US accession to the Comprehensive and Progressive Trans-Pacific Partnership Agreement will improve US trade with major regional economies and strengthen its efforts to compete with China. US President Joe Biden must make this an urgent priority.
TOKYO – Former US President Donald Trump’s isolationist and protectionist policies, summed up in the phrase “America First”, have seriously damaged the United States and its global leadership. The increase in tariffs on imports entering the United States, especially that of China, has only succeeded in encouraging other countries to impose reciprocal tariffs on U.S. products. So Trump’s trade policy has ultimately hurt most Americans, from farmers to middle-class consumers.
During the Trump administration, the United States also unilaterally abandoned its global role, which would have made it possible to overturn the formulation of international rules on international trade and climate crisis management in its favor. The United States withdrew from the 2015 Paris Climate Agreement, the World Health Organization and the Trans-Pacific Partnership (TPP), and launched a derogatory attack on the World Trade Organization by refusing to accept any appointment to vacancies on the WTO Appeal Body. to fill. .
Trump’s isolationism was particularly painful for America’s main allies in Europe and Japan. When the United States abandoned high moral standards in the area of free trade and rule-based multilateralism, it also threatened the values of those key allies.
President Joe Biden’s administration quickly overturned many of Trump’s economic, environmental, and Covid-19 policies, including the reinstatement of US participation in the Paris Agreement and the withdrawal of the US withdrawal from the WHO. Biden, however, was slow to withdraw the protectionist measures of his predecessor. Nearly a year after Biden’s term, some of Trump’s tariffs are still in place.
There is no question of the United States joining the TPP’s successor: the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP, or also known as TPP11). And while the Biden administration is talking about the revival of the WTO, it still has a pending task to turn rhetoric into action.
Biden’s lack of action is confusing. He was outspoken about his political goals regarding China, a country he considers America’s most serious competitor. In December, Biden invited more than 100 world leaders to the Democracy Summit, a virtual event aimed at discussing the challenges posed by authoritarian states, primarily those posed by China and Russia. Given that, why is your government not moving fast to join the CPTPP?
The original TPP was signed in 2016 during the presidency of Barack Obama, it was signed by 12 Pacific countries, including the United States, and it markedly excluded China. It was envisaged as a local economic alliance aimed at promoting free trade and investment comprehensively, as well as an alliance that would protect intellectual property rights, regulate digital commerce and prevent the signatory states from creating an unfair gain competitive advantage through the actions of his state. owned enterprises (SOEs). The agreement was a thinly veiled attempt by the major Pacific economies, with the exception of South Korea, to compete more effectively with China. And its successor agreement, the CPTPP, has become increasingly influential in the Asia-Pacific region, despite the fact that the United States has so far refused to join.
It’s not hard to see why. Many countries that depend on the Chinese market have long had to swallow the conditions that China has set in terms of trade and investment. Chinese authorities, for example, often require foreign companies that make direct investments in China to form a joint venture with a local partner, rather than to establish a wholly owned subsidiary. In addition, the rapid growth of Chinese exports has taken place thanks to state-owned banks financing SOEs, which has led other countries to complain about excessive subsidies in China. The TPP was supposed to extend free and fair trade and rule-based investments among its members, but it was also supposed to establish rules of engagement to prevent China from taking unfair advantage of its trading partners.
After Trump withdrew the United States from the TPP in January 2017, Japan’s then-Prime Minister Shinzo Abe took the lead in forging the CPTPP agreement, or TPP11, among the remaining members of the pact. Some of the clauses in favor of which the United States exerted pressure during the negotiations for the signing of the original TPP were set aside, but could be reinstated in case the United States decided to abide by the new treaty. TPP11 works well, but it still misses the US presence.
Furthermore, while the United States has wasted the past five years by withdrawing from the emerging Asia-Pacific trade and investment framework, two other important developments have taken place. First, China, Japan, South Korea, Australia, New Zealand and the ten member states of the Association of Southeast Asian Nations (ASEAN) signed the Regional Comprehensive Economic Partnership (RCEP) agreement, (India withdrew from this agreement in the last phase of the negotiations).
The RCEP agreement, which entered into force on 1 January this year, negotiates $ 2.5 trillion in foreign trade between its members, a figure that is about 13% of the total value of world trade in goods, and its 15 signatories represent 30% of the world’s GDP. It is the first free trade agreement between Japan and China, and is expected to deepen bilateral trade relations between the two countries.
To accommodate ASEAN’s emerging market economies, average rates under the Regional Comprehensive Economic Partnership (RCEP) agreement will remain higher than those under the TPP11 agreement, and investment coverage is more limited.
The second development is that China and Taiwan separately applied to join TPP11 in September 2021, which poses enormous challenges for the Japanese government. To begin with, can existing TPP11 members negotiate with China to keep the bar high for joining the agreement, or can they eventually be divided on how strictly they should take a stand?
Moreover, while China is expected to take a tough stance against Taiwan joining the agreement, the TPP11 countries may find that welcoming Taiwan, a world leader in high-end semiconductor manufacturing, will benefit them. This could provoke strong reactions from China.
Given the uncertainty surrounding Japan’s willingness to play a tough match with China and Taiwan over TPP11 in the political and economic arena, strong US leadership is needed now more than ever. The rapid accession of the United States to the agreement will improve US trade with major economies in Asia and the Pacific and strengthen its efforts to compete with China. Praying must make compliance with this agreement a matter of urgent priority.
The author
Professor of economic policy at Harvard Kennedy School and a senior fellow at the Peterson Institute for International Economics, he chaired President Barack Obama’s Board of Economic Advisers.
Reference-www.eleconomista.com.mx