Security, Not Economy, Likely to Boost U.S. Trade Engagement in Asia


This underscores the challenge facing US economic diplomacy in Asia.

The success of the United States’ economic engagement in the Indo-Pacific rests on the Indo-Pacific economic framework. But with better access to the US market as an incentive for countries to join, the framework will likely prove to be an insufficient substitute for the CPTPP.

Indo-Pacific countries are unlikely to prioritize the Indo-Pacific economic framework – which is non-binding and lacks trade and investment liberalization – over the CPTPP, which is enforceable and offers demonstrable benefits to its members.

China the key market

This is especially true given China’s demand to join the CPTPP and the benefits member countries would enjoy from lowering barriers to the vast Chinese market.

Following the conclusion of the Regional Comprehensive Economic Partnership (RCEP), which entered into force last week, China applied to join the CPTPP in September 2021, positioning itself as a champion of trade liberalization in the Indo-Pacific.

The United States has repeatedly rejected the idea of ​​joining the CPTPP, advocating the Indo-Pacific economic framework as an alternative. While many CPTPP countries are skeptical of China’s bid for a combination of economic and security reasons, the United States is offering little to offset China’s rise in the CPTPP and other trade deals.

Currently, the strongest American counterweight to China, and the best prospects for the Indo-Pacific economic framework, lie in the area of ​​security.

“Worker-Centered” Trade Policy

In 2021, the Biden administration insisted on integrating social issues into trade deals. Tai is committed to a “worker-centered” trade policy that advances America’s middle class and raises labor standards abroad.

As a result, officials in the Biden administration have said climate change, workers’ rights and the digital economy should be focal points for Info-Pacific’s economic framework.

Items of the digital economy agenda should appeal to Asia, but it is questionable whether the Indo-Pacific economic framework can thrive as a forum to tackle climate change and labor standards.

Without meaningful trade concessions from the United States, Indo-Pacific countries have little incentive to make firm climate and labor commitments in the new forum. But many can still be drawn to its connotations of security.

Trying to address social issues through trade policy is not new and is not limited to the United States. But emphasizing such themes in trade deals is problematic when executives begin to believe trade deals are only worth pursuing if they have a major impact on difficult social issues.

While Tai’s appointment as a trade representative signaled Biden’s penchant for a multilateral approach, under her leadership the United States has maintained many Trump-era “hard on China” policies. , including the first-phase trade deal and tariffs on hundreds of billions of dollars in imports.

And while a series of World Trade Organization cases sparked reform in China, no action was taken by the multilateral organization that persuaded Beijing to change the basic features, namely remittances. forced technology and subsidization of state-owned enterprises.

Biden’s new take on the Chinese problem prioritizes Indo-Pacific engagement. But meaningful engagement in the region faces a number of challenges, both inside and outside the administration.

Perhaps after the November 2022 congressional election, Biden will take another look at his languid business agenda. Or he may decide that the Indo-Pacific initiative is really about confronting China in the security realm.

Gary Clyde Hufbauer is a non-resident senior researcher at the Peterson Institute of International Economics and Megan Hogan is a research analyst at the Peterson Institute for International Economics. This article is part of a series from East Asia Forum (www.eastasiaforum.org) at the Crawford School at ANU College of Asia and the Pacific.


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