad history since industrial revolution. There was no shortage of stealing, copying and cheating on intellectual properties in all developed countries. China is a late comer and she like other developed nations will soon face the same problem as she has now become the biggest annual patent holder surpassing the U.S., Japan and Germany.

China certainly has the right to have her Manufacturer 2025 plan to upgrade her technologies. China has been shutoff from high tech participation when national security threat from China was a joke. But with 24 neighbors, a number of them technologically and militarily powerful, out of necessity  she has to develop her own defense technology. She succeeded in nuclear power but she was the only country declaring that she would never use it first against anyone. She developed her space technology, not only the satellites, space shuttles even her own space station despite of being shut out from the world’s space-station research club. Yes, China has risen but she has done it with her people’s sweat, body and soul. Is China a threat to the world? Looking back in history, it is safe to bet that China might be the least threatening nation among the major powers in the world.Will China bring competition to the world? Yes, more likely to be beneficially and peacefully.

Facing the ill-initiated trade war, China decided to stay firm to defend her rights. With the 90-day truce, China will likely agree to open up more her markets, modify her investment control process, enhance protection of intellectual properties in a gradual pace as she probably would without the trade war. In addition, China will purchase more substantial American products, perhaps slightly at the expense of other countries. But the sanction of selling high-tech products to China is most likely the obstacle for reaching a trade agreement. The US hi-tech sanction policy places China as a competitive enemy directly hindering her strategy of upgrading her industrial technology base to sustain her economic growth. Yet removing such sanction is the most effective means for reducing the US-China trade imbalance. 

For example, an advanced hi-tech Jet plane is priced from $100-500 million, three hundred planes can value up to $150 billion. The US-China trade imbalance is only about $3000-4000 billion. Thus with China’s enormous purchasing power, reaching a trade balance between the two countries is an achievable goal. What about China will begin to make her own planes? Just like cars we could not stop the Japanese, Koreans, … we just have to move on and upward in this competitive world. So the key is to make Americans competitive like the Germans, Japanese and Chinese. Regarding IP protection, China also has her concern of outflow of her advanced technologies in the areas of high-speed rail, electric vehicle, robotics, renewable energy resources, transport and storage of energy, etc. So the positions of The U.S. and China on IP protection should quickly converge. 

Regarding other structural changes related to trade, finance and investment, it would seem to be more productive for the U.S. and China to begin working together on WTO reform (rather than litigation against each other). China is very concerned with the stability and sustainability of her economic growth, so should the U.S. China will not entertain any drastic changes on her working economic system or any new idea without experimentation nor will she (and the rest of the world) give up current WTO easily. The U.S. should have understood China’s concerns and issues discussed above. Therefore, in the 90 days of negotiation, we may optimistically say that the U.S. and China can reach a trade agreement barring any gunboat attitude messing up the negotiation.

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CPTPP is an acronym representing ‘the Comprehensive and Progressive Agreement for Trans-Pacific Partnership’, also known as TPP-11, a trade agreement between eleven nations after the U.S. pulled out. The original Trans-Pacific Partnership (TPP) was involving twelve nations including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam. Oddly, the TPP excluded China, the biggest trading partner in the Pacific. The original TPP grew out of a trade agreement between Brunei, Chile, New Zealand and Singapore, known as P4, initiated by Brunei and signed in 2005. In 2008, it attracted the eight additional nations under the New name TPP.
 
The U.S. under the Obama Administration with its Secretary of State, Hillary Clinton, was supportive of the TPP, although there were arguments that TPP was not beneficial to the U.S. The twelve nations signed the agreement on 2/4/2016 allowing two years for each member nation to ratify the agreement; the effective date was set to be December 30, 2018, 60 days after 50% of members ratified it. One of the motivation factors in reaching this agreement was that the TPP might have a geopolitical effect of reducing the members’ dependence on Chinese trade. On this point, it is debatable whether the ‘China dependency’ is a good or bad thing from global trade perspective. The TPP issue had become a debate item in the US 2016 Presidential Election. Presidential candidate Trump had, since April, 2015, expressed opposition to TPP claiming that it would be unfair to the U.S. causing more unemployment and trade deficit. Candidate Hillary Clinton also took an about-face opposing TPP during her campaign. Thus, when Trump won the election, only days after taking office, he issued an executive order to pull out of the TPP.
 
The legally verified text of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was released on February 21, 2018. The text of the agreement contains 30 chapters, numerous side letters between specific member nations and annexes to the chapters. Since the Pull-out of the U.S. many chapters and languages pertaining to the U.S. are no longer valid. Even excluding the U.S. and China, the economies included in the CPTPP are significant, amount to 13.5 percent of the world GDP – worth a total of $10 trillion. Of course, the main purpose of CPTPP is concerned with reducing costs for doing trades and businesses, but more importantly, it includes commitments to safeguard and enforce high labor and environmental standards across the Asia-Pacific region preserving Member Nation’s right to regulate for legitimate public policies and creating new opportunities for international trade and generating jobs leading to a better standard of living for Member Nations.
 
