Washington has long looked out across the water and recognized the importance and benefit of a strong U.S. relationship with Asia. After years of economic saber rattling and missed opportunities by his predecessor, President Joe Biden intends to restore U.S. influence in the region.
The administration’s announcement last week of a new economic bloc meant to counter China’s increased dominance is a welcome change from the previous administration’s retreat from global trade. However, in its fuzzy details and vague promises of cooperation and growth, the Indo-Pacific Economic Framework is no substitute for the Trans-Pacific Partnership.
That agreement remains the goal Biden should strive for. Hammered out over years of negotiations, the TPP was sabotaged by wavering Democrats and summarily abandoned by former President Donald Trump — .
The TPP was a sweeping deal between the U.S. and 11 other countries including Japan, Malaysia, Australia and Vietnam. It would have allowed America to set the rules of engagement for trade in the Asia-Pacific region and included nations that represent 40% of the world’s economy.
The geopolitical advantages were clear, with the trade pact meant to either exclude China from its benefits or force it to abide by a high bar for entry mainly set by the United States.
For Washington, a state where about 40% of jobs are tied to trade, the positive economic impact was just as evident. A fully implemented TPP would have meant $8.7 billion in new state exports, adding up to 26,400 jobs, according to a 2016 study by the Association of Washington Business and the Washington Council on International Trade.
Instead, Trump withdrew the U.S. from the TPP and decided to go it alone, starting a trade war that imposed widespread tariffs not only on adversaries such as China, but on longtime allies, including the European Union, Canada and Mexico.
“China’s tariffs have gone down for people like the EU, Australia and Japan. They’ve gone down over the last four or five years, while the U.S. ones have gone up into the 20% range,” said J. Norwell Coquillard, executive director of the Washington State China Relations Council. “We’re shooting ourselves in the foot.”
No trade deal is perfect, and governments have consistently failed to adequately help industries and communities impacted by these agreements, but the overall effect is positive. Meanwhile, the cost of doing nothing is high — as the U.S. decided to sit on the sidelines, the world moved on.
Other TPP countries went ahead and implemented the agreement and China now leads the Regional Comprehensive Economic Partnership, the world’s largest trade bloc, uniting 15 Asia-Pacific economies.
A recent deep dive by The Wall Street Journal found that while the U.S. did not lose the trade war, it hasn’t won either. The Chinese economy has more keenly felt the brunt of increased tariffs, but if the goal was to force China to change its unfair trade practices, that effort has fallen flat.
If widespread tariffs continue to hurt Washington exporters and American consumers through increased prices — and have little effect on curtailing Chinese transgressions — then a new plan must emerge.
Trump may have been right to take a more aggressive posture against China but acting unilaterally was a mistake. The newly announced framework is hopefully a first corrective step.
The 13 members of the Indo-Pacific Economic Framework include Japan, India, Australia, Brunei, Indonesia, South Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam. Other countries are expected to join as the deal moves forward.
According to the White House, the framework will focus on four key pillars to “establish high-standard commitments” to deepen U.S. economic engagement in the region. These goals include preventing supply chain disruptions, clean energy and decarbonization efforts, anti-corruption initiatives and greater digital trade.
What this will mean for the price of a Washington apple in India is uncertain. Unlike the TPP, the framework avoids any talk of lifting tariffs or opening new markets. Both of which seem like crucial leverage to encourage meaningful change in countries halfway across the world.
Biden is right to rebuild the coalition of allies the U.S. will need to fight back against China’s worst impulses, but he must also build up the political will at home to enact the kind of trade agreements that can cement America’s influence and ensure fair competition in the world’s fastest growing region.
U.S. economic leadership depends on it.