The CPTPP inherited many of the elements that were negotiated as part of the Trans-Pacific Partnership (TPP), but following the pull-out of the United States, the remaining participants had to agree and suspend 22 items from the TPP, particularly in the areas of investment, intellectual property and pharmaceuticals. One of the concerns in global trade is the threat of the effective operation of World Trade Organization (WTO) rules, including its dispute resolution mechanism. With the two largest economies, the U.S. and China excluded from the CPTPP and currently (they) engaged in a trade war and legal proceedings concerning WTO rule compliance and interpretations, the real effectiveness of CPTPP could be limited. Of course, the more members joining the CPTPP, the more effective the CPTPP agreement would become. Therefore, it is desirable that the current CPTPP members recruit the U.S., China, and other significant economies in the Asia-Pacific region, namely, South Korea, Hong Kong and Taiwan into CPTPP and broaden its scope and effectiveness.
 
Trade agreement couldnot be totally disconnected from international politics and nationalism but if it was overwhelmed by political conflicts, it would lose its significance. Japan should be given credit for laboring and transforming TPP to CPTPP, while the U.S. was moving towards protectionism in an opposite direction of reaching global trade agreement. This change of US behavior is exhibited in the new USMCA orchestrated by the U.S. replacing the old NAFTA with Mexico and Canada as well as in the trade war initiated by her against China. From lowering tariff and protectionism point of view, the CPTPP may be considered as the ‘Gold Standard’. The Twenty-two TPP provisions suspended were more of the interest of the United States rather than that of other negotiating partners. One of the most contested provisions advocated by the U.S. was increasing the abilities of companies to sue national governments over strict government regulations on oil and gas developments. Another issue, the extension of author’s copyright to life plus seventy years, different from the standards in other countries but insisted by the U.S., was substantially reduced in the CPTPP language. The original chapter on state-owned enterprises (SOEs) is unchanged, requiring signatories to share information about SOEs with each other, an obvious intent of preventing state intervention in markets. CPTPP also includes the most detailed standards for protecting intellectual property of any trade agreement, from protections against intellectual property theft to corporations operating abroad.
 
Six nations, Mexico, Japan, Singapore, Australia, New Zealand and Canada, have already ratified CPTPP, thus, it will become effective December 30, 2018. Looking into the future, there may be new members wishing to join in. The U.K. has already expressed interest in joining CPTPP after her Brexit in March 2019. The Trump Administration had kept the door open by saying that she may join if the agreement is renegotiated. Further on 4/12/2018, Trump even ordered his staff to look into the rejoining Issue. As mentioned above, South Korea, Hong Kong Taiwan and China should be invited into CPTPP, ideally with China and the U.S. joining as full members at the same time. It seems that the CPTPP 11-members may have an opportunity to transform their ‘Gold Standard’ to a ‘Diamond Standard’ by making extra efforts to persuade the above members to join CPTPP.
 
South Korea and the U.S. had just concluded a bilateral trade agreement. If the U.S. could be persuaded to join CPTPP, South Korea would likely to follow. On the other hand, if China was persuaded to join, Hong Kong would be a sure in. Taiwan is in fact the most vulnerable economy being excluded from the CPTPP and yet Taiwan may be the only obstacle for Hong Kong and Mainland China to join CPTPP out of a political dilemma created by a post WW II political division of Mainland China and Taiwan followed after Japan’s surrender and returning Taiwan to China. Mainland and Taiwan each claimed to be a part of China and yet politically divided in the world arena for no good reason. Accepting one China with two separate political systems is advocated by Mainland, practiced by Hong Kong and Macao but resisted by Taiwan out of insecurity. Taiwan seems to have an excellent opportunity to use the CPTPP as the test case to evaluate whether Taiwan can function under ‘the one China two political systems’, in fact three or four political systems if including Hong Kong and Macao in CPTPP. Taiwan’s economy is very much dependent on the Mainland market and so do many other CPTPP member nations. Collaborating with Mainland China and inviting her to join the CPTPP makes logical sense. When Taiwan and every country finally realize that by putting aside the political confrontation with Mainland China aside, all the significant economies in the AP region can work under a renegotiated CPTPP for everyone’s benefit. Then the CPTPP can become a ‘diamond standard’ trade agreement for the entire Asia Pacific region. Therefore, it makes perfect sense for the present CPTPP or TPP-11 members to work hard towards getting China and the U.S. into the CPTPP along with the two Koreas, Hong Kong, Macao and Taiwan.